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Dividend Stocks Bought by Stock Gurus

We all like to look at what the stock gurus are buying to determine where to invest our money or at least see what sectors they are looking at for their clients.  I am looking at the high yield stocks owned by investing gurus.  This is a great way to find high yield stocks as the entry point is not as important because you are investing for the income.  Also, I am looking at microcap stocks as they offer some growth potential along the way.  Here is a list of high yield microcap stocks bought by gurus in the last quarter.

Intersections Inc. (INTX) is a leading provider of consumer and corporate identity risk management services. Intersections provide various levels of service to more than 9.1 million consumers. Those services are offered through North America’s leading financial institutions, directly to consumers under Intersections’ award-winning IDENTITY GUARD(R) brand and through the company’s exclusive partnership with ITAC, the Identity Theft Assistance Center. INTX announced record financial results for the quarter ended March 31, 2012. Revenue for the quarter ended March 31, 2012was $90.2 million, as compared to $90.4 million for the quarter ended March 31, 2011. Consolidated adjusted EBITDA before share related compensation for the quarter endedMarch 31, 2012 was $16.3 million, compared to $13.0 million for the quarter ended March 31, 2011. Net income for the quarter ended March 31, 2012 was $6.2 million, a new record, as compared to $4.6 million for the quarter ended March 31, 2011.  INTX is trading at $11.45 with a dividend yield of 6.77%.  INTX has announced a recent $3.5 million share buyback program.  INTX has an equity summary score of 8.7 out of 10 for a Bullish outlook.  INTX was purchased by Joel Greenblatt of Gotham Capital in the previous quarter.

These two stocks are turn around plays:

Lincoln Educational Services Corporation (LINC) is a leading provider of diversified career-oriented post-secondary education. Lincoln offers recent high school graduates and working adults degree and diploma programs in five principal areas of study: health sciences, automotive technology, skilled trades, business and information technology and hospitality services.  The first quarter of 2012 marked the beginning of a year of rebuilding for LINC.  For the full year, LINC expects revenue of $440 million to $460 million, representing a decrease of approximately 10% to 14% over 2011, and diluted EPS of$0.25 to $0.40, representing a decrease of approximately 49% to 68% over 2011. Guidance for the full year is based on an increase in expected student starts of 6% to 8% over 2011. The Board of Directors has set the record and payment dates for the dividend for the second quarter of 2012. The cash dividend of $0.07 per share will be payable on June 29, 2012 to shareholders of record on June 15, 2012.  LINC is trading at $6.20 with a dividend yield of 4.54%.  LINC was purchased by Joel Greenblatt of Gotham Capital in the previous quarter.

Having helped Americans lose millions of pounds over the last 40 years, Nutrisystem, Inc. (NTRI) is a leading authority on nutrition research and the science of weight loss and is also the number one home delivery weight loss company.   NTRI expects revenue growth in the mid-single digits for 2012, and, excluding one-time charges, we are on plan from an operational standpoint with earnings guidance for the year in the range of 45 to 55 cents per share. For the second quarter, NTRI expects double-digit revenue growth due to strong new customer starts, and earnings per share in the range of 30 to 35 cents per share before one-time items.  NTRI is trading at $10.73 with a dividend yield of 6.57%. Gurus buying the stock include Joel Greenblatt of Gotham Capital and John Hussman of Hussman Econometrics Advisors.

The Best Dividend Stocks for 2012 – Industrial Sector

S&P recommends marketweighting the S&P 500 Industrials sector. Year to date through November 18, the S&P Industrials Index, which represented 10.6% of the S&P 500 Index, was down 6.3%, compared to a 3.3% decline for the S&P 500. In 2010, this sector index advanced 23.9%, versus a 12.8% increase for the 500. There are 18 sub-industry indices in this sector, with Aerospace & Defense being the largest at 24.9% of the sector’s market value.

S&P analysts have a positive fundamental outlook on the Industrials sector due to expected sales benefits from rising emerging market exposure, although Europe’s debt crisis has increased uncertainty, in our view. In addition, operating leverage is rising with revenues thanks to aggressive cost-cutting initiatives put in place by most companies during the extreme business downturn of 2008 and 2009. According to Capital IQ, from a valuation standpoint, the sector trades at 11.8X consensus estimated 2012 EPS, above the market’s 11.3X, due to above-average EPS visibility, in our view. Its P/E to projected five-year EPS growth rate of 0.9X is lower than the broader market’s 1.1X. The sector’s marketweighted S&P STARS average of 3.7 (out of 5.0) is slightly below the 3.8 average for the S&P 500.

The S&P Industrials Index have broken out from a fairly large, bullish base, turning the intermediate-term trend to bullish, in our view. In addition, prices have retaken a bearish trend-line off the highs since July, confirming to us the change in trend. The sector has also jumped back above its 17-week exponential moving average for the first time since July. The next area of overhead supply sits up near the 300 level, which was the major breakdown region. The rising 17-week exponential remains below the 43-week exponential, but the gap between the two is narrowing, a potentially bullish sign. Relative strength versus the S&P 500 has reversed to the upside, another positive sign. We have raised our technical opinion on Industrials to neutral with a bullish bias, from neutral.

We recommend marketweighting this cyclical sector due to increased risks we see to the global economic recovery, which we believe are offset by an improving technical outlook.

As the world’s largest defense contractor, Lockheed Martin (LMT) has amassed an enviable product portfolio.  Lockheed turns 8% of revenue into operating cash flow, which it uses to fund dividends and stock repurchases. Still, budgetary pressures that require the Department of Defense (DoD) to reduce spending by $350 billion over 10 years could be expanded to more than $950 billion should Congress be unable to come to a consensus on the upcoming debt reduction discussions.  However, LMT is on the technology side of DOD so they have not been hurt by budget cuts.  Aeronautics houses key fighter aircraft programs such as the fourth generation F-16 and the fifth generation F-22 and F-35.  The difference between fourth and fifth generation aircraft is related to stealth, computer systems, and the ability to process and integrate data to rapidly make informed decisions.  LMT has a dividend yield of 4.9%.

We believe that Eaton’s expansion into developing markets will pay nice dividends, even while developed economies in the U.S. and Europe face challenges. Over the long run, we think the firm’s advanced technologies and high switching costs should lead to solid economic profit generation.  Eaton is a diversified manufacturer of electrical components and systems across a broad number of end markets, but is importantly focused on the common theme of providing power solutions. Thus the firm has been successful at expanding its business well beyond its central focus of supplying to car and truck manufacturers, but hasn’t drifted too far outside of its core competencies.  Eaton also has a long history of dividend growth, based on a target of growing EPS by 15% per year and dividends in a like amount.  The dividend was maintained throughout the recession, and may grow once again as earnings recover.

The list of industrial stocks with bullish equity summary scores are shown in the table below: best dividend stocks of 2012 for industrials.

Best Dividend Stocks for 2012

Click to enlarge

 

 

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