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Don’t Overpay for Dividend Stocks, Pro Says


Stocks offer the best option for investors looking to weather turbulent markets, Bill Nygren said Tuesday on CNBC.

“I think stocks are really attractive today,” the Oakmark Global Select Fund Portfolio manager said on “Fast Money.”

However, many investors are overpaying for safe, high-yield stocks, he added.

“I’d say, in general, industrial companies and financial companies are really cheap,” he said.

Among his funds holdings are Capital One, JPMorgan, Comcast (parent company of CNBC) and eBay.

Nygren suggested looking for undervalued companies with good management, and those that use free cash flow to buy back stock and increase earnings-per-share growth instead of paying dividends.

“Investors are penalizing companies like that,” he added.

Trader disclosure: On July 31, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Steve Weiss is long JPM; Steve Weiss is short KORS; Steve Weiss is short JCP; Steve Weiss is short X; Pete Najarian is long AAPL; Pete Najarian is long C; Pete Najarian is long INTC; Pete Najarian is long SBUX; Pete Najarian is long FB; Pete Najarian is long MSFT; Pete Najarian is long PFE CALLS; Pete Najarian is long EBAY CALLS; Josh Brown is long AAPL; Josh Brown is long JPM; Josh Brown is long GDX; Josh Brown is long GLD; Josh Brown is long XLF; Josh Brown is long WMT; Josh Brown is long TGT; Josh Brown is long PFE; Steve Cortes is long PFE; Steve Cortes is long PPH; Steve Cortes is long DG; Steve Cortes is long DEO; Steve Cortes is short COH; Steve Cortes is short XGB VS. S&P LONG; Steve Cortes is short IWM

A member of the household of an Oppenheimer & Co. Inc. research analyst who covers this company has a long position in JCP

The subject company (COH) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse: COH

Credit Suisse provided investment banking services to the subject company (COH) within the past 12 months: COH

Credit Suisse has received investment banking related compensation from the subject company (COH) within the past 12 months: COH

Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (COH) within the next 3 months: COH

As of the date of this report, Credit Suisse Securities (USA) LLC makes a market in the securities of the subject company: COH ______________________________________________________
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