One of the advantages dividend paying stocks have over non-paying companies, is that dividends can provide price support. As the share price falls, the dividend yield goes up correspondingly. In many cases, at some point, this yield becomes too attractive to investors who subsequently buy the stock, stabilizing the share price.
Looking for stocks that have fallen in the near-term, and are now offering an attractive dividend yield, can be an effective strategy for investors. Of course, it is always important to do an analysis of the safety of the dividend before purchasing the shares. Buying stocks with safe dividends on draw-downs provides a couple of advantages.
First, it is a contrarian strategy whereby you are purchasing the stock while other investors are selling. Frequently, long-term investors who do their homework can find value using a contrarian strategy. The second obvious advantage is the ability to purchase high quality companies when their yields are the most attractive.
Here are fours stocks which have fallen more than 10 percent in 2013, and are now yielding above 5 percent:
Strayer Education (NASDAQ: STRA)
Garmin (NASDAQ: GRMN)
Penn Virginia Resource Partners (NYSE: PVR)
Gold Resource (NYSE: GORO)
(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Posted in: Long Ideas, News, Dividends, Dividends, Technicals, Trading Ideas, Best of Benzinga