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As Bond Yields Reach Record Lows, Buy These Dividend Stocks Under $10
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There is so much uncertainty surrounding the global market, and investors are putting their money into safer places. Such havens include investments in valuable metals and treasury bonds, but dividend stocks also stand to see higher levels of demand as many questions regarding the health of the global economy persist. Over the short term, this phenomenon could lead to higher share price returns for public companies doling out attractive dividend yields.
Yields on US and other government bonds have reached record lows today. This means that the returns one can generate from buying government debt is quite miniscule right now. Investors will likely seek out investments with higher yields since an annual return of about 1% on long term government bonds will do little for anyone’s portfolio.
A nice dividend is something every investor should seek to capitalize on. That is because you can count on receiving a sizable amount of cash from public companies when the going gets rough. Receiving these consistent cash flows will help in hedging your exposure to the market’s returns, and everyone seems to be in need of that right now.
Not all companies that boast a high yield are worth investing in. Dividends are not guaranteed, so it is best to buy shares in companies that consistently generate cash flow levels which can sustain their current dividend yield. Below are two dividend stocks under $10 which have dependable cash flows that they can fall back on. They look attractive on the valuations front, and each of them trades at a significant discount compared to this time last year.
Tsakos Energy Navigation is a shipping company that provides transportation services involving crude oil and liquid nitrogen gas. The company boasts a line of over 70 shipping vessels, and it is coming off of a record year on the revenues front. TNP is a Zacks Rank #3 (Hold) and it doles out an attractive 6.49% dividend yield.
TNP shares trade at a forward PE and PEG of 4.19 and 0.42, respectively. To put this into perspective, the average stock trades at a PE of about 20, so TNP appears very cheap across this valuation metric. A PEG under one may suggest that a stock is undervalued, and Tsakos Energy shares are trading at a level that is well below this threshold. The company gave shareholders $33.4 million in the form of dividends last year, but its free cash flows could have supported an even higher payout to investors.
This year is not expected to be as great as last year, and a poor industry outlook has contributed to why shares have dropped 48% over the last 12 months. Nonetheless, TNP is an outstanding peer in its industry, and its high operating margins give investors hope that there are better days to come for this company.
EarthLink provides IT services and communications to businesses and residential customers. The company primarily focuses on operating in the US, and they engage in cloud computing, virtualization, IT security, application hosting, and a range of other technology services. EarthLink is a Zacks Rank #1 (Strong Buy) and it doles out a dividend that yields an annual return of 3.18%.
ELNK stock gets a “B” for value in the Style Scores. The company’s EV/EBITDA of 5.33 is well below the industry’s average EV/EBITDA of 13.63. EarthLink shares also trade at a price-to-sales of 0.69. If a company’s stock trades at a price-to-sales below 1, it may be undervalued.
The corporation does trade at a steep earnings multiple, but its cash flows do a good job of making the point for why this company is valuable. Over the last two fiscal years, the company has generated cash flows that could sustain a higher dividend yield than it already offers. ELNK has not increased its dividend payout over the last five years, but with the higher level of operating cash flows that it has been generating, it may increase its yield sooner rather than later.
Both of these companies look like great investment opportunities right now, and they are both on track to seeing significant earnings growth over the long run. If you can capture these stocks at their current prices, your yield may increase significantly over the long run. That is because they are likely to increase their dividend payout per share as their cash flows continue to blossom over the years to come.
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As Bond Yields Reach Record Lows, Buy These Dividend Stocks Under $10
There is so much uncertainty surrounding the global market, and investors are putting their money into safer places. Such havens include investments in valuable metals and treasury bonds, but dividend stocks also stand to see higher levels of demand as many questions regarding the health of the global economy persist. Over the short term, this phenomenon could lead to higher share price returns for public companies doling out attractive dividend yields.
Yields on US and other government bonds have reached record lows today. This means that the returns one can generate from buying government debt is quite miniscule right now. Investors will likely seek out investments with higher yields since an annual return of about 1% on long term government bonds will do little for anyone’s portfolio.
A nice dividend is something every investor should seek to capitalize on. That is because you can count on receiving a sizable amount of cash from public companies when the going gets rough. Receiving these consistent cash flows will help in hedging your exposure to the market’s returns, and everyone seems to be in need of that right now.
Not all companies that boast a high yield are worth investing in. Dividends are not guaranteed, so it is best to buy shares in companies that consistently generate cash flow levels which can sustain their current dividend yield. Below are two dividend stocks under $10 which have dependable cash flows that they can fall back on. They look attractive on the valuations front, and each of them trades at a significant discount compared to this time last year.
Tsakos Energy Navigation Ltd-(TNP - Free Report)
Tsakos Energy Navigation is a shipping company that provides transportation services involving crude oil and liquid nitrogen gas. The company boasts a line of over 70 shipping vessels, and it is coming off of a record year on the revenues front. TNP is a Zacks Rank #3 (Hold) and it doles out an attractive 6.49% dividend yield.
TNP shares trade at a forward PE and PEG of 4.19 and 0.42, respectively. To put this into perspective, the average stock trades at a PE of about 20, so TNP appears very cheap across this valuation metric. A PEG under one may suggest that a stock is undervalued, and Tsakos Energy shares are trading at a level that is well below this threshold. The company gave shareholders $33.4 million in the form of dividends last year, but its free cash flows could have supported an even higher payout to investors.
This year is not expected to be as great as last year, and a poor industry outlook has contributed to why shares have dropped 48% over the last 12 months. Nonetheless, TNP is an outstanding peer in its industry, and its high operating margins give investors hope that there are better days to come for this company.
TSAKOS EGY NAVG EPS Diluted (TTM)
TSAKOS EGY NAVG EPS Diluted (TTM) | TSAKOS EGY NAVG Quote
EarthLink Holdings Corporation-
EarthLink provides IT services and communications to businesses and residential customers. The company primarily focuses on operating in the US, and they engage in cloud computing, virtualization, IT security, application hosting, and a range of other technology services. EarthLink is a Zacks Rank #1 (Strong Buy) and it doles out a dividend that yields an annual return of 3.18%.
ELNK stock gets a “B” for value in the Style Scores. The company’s EV/EBITDA of 5.33 is well below the industry’s average EV/EBITDA of 13.63. EarthLink shares also trade at a price-to-sales of 0.69. If a company’s stock trades at a price-to-sales below 1, it may be undervalued.
The corporation does trade at a steep earnings multiple, but its cash flows do a good job of making the point for why this company is valuable. Over the last two fiscal years, the company has generated cash flows that could sustain a higher dividend yield than it already offers. ELNK has not increased its dividend payout over the last five years, but with the higher level of operating cash flows that it has been generating, it may increase its yield sooner rather than later.
EARTHLINK HLDGS Gross Margin (TTM)
EARTHLINK HLDGS Gross Margin (TTM) | EARTHLINK HLDGS Quote
Bottom Line
Both of these companies look like great investment opportunities right now, and they are both on track to seeing significant earnings growth over the long run. If you can capture these stocks at their current prices, your yield may increase significantly over the long run. That is because they are likely to increase their dividend payout per share as their cash flows continue to blossom over the years to come.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>