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Top 6 Dividend Stocks for August

Find big income in oil, REITs, BDCs and defense

By InvestorPlace Experts

http://invstplc.com/1hTOEFv

Dividend Stocks to Buy Now for Safe Profits

dividendsThis market cycle has been among the trickiest of the past half century. By any measure, stocks — whether domestic or foreign — have racked up enormous gains since the March 2009 bottom.

Yet the news background that has accompanied this spectacular bull run has repeatedly frightened investors out of the market — or prevented them from getting in at all. A healthy level of concern is warranted, but there is still time to make generous profits with safe, strong, dividend stocks before this bull has run its course.

Here are your top dividend stocks to buy now.

Dividend Stock to Buy – Total (TOT)

Total (NYSE:TOT)By: Richard Band, Editor, Profitable Investing

Next to gold, oil is one of the world’s most reliable inflation hedges — a scarce tangible asset, and an essential raw material to boot. If you believe, as I do, that all the funny money sloshing around will eventually trigger a surge in retail prices, you need to own some oil wells. And the best way to do it is with a dirt-cheap dividend stock like Total (NYSE:TOT).

The world’s fifth-largest oil company by market value, Paris-based Total is trading at about 7 time estimated 2011 earnings, versus an average of 9.5 times from 2003 to 2007. Thus, if the stock were merely to return to its former average valuation, you would pocket a gain of 35% or more. In addition, TOT pays a dividend of nearly 6%, one of the richest yields among the oil majors. Starting in September, the company is switching to a quarterly (rather than semiannual) dividend schedule — an extra attraction for retirees and other dividend stock investors.

Dividend Stock to Buy – Fifth Street Finance (FSC)

By: Bryan Perry, Editor, Cash Machine

5thstreetFifth Street Finance (NYSE:FSC) is a business development company (BDC) specializing in investments in middle market, bridge financing, first and second lien debt financing, expansions, acquisitions, add-on acquisitions, recapitalizations, and management buyouts in small and mid-sized companies. Given how tight the banks have been to extend credit to small businesses, specialty finance companies like FSC should post a strong second-quarter in terms of lending.

With a yield of 11%, there is ample room for capital appreciation from current levels. BDCs have been weighed down by a weak bank sector, but they should post robust growth going forward and shares should push higher.

Dividend Stock to Buy – Invesco Mortgage Capital (IVR)

By: Richard Band, Editor, Profitable Investing

invescoInvesco Mortgage Capital (NYSE:IVR) operates as a mortgage real estate investment trust (REIT). This week, the REIT reported Q2 earnings of 99 cents per share, right in line with the analyst consensus. My guess is that the weakness in the stock of late has little to do with IVR’s operating performance and a lot to do with the Washington circus, which has spooked a broad cross-section of bond and mortgage investors.

I’m projecting IVR will pay at least $3.90 per share of dividends this year, for an eye-popping yield of 19.8% at yesterday’s closing price. At that rate, we can afford to wait patiently for the share price of this dividend stock to rebound. I’m confident it will.

Dividend Stock to Buy – Aberdeen Chile Fund (CH)

By: Bryan Perry, Editor, Cash Machine

Emerging markets in Latin America are on track to post robust economic growth this year. One of the leaders of the pack is Chile, which is expected to show GDP growth of 6.3%.

aberdeenThe Aberdeen Chile Fund (AMEX:CH) is a close-ended balanced mutual fund that primarily invests in the public equity and fixed income markets of Chile. With its very attractive 8.79% yield, CH is a great way to participate in this growth.

Dividend Stock to Buy – Government Properties Income Trust (GOV)

By: Richard Band, Editor, Profitable Investing

govGovernment Properties Income Trust (NYSE:GOV) is a REIT that primarily owns and leases office buildings that are leased mainly to government tenants. The RIET recently floated on another follow-on offering for 6.5 million new shares.

Why is GOV issuing more stock? My guess is that the REIT’s acquisition pipeline is starting to fill up. In May, the trust bought a New York City office building, primarily tenanted by the United Nations, for $114 million. To keep doing deals of that size at favorable interest rates, GOV needs to raise equity from time to time. This is standard operating procedure for REITs (and master limited partnerships, too, by the way). This dividend stock currently yields 6.6%, double what you could earn on a 10-year Treasury note.

Dividend Stock to Buy – Raytheon (RTN)

Raytheon (NYSE:RTN)By: Richard Band, Editor, Profitable Investing

Defense contractor Raytheon (NYSE:RTN) has been marked down on worries of savage defense cuts. I suspect the resolution will turn out considerably more benign than the Street fears. With a low-debt balance sheet and diversified business lines, RTN is well equipped to cope with any adjustments Washington may make in defense spending.

Yesterday, the company said that its second-quarter profit more than doubled and it raised its guidance for the year. The company earned $438 million, or $1.23 per share, for the quarter that ended July 3. That was up from $208 million, or 55 cents per share, from the year-ago period. And revenue rose 4.2% to $6.22 billion, from $5.97 billion a year earlier. Raytheon benefited from a big turnaround in its intelligence and information systems unit.

The dividend stock is also throwing off a nice 3.6% yield, with a record of seven annual dividend increases in a row.


Article printed from InvestorPlace Media, https://investorplace.com/2011/07/dividend-stocks-to-buy-now-tot-fsc-ivr-ch-gov-rtn/.

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