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Dividends from High Quality, High Yield Stocks

With so many companies being affected by the financial crisis, it’s important for income investors to find dependable dividend payers that they can count on. With projections for a slower growth economy amid historically low interest rates, it’s now more important than ever to find these solid dividend paying companies as there are fewer places to turn to for high yielding investments without taking on unwelcomed risk.  By screening for stocks with market beating yields, double digit growth rates, above median increasing cash flows and a strong balance sheet, this screen seeks to do just that by finding those companies that could turn into long-term core holdings for an income producing portfolio.

If you have not heard of TWO, then take note as this is a 9 on a 10 point scale.  Two Harbors Investment (TWO) is a holding company. The company operates as a real estate investment trust focused on investing in, financing and managing residential mortgage-backed securities (RMBS), and related investments. The company is externally managed and advised by PRCM Advisers LLC. The company’s target assets include the following: Agency RMBS, Non-Agency RMBS, and Financial assets other than RMBS, which include asset-backed securities and certain hedging transactions.

TWO is trading at $9.23 with a high dividend yield of 17%.  Yes, yields this high are scary but TWO is similar to Annaly as a mortage REIT.  EPS increased from $1.09 to an estimated $1.43 over the past 5 quarters indicating an improving growth rate. Analyst forecasts have recently been raised.  Company recently reported better than expected results.

Screening Criteria:
Dividend Yield Greater than or Equal to 5.00%; EPS Growth (Proj this Yr vs. Last Yr) – Greater than or Equal to 10.00%; P/E (This Year’s Estimate)Less than or Equal to 20.0; Cash Flow Growth Rate (TTM vs. Prior TTM) Greater than or Equal to 0.06%; Interest Coverage (Most Recent Qtr) Greater than or Equal to 3.0x; Security Price Greater than or Equal to $5.00.

 

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