High Dividend Stock Recommendations (August 2010)
August 15th, 2010
Easy Investing Strategies is starting a new series of posts related to stock research and stock picks. We will be tracking our selected stock picks, and all stock selections will be done using the Easy Investing Strategies outlined on our site.
To start off our research, we dove into a stock screen using a criteria we should hold all reputable companies to. First, we selected companies that currently pay a 5% dividend or higher. To understand how you can further benefit from dividend stocks, read our post High Dividend Investing post. Second, we selected only companies that had zero debt, and had cash balances on their latest balance sheet of $100 million or more.
As expected, the results produced a large number of companies known as REIT’s. REIT’s are Real Estate Investment Trusts, and usually have high dividends due to the law that REIT’s must pay out a large portion of their earnings each quarter as dividends to their shareholders. Since the real estate market is still depressed in most areas due to the sluggish economy, we decided to remove all companies that are REIT’s from our list. This left a few interesting companies left over.
Himax Technologies, Inc. (HIMX) is the first company that caught our eye. Their current dividend payout is at 9.8% based on the most recent closing stock price, and they have $161 million cash on hand. The 52 week stock price ranged from $2.16 to $3.58 per share. The narrow trading range was also something that we liked as it meant the stock is less of an overall risk. Sometimes stocks have high dividends because their stock price drastically drops, making it more volatile and a higher risk choice. Himax Technologies shows more stability in the stock price, making it a better choice. Himax Technologies designs, develops and markets flat panel displays. Based on the number of flat panel monitors, TV’s, and mobile handsets in the market today, there is no foreseeable end to the consumer demand for Himax Technologies flat panel display technology. Easy Investing Strategies is giving Himax Technologies a high recommendation.
Garmin Ltd. (GRMN) is another company that stuck out on our stock screen. The dividend currently sits at 5.4% with $1.192 billion of cash. The company has recently introduced the Garminfone, which combines GPS features from the mainstream Garmin GPS models, and a mobile phone together. Garmin seems to be keeping up with the latest technology, and with a decent dividend and loads of cash, Easy Investing Strategies highly recommends them.
After our highly selective stock screen and analysis of resulting companies, Easy Investing Strategies top pick is Himax Technologies (HIMX). This is due to its low stock price, excellent dividend, and visible demand for their technology in the marketplace.
Disclosure: Easy Investing Strategies does not own or hold Himax Technologies or Garmin Ltd. stock.