5 High-Yield Stocks You May Be Ignoring
0.26%August 12 | MyPlanIQ portfolio symbol P_35609
We have recently noted that high yield stocks may hide a fundamental weakness and "All that glitters may not be gold," S&P Capital IQ stating that 20 eurozone companies trading on major U.S. exchanges are now yielding over 5%. Illan filters this further with reasonably stable businesses, that can afford to meet their short-term interest obligations (in case credit gets more expensive), and that earn their revenue from a diversified geographic base.
Those with the strength to survive may actually benefit from a weaker Euro. He selects five from this list.
|
Company |
Country |
Euro Exports as % of Revenue* |
Interest Coverage |
Dividend Yield |
|---|---|---|---|---|
| Telefonica (NYSE: TEF) | Spain | 43% | 4.8 | 10.9% |
| France Telecom (NYSE: FTE) | France | 30%** | 3.7 | 11% |
| Nokia (NYSE: NOK) | Finland | 66% | 9.0 | 8.1% |
| Total (NYSE: TOT) | France | 31% | 35.1 | 6.1% |
| Veolia (NYSE: VE) | France | 27% | 2.0 | 12.9% |
Source: S&P Capital IQ. *As of fiscal 2010. **Approximation.
- Telefonica provides fixed telecommunications, mobile, and Internet services to Spain, Europe, and Latin America. Having access to Latin America is key as this is a rapidly growing market and provides diversification.
- France Telecom doesn't have Latin America but Africa and
the Middle East are significant growth areas.
- Nokia is one of the troubled cell phone operators that has not
made the jump into the smart phone leadership. This is a cheap stock
with upside but still a major world player.
- Total is a massive integrated oil and gas company -- about the size of ConocoPhillips
- Veolia provides water, environmental, and energy-grid services worldwide
So, we have five strong companies with good yields but are in the troubled Eurozone. What would a portfolio look like and how would it compare with our reference benchmark?