New York, New York (PressExposure) February 22, 2012 -- Danny Esposito, co-editor for top financial web site and newsletter Penny Stock Detectives, believes there is compelling value in dividend-paying stocks that have experienced a rough patch in the past causing investors to ignore them. According to a recent article by Esposito (see Profiting From Overlooked Dividend-paying Stocks ), with these stocks that disappoint, investors tend to sell first and ask questions later. Usually, once sold, investors forget these stocks and move on.
"These overlooked stocks with sound business models and a detailed turnaround plan can outperform the market by a wide margin once the turnaround actually occurs. It is important, however, that these firms convey their turnaround plans in a clear and detailed manner to shareholders," notes Esposito.
Esposito highlights the fact that, while waiting for the turnaround to occur, investors are paid a dividend that is typically higher than what banks and treasury bills are paying. The financial editor also says that it's critical to note that the dividend yield (dividend per share/price per share) generally tends to be higher for these types of overlooked stocks than buying a five-year treasury note at roughly two percent. Furthermore, he says that dividend payments are taxed at a lower rate than interest income, compounding the after-tax return from this investment vehicle over interest income from banks or treasury bills.
"It is important to keep in mind that many of these overlooked stocks that say they will turn things around actually never do. Many of them are well-intentioned, but changes in the marketplace, changes in consumer behavior, or a new technology that makes their product/service irrelevant will ensure that the turnaround will never succeed," warns Esposito.
As always, picking the right turnaround company is critical, Esposito notes, or the losses from a continuously falling stock price are all that an investor will experience, along with a dividend payment that will eventually be cut to conserve cash.
"In the universe of penny stocks that make dividend payments, there are those exceptional companies that are small, but that, as a reward to shareholders, make a dividend payment. Although not a common occurrence, these confident, overlooked stocks could be clearly on the rise, becoming part of the universe of dividend-paying penny stocks that we at Penny Stock Detectives are on the lookout for," comments Esposito.
Published every business day, Penny Stock Detectives researches and analyzes low-priced opportunities in the stock market and individual stock market sectors. Penny Stock Detectives reports on penny stocks, small-cap stocks, micro-cap stocks, high-profit potential plays mostly under $10 and the stock market in general.
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The editors of Penny Stock Detectives believe low-priced stocks, when researched properly, present investors with great opportunities to accumulate wealth and to increase the value of their investment portfolios. You can learn more about Penny Stock Detectives at www.pennystockdetectives.com.