The priorities for fixed-income investors differ vastly from regular investors. While a regular investor generally looks out for the investment opportunities that can provide a better capital appreciation, a fixed-income investor prefers stable and consistent income. However, they might find it very hard to find the right stock for their portfolios, since the stocks that are stable, have a consistent dividend payout history and boast a respectable dividend yield are expensive to buy. With this in mind, we have scanned the portfolios of around 800 funds we track in order to identify four dividend stocks that are trading under $10, have a solid dividend yield and enjoy a strong level of support among the investors in our database
We track prominent investors and hedge funds because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 15 most popular small-cap stocks among a select group of investors delivered a monthly alpha of 80 basis points between 1999 and 2012 (see the details here).
#4 Frontier Communications Corp (NASDAQ:FTR)
– Investors with Long Positions (as of December 31): 31
– Aggregate Value of Investors’ Holdings (as of December 31): $342.2 million
Though the stock of Frontier Communications Corp (NASDAQ:FTR) ended the fourth quarter nearly flat, its ownership among investors covered by us inched down by two and the aggregate value of their holdings in the company fell by $108 million. Billionaire Seth Klarman‘s Baupost Group was one of the funds which reduced its stake in Frontier by 20% to nearly 11 million shares during the fourth quarter. The company posted an earnings beat for the fourth quarter recently, which caused its shares to rally and they now trade up over 13% year-to-date. Despite this rise, Frontier Communications Corp (NASDAQ:FTR)’s stock currently sports an attractive annual dividend yield of nearly 8%. Last year Frontier Communications Corp announced that it would acquire Verizon (NYSE:VZ)’s wireline assets in several key markets in a $10.4 billion deal. While this deal is expected to get completed by March 31 and Frontier is expecting massive synergies from this acquisition, analysts at Citigroup are concerned about the complications involved in this deal. Citing that reason, on March 9, they downgraded Frontier’s stock to ‘Sell’ from ‘Neutral’ and lowered their price target to $4 from $5.