The stock market is on fire. Stocks have risen more than two times in price since the bull market started, in 2009. Still, now is not the time cash out. Rather, it's time to get defensive.
Income investments, like dividend paying stocks and real estate investment trusts (REITs), give investors much needed safety right now. That’s because income payers typically don't fall as far in down markets. So, in addition to income, there is downside protection should the market slump from here.
These income investments should be on your short list now.
I like Steel Dynamics, Inc. (NASDAQ:STLD) a lot right here. While the market as a whole has seen tremendous gains, metals have been held largely in check. Steel Dynamics, Inc. (NASDAQ:STLD) however, has stayed consistently profitable. These profits have helped Steel Dynamics, Inc. (NASDAQ:STLD) pay one of the steel industry's highest dividend yields: 3.2%
I always try to remember that a dividend is only as good as a company’s ability to continue paying it. If a company can pay it and continue to raise it, well, that's even better. When it comes to having the ability to pay (or raise) the dividend, I feel this steel producer really shines.
Everyone knows that the steel industry has notoriously high costs. But even with such a high dividend, Steel Dynamics, Inc. (NASDAQ:STLD) has kept expenses in check. The company beat earnings expectations last week, with EPS coming in at $.21/share, and earnings increased year over year by 5% on reduced costs.
If Steel Dynamics, Inc. (NASDAQ:STLD) continues to meet (or beat) earnings expectations, they'll earn $1.08/share this year with a dividend pay-out of $.44. With that low of a pay-out ratio and expenses well in check, the company is exhibiting sound fiscal policy.
Steel prices are at a cyclical low right now. Should prices, and production, ramp up, Steel Dynamics, Inc. (NASDAQ:STLD) will be in a great position to increase earnings and dividends.
Speaking of cycles, Cal-Maine Foods Inc (NASDAQ:CALM) is certainly trending higher right now. The shell egg producer has been on fire of late, surging to new highs after beating earnings expectations and growing net income 17% year over year.
Despite the rally, there is tremendous opportunity in Cal-Maine Foods Inc (NASDAQ:CALM). In addition to offering a sturdy 3% dividend yield, Cal-Maine is on the right side of a long-term trend. As one of the nation’s largest producers of cage free and organic eggs, they’re poised to benefit from the healthy eating and living trend that has benefited companies like Whole Foods Market, Inc. (NASDAQ:WFM) and Chipotle Mexican Grill, Inc. (NYSE:CMG). They're positioning themselves where the customer is going.
Better yet, a great buying opportunity may be brewing. Executives have warned of potential increases to feed costs, which may crimp earnings in the near term. So while this company is a decent value today, that yield may be set to get higher.
I like Cal-Maine Foods Inc (NASDAQ:CALM) right here because of growth and should it pull back below $40 on short-term costs, I’d buy more. It deserves a spot on your short list.
Campus Crest Communities Inc (NYSE:CCG) is a REIT that owns a portfolio of student housing properties near universities. It holds nearly 30 properties with more than 5,000 apartment units. This is the essence of an investment that is on the right side of a long-term growth trend. Long-term trends of higher unemployment and a skilled labor shortage are likely to drive continued increases in college enrollment.