Income investors should pay attention to a stock's dividend yield, but should also use a number of different techniques to determine whether or not the company will be able to sustain its current dividend payments over time. These would include evaluating a stock's forward earnings estimates, based on the consensus of Wall Street analysts, to ensure that a company is expected to generate substantial earnings compared to its market capitalization; as a bonus, in theory stocks with low earnings multiples should be less likely to deliver capital losses.
Here are five stocks, which currently pay dividend yields of 4% or higher and are valued at less than 12 times forward earnings estimates: Large oil and gas companies are generally trading at low earnings multiples, including ConocoPhillips (COP). Transocean (RIG) is expected to grow its earnings per share to $5.80 next year. Also satisfying our criteria is Freeport-McMoRan Copper & Gold (FCX). Potash Corp of Saskatchewan (POT) recently plunged about 20%. Canadian Imperial Bank of Commerce (CM), also offer a combination of low earnings multiples and high yields.
Source: Seeking Alpha
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