4 Eclectic Names Where I Combine Dividends With Value

 | Mar 29, 2017 | 11:00 AM EDT
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I'll be the first to admit I invest in some companies that are off the beaten path. These ideas usually are driven from a value perspective, as I buy what I perceive to be cheap assets. Sometimes, these names are also dividend payers, which can act as a sweetener. At this point in my life, I tend to reinvest dividends in order to purchase more shares, but suspect that will change someday. While I tend to focus on smaller names, company size does not matter if I believe there is value.

In the microcap category, there's Farmland Partners (FPI) , the largest publicly traded farmland REIT in the U.S.; it owns 144,000 acres, or, 225 square miles, in 16 states. FPI recently completed its merger with American Farmland, which broadened FPI's geographic presence and added some higher-value land and crops to its mix. FPI currently yields 4.7%. There are questions about the value of farmland these days, with some believing it is overpriced. That's OK by me. I am happy to reinvest the dividend, acquiring more shares in the process and letting the chips fall where they may. This is a long-term play.

In the small-cap category is Getty Realty (GTY) , the leading REIT that specializes in gas stations and convenience stores. This was a distressed name in 2012, when trouble with its largest tenant forced Getty Realty to cut its dividend dramatically. I took a position during that time with the belief that the negativity was overblown, a common theme for me. The stock has recovered nicely, is trading at a six-year high, and has been increasing the dividend. While not nearly back to pre-crisis levels, GTY raised the dividend 12% in December, and the stock now yields 4.5%.

In the mid-cap category is private corrections operator CoreCivic (CXW) , which has had quite a year. Indeed, CoreCivic's one-year chart looks like a roller coaster. Fears that the federal government no longer would use private prison operators sent the shares of this REIT into the teens over the summer. CoreCivic not surprisingly cut its dividend 22%, to 42 cents quarterly. The shares have roared back post-election and are up 152% since, thanks to a new administration that is not opposed to privately run prisons. CXW currently yields 5.3%.

In the large-cap category, there is Corning (GLW) . Although there is nothing off the beaten path about this name, this company, which never seemed to get the respect it deserved in recent years, now is trading at a 15-year high. The things that impress me about Corning are its solid balance sheet, which includes $5.3 billion in cash, and its willingness to return cash to shareholders via dividend increases and share buybacks.

Corning has more than tripled its quarterly dividend in the past six years from five cents to 15.5 cents. Shares currently yield 2.3%. In addition, GLW has reduced shares outstanding by more than 40% in the past five years. I've found that the combination of dividend increases and share buybacks can be very powerful, and I'll spend more time on that notion in future columns.

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