With a dividend paying stock like CorpBanca SA (
BCA
,
quote
), it turns out emerging market investors can have it all.
[caption id="attachment_65897" align="alignright" width="300"
caption="CorpBanca El Golf, Las Condes, Santiago de Chile"]
[/caption]
One of the fundamental precepts of investing is the risk/reward
ratio: the riskier the investment, the higher the potential
returns. That is why "junk bonds" are called high yield. It is why
the long shots in horse races pay the highest odds, offering the
biggest payout.
But research by Dr. Robert Haugen of Haugen Financial Systems
proves this does not always hold true. In an article in
Money
magazine, "
How to Pick Stocks without Getting Burned
," research by Dr. Haugen found the least risky US stocks returned
the most while the most volatile shares lost value.
Chilean bank CorpaBanca is a dividend paying stock with a high
yield, a low beta, and a high dividend.
Beta measures the volatility of the financial markets as a
whole. A security with a beta of 1 moves in sync with the entire
market. A stock with a beta above 1 is more volatile and beta below
1 is more stable. CorpaBanca has a beta rating of 0.84. The beta
for JPMorgan (
JPM
,
quote
) is 1.33.
As a dividend paying stock, CorpaBanca ranks highly. While the
average dividend for a stock on the Standard & Poor's 500 Index
is around 2%, CorpaBanca pays a 7.96% dividend.
Supporting this dividend is a robust profit margin of 42% for
CorpBanca. A profit margin of 20% is considered to be very
healthy.
Another bullish indicator is the low short float for CorpaBanca
of just 0.57%. This means the profit margin of Corpa Banca is
higher and its short float lower than that of JP Morgan. With
tempting financials and a reward so much higher than its risk,
CorpaBanca is considered a takeover target.
When investing in the financial sector of a country, you are
very much investing in the overall economic health of that nation.
At present, Chile has a Standard & Poor's credit rating of A+,
the highest possible. Chile's debt has a much higher rating than
Mexico or Brazil's. Overall,
Latin American banks have a bullish future
.
Now trading around $19, the mean analyst target price for
CorpaBanca over the next year is $20.00. The 52-week high for this
dividend paying stock is $23.10.
