Mattel Inc. (NASDAQ: MAT) is a household name in toys, and its share pullback by one-third has given it north of a 6% yield. While this one fits the screen, investors need to be aware that the $1.52 annualized dividend payout has been in place for over 18 months and is barely higher than its 2014 earnings per share and higher than the expected 2015 and 2016 earnings per share. That could spell trouble ahead, so don’t think you are getting a risk-free high dividend here, even if it is valued at 15 times expected 2016 earnings.
Mattel shares trade near $22.75, within its 52-week trading range of $20.50 to $32.19. The stock has a consensus analyst price target of $27.50 and a market cap of $7.7 billion. Its dividend yield is 6.6%.
R.R. Donnelley & Sons Co. (NASDAQ: RRD) is an integrated communications solutions in print and publishing, including magazines, catalogs, retail inserts, books, directories, packaging products and so on. The stock has lost more than a quarter of its peak value in the past year, but it does have dividend coverage expected and it is valued at only about nine times expected 2016 earnings. Investors who only think we are in a digital age may just not be excited about companies that still do real, live printing.
R.R. Donnelley shares were last seen at $14.90, with a 52-week trading range of $14.32 to $20.22. The consensus price target is $25.33, the market cap is $3.1 billion and it has a dividend yield of 6.6%.
Southern Co. (NYSE: SO) is an electric utility giant, based in Atlanta with a coverage area of Alabama, Georgia, Florida and Mississippi, that has about than 4.5 million customers. Southern has a wide base of power-generation alternatives, some favorable and some that are considered dirty by coming EPA standards. It has the same risks as many utilities, including the risk of higher interest rates and higher future borrowing costs, and it is valued in line with many peers at 15 times expected 2016 earnings.
Shares were last seen near $44.00, slightly under its consensus analyst price target of $44.93. The 52-week range is $41.40 to $53.16, and the market cap is $39 billion. It has a dividend yield of 5.0%.
Tupperware Brands Corp. (NYSE: TUP) is a company that you almost certainly now have or have had one of its plastic storage products in your pantry. The stock has been hammered, losing about a third of its value, and that has given it a higher than 5% dividend yield, in part due to strong dollar and overseas weakness. The company’s earnings are down, but the $2.72 annualized payout comes with ample earnings coverage, it has an acceptable debt profile and it is valued at less than 11 times expected a blended 2015 to 2016 earnings estimate.
Tupperware’s stock recently traded at $50.05, near the lower end of its 52-week trading range of $47.85 to $72.93. The consensus price target is $62.89, and the market cap is about $2.5 billion. It has a dividend yield of 5.3%.
Again, some of these high yields may now be among the “accidental high yields” due solely to a price drop in the stock. Investors may love dividends, but two or three of these dividends could face pressure ahead if there are continued negative developments. There really is no free lunch when it comes to evaluating stocks, not when the market is looking for a new fair-market multiple as it grapples with a slowing growth story.