3 Income Plays With Strong Upside
By Takeover Analyst:What follows is a list of companies that offer strong dividend yields to hedge against an uncertain economy. Telecom traditionally distributes earnings through this form of capital allocation, so it should be no surprise that one telecom company is included in this list. The other two companies are engaged in consumer goods and mining. My preferred pick is Vale due to strong secular trends from fears over inflation.
Windstream is rated a "buy" and trades at a respective 36.7x and 16.2x past and forward earnings, with a dividend yield of 8.2%. Consensus estimates for Windstream's EPS forecast that it will decline by 21.1% to $0.60 in 2012, grow by 25% in 2013, and then decline by 16% in 2014. Assuming a multiple of 15x and a conservative 2013 EPS of $0.73, the rough intrinsic value of the stock is $10.95, implying 10% downside.That said, the company hadComplete Story »