Investing 101: Oversold Dividend Stocks With Institutional Buying
Jun 4th 2012 3:21PM
Updated Jun 4th 2012 3:22PM
When the market drops, many institutions search for stocks paying high dividends so they can at least benefit from the additional sources of income.
Many investors watch institutional purchases very closely because of their ability to buy a large number of shares at a time, called blocks of shares. These large purchases can have a significant impact on the stock price. And since these hedge funds house some of the smartest and most experienced traders, they are often referred to as "smart money," and it is considered a strong vote of confidence when they net purchase a stock.
Since the market dropped, there are many stocks trading at lower prices, but we wanted to look at stocks trading in extremely oversold conditions. For this, we used the relative strength index (RSI) readings over the last 14 days. A level under 40 indicates oversold conditions.
Business section: Investing ideas
The list below has dividend yields between 1%-7%, with positive payout ratios under 50%.
We took that list and checked for oversold conditions according to the RSI(14) with levels under 30.
Then we used those names and checked for stocks that are showing institutional purchases. Do you agree with the "smart money"?
List sorted by dividend yield. (Click here to access free, interactive tools to analyze these ideas.)
1. Campbell Soup (NYS: CPB) : Engages in the manufacture and marketing of branded convenience food products worldwide. Market cap at $9.90B, most recent closing price at $31.47. Dividend yield at 3.70%, payout ratio at 49.63%. RSI(14) at 20.12. Net institutional purchases in the current quarter at 14.0M shares, which represents about 8.81% of the company's float of 158.99M shares.
2. BankUnited (NYS: BKU) : Operates as the holding company for BankUnited that provides various banking products and services to consumers, and commercial and middle-market businesses. Market cap at $2.22B, most recent closing price at $23.10. Dividend yield at 3.01%, payout ratio at 34.60%. RSI(14) at 25.55. Net institutional purchases in the current quarter at 2.5M shares, which represents about 7.32% of the company's float of 34.17M shares.
3. Xyratex (NAS: XRTX) : Provides modular enterprise-class data storage solutions and storage process technology. Market cap at $310.58M, most recent closing price at $11.27. Dividend yield at 2.72%, payout ratio at 14.62%. RSI(14) at 20.19. Net institutional purchases in the current quarter at 2.2M shares, which represents about 8.06% of the company's float of 27.31M shares.
4. Bancolombia (NYS: CIB) : Provides financial products and services to individual and corporate customers in Colombia, Panama, El Salvador, Puerto Rico, the Cayman Islands, Peru, Brazil, the United States, and Spain. Market cap at $12.55B, most recent closing price at $58.88. Dividend yield at 2.52%, payout ratio at 23.78%. RSI(14) at 26.94. Net institutional purchases in the current quarter at 7.7M shares, which represents about 5.26% of the company's float of 146.26M shares.
5. Cal-Maine Foods (NAS: CALM) : Engages in the production, grading, packaging, marketing, and distribution of shell eggs primarily in the southeastern, southwestern, mid-western, and mid-Atlantic regions of the United States. Market cap at $831.7M, most recent closing price at $34.97. Dividend yield at 2.40%, payout ratio at 33.30%. RSI(14) at 29.43. Net institutional purchases in the current quarter at 757.4K shares, which represents about 5.48% of the company's float of 13.82M shares.
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 Danny Guttridge does not own any of the shares mentioned above. Institutional data sourced from Fidelity, all other data sourced from Finviz.
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