For stock investors the past six years have been tremendous, but for income investors not so much. Yields on certificates of deposit from banks are still at generational lows, and many of the better stock yields have risen in price to the point that investors are concerned. In a new report, the analysts at Piper Jaffray, like many on Wall Street, think recent Federal Reserve meeting language suggests a rate hike can come as early as mid-summer — though its stance on the timing and pace of increases was more conservative than expected.
The Piper Jaffray team thinks that with the Fed’s more conservative commentary on rates hikes, that quality stocks in the outsourcing, facilities and professional services universe can provide healthy sources of income yield. 24/7 Wall St. screened the list for the four highest yielding companies: Iron Mountain Inc. (NYSE: IRM), Pitney Bowes Inc. (NYSE: PBI), Xerox Corp. (NYSE: XRX) and ABM Industries Inc. (NYSE: ABM).
While two of these four dividends are closer to 2%, one yields over 3% and one currently is well above 4%. Note that the current median yield of the 30 Dow stocks is roughly 2.8%, and the 10-year Treasury note now has a yield of less than 2.0%.
Iron Mountain is a leading provider of storage and information management services. Its real estate network of over 67 million square feet across more than 1,000 facilities in 36 countries allows it to serve customers around the world.
The company offers business solutions for records, data, document and data center management, along with secured shredding to help organizations lower storage costs, comply with regulations, recover from disaster and better use current information.
Iron Mountain elected real estate investment trust (REIT) status at the beginning of 2014, so investors are paid an outstanding 4.9% distribution, which could include return of capital from time to time. The Thomson/First Call consensus price target for the stock is $38.36. Shares closed Monday at $38.33.
This global technology company offers innovative products and solutions that enable commerce in the areas of customer information management, location intelligence, customer engagement, shipping and mailing, and global e-commerce. More than 1.5 million clients in approximately 100 countries around the world rely on products, solutions and services provided by Pitney Bowes.
Pitney Bowes investors are paid a very solid 3.1% dividend. The consensus price target for this old-school survivor stock is $28.50. Shares closed on Monday at $23.98.
Xerox is yet another old-school survivor stock that makes it on to the Piper Jaffray list of solid dividend stocks. It is a global business services, technology and document management company helping organizations transform the way they manage their business processes and information.
It is not just a copy equipment company, and it trades at a market discount at about 13 times expected 2015 earnings (and 11.5 times expected 2016 earnings). Xerox provides clients with business process services, printing equipment, hardware and software technology for managing information from data to document.
Investors in Xerox are paid a respectable 2.2% dividend, but with a low payout rate against its earnings, the company could arguably make that higher if there is any business improvement. The consensus price target is set at $14.14. Shares closed Monday at $13.24.
This is probably the least well-known of the four top yielding stocks at Piper Jaffray. The company is a leading provider of facility solutions, with revenues of approximately $5 billion and 118,000 employees in more than 300 offices deployed throughout the United States and various international locations.
ABM’s comprehensive capabilities include facilities engineering, commercial cleaning, energy solutions, HVAC, electrical, landscaping, parking and security, provided through stand-alone or integrated solutions. ABM provides custom facility solutions in urban, suburban and rural areas to properties of all sizes, from schools and commercial buildings to hospitals, manufacturing plants and airports.
ABM investors receive a 2.1% dividend. The consensus price target is $33.71, and shares closed Monday at $32.17 apiece.
None of these Piper Jaffray stocks will elicit the momentum stock crowd to participate. Yet they are solid companies, many which are proven survivors, that will continue to cover and pay dividends well into the foreseeable future