There are many reasons why insiders sell stock in their own company. Some decide to diversify their holdings, others may do it for tax reasons, while many investors see a rally in the company's stock as excessive and find the current price level as a good opportunity to unload their shares. Insider sales could be potential red flags, sending a strong signal to investors that, perhaps, now may be a good time to sell the shares. Here are four dividend-yielding stocks that recently insiders have been selling heavily.
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FirstEnergy (FE) is a $20.3 billion diversified energy company providing electric power to 6 million customers in six U.S. states. The utility company pays a dividend yield of 4.6% on a payout ratio of 81%. FirstEnergy's peers Dominion Resources (D) and American Electric Power Co. (AEP) pay dividend yields of 3.9% and 4.7%, respectively. The company's shares have hit 52-week high of $48.49 and are up 13.3% from the beginning of the year.
Since the beginning of May, there have been four insider sales of FirstEnergy stock, including the sale of 257,100 shares at $47.28 by the company's President and CEO, Anthony J. Alexander. The company's Executive Vice President and General Counsel, Ms. Leila L. Vespoli, sold 14,372 shares at an average price of $47.08 a share on May 23. Most recently, on June 5, First Energy's Vice President and Treasurer, James F. Pearson, sold 2,000 shares at an average price of $46.78 a share. It should be noted that recently Jefferies downgraded the stock from hold to underperform, citing increasing regulatory risks.
Southern Company (SO) is a $41.4 billion public utility holding company whose subsidiaries are selling electric power to some 4.4 million customers in Alabama, Georgia, Florida, and Mississippi. The company boasts a dividend yield of 4.1% on a payout ratio of 79%. Its peers CenterPoint Energy (CNP), Entergy Corporation (ETR), and NextEra Energy (NEE) pay dividends yielding 4.0%, 5.0%, and 3.6%, respectively. The company's shares are currently trading around its 52-week high of $48.19 a share. The stock is up 6.7% year-to-date.
As regards insider selling, from May 30, there have been four insider sales. In two transactions on May 30-31, the company's Executive Vice President and COO, Anthony J. Topazi, sold a total of 125,385 shares at an average price of $46 a share. Recently, Charles D. Mccrary, President and CEO of Alabama Power Company, one of Southern Company's subsidiaries, sold 179,165 shares at an average price of $46.70 a share. His sale was followed by that of Christopher C. Womack, Executive Vice President and President of External Affairs, who sold 25,113 shares at an average price of $47.16 a share.
Sempra Energy (SRE) is a $16.3 billion energy services holding company whose subsidiaries provide natural gas and power to customers. It is also the largest natural gas storage company in the United States. The company pays a dividend yield of 3.6% on a payout ratio of 43%. The company's peers PG&E Corp. (PCG), AGL Resources (GAS), and Enbridge (ENB) pay dividends yielding 4.0%, 4.8%, and 2.9%, respectively. Sempra Energy's stock is hovering around its 52-week high of $68.01 a share and is up 23.7% from the beginning of the year.
Since the beginning of June, there have been six insider sales at Sempra Energy. The company's Chairman, Donald E. Felsinger, in a series of four transactions in the June 11-15 period, sold 151,800 shares at an average price of the four transactions of $67.16 a share. Earlier, Sempra Energy's Executive Vice President and General Counsel, Javade Chaudhri, sold in two transactions 16,000 shares at average prices of $65.00 (6,000 shares) and $64.45 (10,000 shares).
Wynn Resorts (WYNN) is a $10 billion casino resorts operator with facilities in Las Vegas, U.S., and Macao, China. The company pays a dividend yield of 2.0% on a payout ratio of 42%. The company's rival Las Vegas Sands Corp. (LVS) pays a dividend yield of 2.2%, while competitor MGM Resorts International (MGM) does not pay any regular dividends. Wynn Resort's stock is trading at $99.53 a share, down 12.7% year-to-date. Recently, investors have been unnerved by Wynn Resorts' large exposure to the slowing Chinese market, the competitive pressures within the industry, and a quarrel about the ownership structure of the company with one of its insiders. As regards insider sales, on June 5, one of the company's Directors, Alvin V. Shoemaker, sold 10,000 shares at an average price of $100.08 a share. It should be noted, however, that on May 30, Goldman Sachs upgraded Wynn Resorts' rating to buy, with a target price of $136, implying a 36.6% upside potential from the current price.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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