There are few Wall Street bargains better than oversold dividend stocks. For some reason, there are dividend stocks that have been absolutely stomped by investors and are now trading at or near their 52-week lows.
Now, it’s entirely possible that they are near these lows not just “for some reason,” but for very good reasons. Maybe the company is in a bad financial situation and deserves to be sold off.
However, we don’t know until we unwrap the package and see what’s left inside. Maybe investors just got spooked by news that has no real financial impact on the company.
Hopefully, you’ll be able to grab solid dividend stocks for a bargain and hold for a huge return.
Dividend Stocks — Safe Bulkers, Inc. (SB)
Safe Bulkers, Inc. (SB) is an owner and operator of — surprise — dry bulk transport boats. These vessels mostly handle coal, grain, and ore. I learned that the 32 ships under SB stock’s management carry loads that are measured in “deadweight tons” (the same expression my girlfriend uses when referring to my bathroom scale’s readout as I step off of it each day).
In any event, SB stock is based in Greece. That country isn’t exactly finding favor in the economic world right now, and that’s one reason why the market is spooked, having sent shares of SB down around $5.30 from their 52-week high of $11.48. The other reason is that charter rates have gotten clipped this year, and net income got hammered.
However, SB stock has one spectacular balance sheet, even compared to other dividend stocks.
Safe Bulkers has $77 million in cash and $451 million in long-term debt. But, wow, that debt costs almost nothing — an average interest rate of only 1.2%. It may be worth considering buying a little bit here and wait for a turnaround, and collect a modest 4.5% yield while you wait.
If you like SB stock, you should looking for other shipping companies. They include Diana Shipping Inc. (DSX), DryShips (DRYS), Navios Maritime Holdings (NM), and Navios Maritime Partners (NMM). Or, if you want the whole bundle, The Guggenheim Shipping ETF (SEA) is the ETF that invests in shipping companies.
Dividend Stocks — Pan American Silver Corp (PAAS)
Pan American Silver Corp (PAAS) is a silver miner that operates in Mexico, Peru, Argentina, and Bolivia. It also produces modest amounts of other metals, including gold, zinc, lead, and copper. As with all mining companies, so much is tied to demand and expenses and the price of the metals themselves.
Right now, things have turned against PAAS stock, but buying near the bottom of a cycle can be a good idea. The balance sheet is outstanding, with $406 million in cash and only $43 million in debt, for a net cash position of $2.40 per share. It generated 32 cents of cash flow per share in a quarter where silver hit its lowest price in the past four years.
The stock is barely off its 52-week low of $9.17, trading at $9.30 as of this writing. It pays out a dividend yield of 5.4%. Buying the stock here means you are betting the price of silver is going to rise.
Lawrence Meyers does not own shares in any company mentioned, but he has some silver dollars he collected as a kid, and he is alleged to weight 17 deadweight tons.