Dividends4Life: Quality Stocks for Value and Dividend Investors

With stocks trading near all-time highs, it is becoming more difficult to find good values. People feel that they are forced to buy stocks because interest rates are so low, and so while stocks appear expensive, they are also a superior alternative to bonds, which are at historically high levels, as well as cash, which yields virtually nothing. But even if you feel that you need to own stocks, you don’t necessarily have to buy overvalued stocks. There are plenty of value opportunities for investors who look under the radar, and I list three here. Averaged together, these three stocks trade at about half the price-to-earnings multiple of the S&P 500, and they also yield about three times as much, making them especially appealing for value investors. Furthermore, I think they are quality companies: they aren’t cheap because of some problem with the firm.

Hercules Technology (HTGC) is what is referred to as a business development corporation, or a BDC. A BDC provides startup capital to small companies in exchange for interest payments and some stock warrants, or the right to buy a certain amount of the company’s stock at an agreed-upon price. AT&T (T) is not really an under-the-radar stock, but it is one that investors should consider. Alliance Resource Partners (ARLP) has bucked the downtrend in coal. While many coal companies have seen enormous losses, cut their dividends, and have seen their stock prices fall by 80 percent or more, Alliance Resource Partners is trading near an all-time high and pays a 5.4 percent dividend.

Source: Wall St Cheat Sheet

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