Investing 101: Low Beta Stocks With High Dividend Yields and Insider Buying
Looking for high-yield dividend stocks with little market volatility? If so, you'll probably enjoy the list and information below.
To create this list we screened for all of the following requirements:
- Dividend yield between 3%-7%
- Beta below 1
- Market cap above $300M
Then, to further refine the list, we searched for the names experiencing net positive insider buying over the past six months.
We were left with four names, listed below along with relevant data.
Want more information on the metrics used above? Let's review the key terms and their implications:
Market capitalization (market cap): Market capitalization, commonly referred to as market cap, is the total market value of a company's outstanding shares. It can be thought of as a measure of company's size. It can be calculated by multiplying the number of shares by the current price of the shares. Companies with higher market cap are considered to have more trustworthy information because they have greater histories of profitability and data.
Dividends are a payment made by a company to its shareholders. The money is a portion of the company's profits. Not all companies pay dividends.
Dividend yield is the company's annual dividend payment divided by its market cap, or dividend per share. It is presented as a percentage.
If Company XYZ has shares valued at $100 and pays a $5 dividend, the dividend yield is $5/$100 = 0.05 (5%).
Beta allows investors to quickly gauge how volatile/risky a stock is. It measures how the stock has behaved relative to the market in the past (often enough a useful predictor for future performance, although past performance does not guarantee future results).
A beta of 1 indicates the stock has generally moved in tandem with the market. Exsmple: When the market rose by 2%, the stock rose by 2% as well.
A beta between zero and 1 means the stock has generally been less volatile than the market (less risk for investors). Example: If beta is 0.5-50% less volatile than the market-when the market rose by 2%, the stock generally rose by 1%. When the market dropped by 2%, the stock generally dropped by only 1%. Similarly, a beta greater than 1 means the stock has generally been more volatile than the market (more risk for investors).
Insider buying: Many analysts follow insider buying trends because, after all, insiders know more about their companies than anyone else. Their investment activity is closely monitored and can tell us a lot about where they feel the business is heading.
Insider buying is represented as a percentage of the share float. Companies experiencing insider buying over the past six months provide an indicator that insiders think the stock is undervalued at current levels. Inversely, insider selling serves as a negative indicator.
Now that you're armed with information, take a look at the list below. Use the data as a starting-off point in your own analysis. (Click here to access free, interactive tools to analyze these ideas.)
1. USA Mobility (NAS: USMO) : Wireless Communications Industry. Market cap of $340.12M. Dividend yield at 6.50%, payout ratio at 38.53%. Beta at 0.83. Net insider shares purchased over the last six months at 6.74K, which is 0.03% of the company's 19.96M share float. The stock is a short squeeze candidate, with a short float at 8.71% (equivalent to 8.46 days of average volume). The stock has gained 21.76% over the last year.
2. Southside Bancshares (NAS: SBSI) : Regional Banks Industry. Market cap of $330.81M. Dividend yield at 3.58%, payout ratio at 36.36%. Beta at 0.60. Net insider shares purchased over the last six months at 7.82K, which is 0.06% of the company's 13.72M share float. The stock is a short squeeze candidate, with a short float at 5.73% (equivalent to 19.07 days of average volume). The stock has gained 16.04% over the last year.
3. NL Industries (NYS: NL) : Synthetics Industry. Market cap of $689.03M. Dividend yield at 3.53%, payout ratio at 23.34%. Beta at 0.85. Net insider shares purchased over the last six months at 52.89K, which is 0.80% of the company's 6.63M share float. The stock is a short squeeze candidate, with a short float at 5.43% (equivalent to 6.64 days of average volume). The stock has had a couple of great days, gaining 5.59% over the last week. The stock has performed poorly over the last month, losing 22.75%.
4. First Financial Bankshares (NAS: FFIN) : Regional Banks Industry. Market cap of $928.09M. Dividend yield at 3.25%, payout ratio at 45.68%. Beta at 0.44. Net insider shares purchased over the last six months at 12.56K, which is 0.04% of the company's 29.53M share float. The stock is a short squeeze candidate, with a short float at 17.09% (equivalent to 38.32 days of average volume). The stock has gained 1.69% over the last year.
List compiled by Daniel Guttridge. Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Becca Lipman and Daniel Guttridge do not own any of the shares mentioned above. Insider data sourced from Yahoo! Finance, all other data sourced from Finviz.
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