Jim Cramer has famously described companies paying a high dividend yield with a solid chance of recovery as being “accidental high yielders.” Another term for them could be “temporary high yielders,” because accidental high yielders aren't supposed to be paying out such a high dividend yield, and soon enough (so the thinking goes)… they won't.
Accidental high yielders are expected to bounce back, and thus are considered solid buys. One, because a high dividend yield is naturally attractive, especially so when the company isn’t in danger of tanking completely. And two, if the stock is expected to rebound, the investment itself will increase.
We decided to sift through the data to find all the companies that are accidental/temporary high yielders. To qualify as such, we decided a company had to fit in the following four categories:
1) The company is a large-cap (over $10 billion)
2) The company is currently paying a dividend yield of at least 5 percent, and sometimes more
3) The company’s stock is down over the last 30 days
4) A majority of analysts have assigned the stock a “buy” rating or better
We found out that seven companies fit that criteria, and thus should be considered accidental/temporary high yielders.
Barrick Gold Corporation (ABX) This gold company bills itself as the world’s largest gold producer. Gold isn’t doing so well lately, dipping 22.93 percent since January. And Barrick is doing even worse, sporting a 56.6 percent stock plunge since the beginning of the year.
But analysts are still high on Barrick’s chances to rebound. Barrick is still flush with cash from the commodities boom, and was able to diversify during the gold price surge, buying heavily into other commodities like copper giant Equinox for 7.5 billion in 2011.
BP plc (BP) British Petroleum, known colloquially as “BP” still hasn’t put the Gulf oil spill behind them. Following the spill BP was ordered to pay out $4 billion over five years. They also settled with the Securities and Exchange Commission for $525 million to square securities charges.
Despite surging oil prices, BP has stayed essentially flat this year, and is down this month. They’re currently at $42.19 a share, though analysts like the proactive stance taken by the company when it implemented an $8 billion share buyback program following windfall profits from the sale of a Russian oil and gas company OAO Roseneft.
British American Tobacco (BTI) The tobacco company’s market share in America is dwarfed by competitors Altria Group, Inc. and R.J. Reynolds. British American has recently started making forays into the burgeoning e-cigarette market, a market analysts find promising.
British American Tobacco’s stock currently sits at $105.61 a share. On July 12 Barclay’s put a price target on the company at 13.02 higher than their current value.
Eni SpA (E) This Italian natural gas and oil company is down 6.63 percent this month. The company has a solid store of cash, and looks to start drilling of the coast of Cyprus in 2014. And Cyprus looks promising: estimates put the amount of gas in one particular strike in the region at between 5 and 8 trillion cubic feet.
The company’s stock currently sits at $42.08 a share.
National Grid plc (NGG) A multinational British utility company, National Grid is one of the larger utilites in the entire country.
National Grid is down 5.33 percent over the last month to hit $57.71 a share. The median price target for analysts is $60.67 a share.
Vale S.A. (VALE) The Brazilian mining company is listed as being the second largest mining compnay in the entire world. In June Forbes claimed that thier stock was being oversold, driving the price unnaturally low. The company is considered strong though, on account of their wide diversification. Vale currently operates in 16 Brazilian states and six continents, and mines several different minerals, and is the world's leading supplier of iron ore.
Vale is currently at $13.29 a share.
Telefonica Brasil, S.A. (VIV) Another Brazilian company, Telefonica spun off from Spanish Telefonica. They report revenues of 16.2 billion a year, and supply a large percentage of the Brazilian population. They currently operate under the name Vivo. They were battered a bit in Q1 2013 after having lower-than-expected sales outside of Brazil.
Their stock is currently at $21.23 a share.