Once upon a time, high dividend stocks tended to trade at discounts to the rest of the market. Today? No such luck. In a recent piece for his blog, "The Investor's Field Guide", Patrick O'Shaughnessy provided data showing that high dividend yield stocks did at one time enjoy a valuation advantage over other stocks. "[But] their valuation advantage has collapsed," he wrote. Prior to 2009 - when the bear market bottomed - higher yielders (stocks with dividends over 4%) were cheaper than those with yield in the 2-4% range 92% of the time, O'Shaughnessy says. Since then, they've been cheaper just 30% of the time.
I recently used my Guru Strategies (each of which is based on the approach of different investing greats) to find some stocks that not only have high dividend yields, but also have attractively priced shares and solid financials. I found a number of them that fit the bill and are good candidates not just for steady income but for capital appreciation as well. Here are some of the best of the bunch: Douglas Dynamics (NYSE:PLOW), Taiwan Semiconductor Manufacturing (NYSE:TSM), Johnson & Johnson (NYSE:JNJ), Siliconware Precision Industries (NASDAQ:SPIL) and Maiden Holdings (NASDAQ:MHLD)..
Source: Seeking Alpha
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