Big Income from Small Stocks
11/19/2012 11:45 am EST
These companies have flown under most investors' radar, but they promise big income and solid total returns for years to come, says Hilary Kramer.
Growth stocks with dividend kickers. We are here with Hilary Kramer, who is going to tell us about some of those.
One of my favorite stocks right now is in the insurance sector, which is just so hot. Some of the really good, fast money that is before the whole herd is right there in insurance.
You want Universal Insurance Holdings (UVE), an 8.8% dividend yield from a property and casualty integrated insurance company. The market cap is less than $200 million, but expect here a premium of 40% to 60% in an acquisition.
These smaller insurance companies are being gobbled up by the larger insurance companies. There is a real consolidation taking place. You have growth in this area and a 8.8% dividend yield.
Another stock that I love, it is a growth story, is Cal-Maine (CALM). People call it the calm stock. Why is that? It is an egg company based in Jackson, Mississippi. It is one of the largest egg companies in the country, and probably the largest when it comes to organic, DHA, omega enhanced, and cage-free.
Really? That is a huge trend these days.
Yes, and so there is real growth there. Also, what has happened are that eggs are no longer considered cholesterol-creating killers, and so people understand eggs within reason are actually very healthy and they are being used as a protein source today. So you have growth with CALM and an excellent dividend yield. You really want to be in a stock like that.
Then lastly, I really like in terms of growth a company like Evercore (EVR). Evercore is a boutique investment bank; you have approximately a 3% dividend yield, and Evercore has been involved with more than 50% of all the mergers and acquisitions that have taken place in the last two years.
As well, Evercore is a very strong asset management company, and it doesn't have the overhang of all the Volcker Rules and all of the compliance issues and legacy history of TARP that so many of the other companies do. Plus Evercore just prints money when it comes to the fact that they are doing the restructuring of the US Post Office.
Wow, and I would assume the M&A activity in this economy can be fairly slow, so when things pick up they are going to be there.
Evercore is positioning themselves to fill that void of a Bear Stearns, or Lehman Brothers, or Wachovia. And out of the ashes of financial meltdowns, new companies are created, so Evercore has really been able to recruit some of the top talents on Wall Street and recruit them with very little difficulty because of the way they have structured their compensation. So the shareholder gains, the employee partner does well.
You want Evercore; that is a growth story. You are going to turn around in a few years and say wow, how did this stock get to be $100? It is $27 now; it could take five years, but for those that invest in the long term, that is where you want to go.