3 high-yield stocks to pick up as the companies turn around

Here are three companies that are going through a business restructuring or cost-cutting program and have the potential of turning their share prices around over the next 1 – 3 years. They have good dividend yields and for the long-term investor offer opportunities to build up a portfolio position in well-established businesses at lower share prices.

AMP Limited (ASX: AMP): The venerable investment management and financial planning company is beginning to turn things around after an earnings decline in FY 2013. Its half-year results showed a 16% increase in underlying net profit. All but one of its business divisions saw double-digit percentage growth.

The company’s cost-cutting program has improved operating margins. Demand for superannuation and SMSF (self-managed super funds) products has helped its largest division, wealth management, to achieve a 16% gain in operating earnings. Its interim dividend was raised to 12.5 cents per share. The stock offers a 4.2% dividend yield partially franked. It has been trading sideways since mid-2011, but has now hit a multi-year high of $5.94.

Leighton Holdings Limited (ASX: LEI): Since getting a new CEO and a board reshuffle from its majority shareholder, Germany-based Hochtief, the share price is starting to improve. The engineering and construction company still has plans to sell off some of its businesses to streamline the company. It will sell its holdings in Devine Limited (ASX: DVN), the home builder, and plans to sell off its John Holland subsidiary if the price is right.

The company had a 20% drop in interim net profit, but raised its interim dividend from 45 cents per share (cps) to 57 cps. The stock is priced at 13.7 times earnings and the yield is 4.9% partially franked. The restructuring will take some time, yet investors can start building up a position and benefit from the higher dividend.

Coca-Cola Amatil Ltd (ASX: CCL): The bottler and distributor of Coca-Cola in Australia and five neighbouring countries is hovering just above previous lows after it told the market FY 2014 full year earnings may be “materially below” FY 2013’s. This is on the back of half year reported net profit falling 15.6%, due to difficult trading conditions in Australia from pricing competition. Its Indonesian division saw stronger volume growth, yet rapid cost inflation and currency depreciation brought down EBIT heavily.

It sounds pretty gloomy, yet the company has just started a business restructuring. The benefits may take some time to play out and possibly by that time these current market conditions may improve.  Now may be an opportunity to hold a position on the temporary weakness. It has a very healthy 5.4% yield partially franked.

An even better bet for your money...

Although each of these companies may pay good dividends while you wait for the share price to recover, there is one other company which our analysts have dubbed the #1 dividend pick for 2014 that you should know about.

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Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned. 

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