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3 High-Yield Stocks With Heavy Insider-Buying

 April 04, 2012 09:16 PM
 


Whenever I screen for stocks, I always look at whether insiders are buying shares of their companies. This kind of information can be extremely valuable to individual investors.

Insiders know the industry, the inner workings of the company and the business opportunities far better than the average investor. Insiders may buy shares in anticipation of a hot new product, an acquisition or simply because they think the stock is undervalued.

Peter Lynch said it best: "Insiders may sell their stock for many reasons, but they buy for only one: they think the price will rise."

With these words in mind, I found three great high-yield stocks that have recently experienced heavy insider-buying. Keep in mind that heavy insider-buying is typically a better predictor of long-term stock performance than short-term gains.

1. ConocoPhillips (NYSE: COP)
Yield: 3.5%

Last November, CEO Jim Mulva added ConocoPhillips shares to his personal portfolio, an investment of nearly $100 million. And ConocoPhillips looks like a long-term winner.

Already this year, the company announced it would sell $10 billion worth of low-margin assets and re-invest the proceeds in high-return exploration and production (E&P) projects. ConocoPhillips is also spinning off its refining and marketing arm, which will free up even more capital for E&P operations.

The company's revenue stream is solid. In 2011, for instance, ConocoPhillips' income grew 48% to $17.5 billion from $11.8 billion in 2010. Also, the company now has exposure to major energy plays such as the Bakken Shale, Eagle Ford Shale, the Permian Basin and oil sands in Canada, as well as a stake in a new $40 billion pipeline that will transport natural gas from Alaska and Asia.

The company has posted 11 straight years of dividend growth, including a 20% increase last year to a $0.66 annualized rate. The payout is only 29% of earnings, which leaves plenty of room for dividend growth.


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