Income is a big part of investors' returns. Stocks, mutual funds and fixed income ideas in this column are featured because they are relatively solid in their ability to pay dividends or interest. We're giving income investors a resource to start their research for investments that give better yields with lower risk.

It distributes to end-users through the United States postal services, retail channels, electronically, or by direct shipment to customer facilities. R.R. Donnelley & Sons was founded in 1864 and is based in Chicago, Illinois.

Lately, RRD has been bouncing off its lows. It went from $21.30 in the middle of last year, to a recent $11.25 on January 30, 2012. In the last 12 months, it's down 33.69%. Could this be the time to buy?

If you're bullish on the IPO (Initial Public Offering) market, you'll put your order in now. RRD is the world's largest commercial printer, and there's a long list of stocks waiting to go public, if only the market would show consistent strength. Before these new stocks start trading, they need a prospectus to send to every potential investor. It's like a pamphlet that discloses all the pertinent information on a company. A company will print thousands of them. And RRD will print most of them. But that's only if the market heats up. And that's in the future.

HIstorically, earnings took a beating in 2009, dropping to $1.03 a share from $2.93 in 2008. That took the stock down to $5.50 a share in early 2009. Later that year, the stock traded at $22.80 so the rebound was quick and positive. In 2010, earnings per share finished at $1.76. Last year should finish at $1.80 if the consensus from 6 analysts is correct. They see $1.74 for this year with a range of $1.28 to $1.98.

December will most likely show 44 cents compared to 51 cents in the fourth quarter of 2010. Less demand from the financial sector is one major reason as fewer IPO's were issued, general downsizing at investment banks was prevalent, and lower revenues persisted.

That should start to change if (and it's a big if) the IPO market heats up.
There's a large backlog of stocks waiting to see their ticker symbols lit up in lights. Furthermore, RRD bought Bowne and that has increased RRD's end-to-end digital multi-platform communications services. Another revenue source gaining momentum: CustomPoint, a way for companies to manage print ordering and fulfillment for commercial print, digital print-on-demand, direct mail, template-based documents, forms, kits, pick-and-pack items, and rollouts and pushes. It's all online. The service recently signed agreements with multimedia firms such as AMI, American Media International. The division is experiencing double digit growth in orders.

More deals recently signed were for print orders, with multi-year contracts, for Chrysler, IMG, and Metro, Inc. Combined, all of the above suggest the company's revenues will be more diverse and grow over the next several years. Profits will most likely follow.

One reason for better profits will be cost control. The Bowne acquisiton was in November of last year. Then it added a Ohio packaging company called Stratus Group. As with all acquisitions, there should be some costs that will be eliminated as these two firms mesh with RRD, wringing better efficiency through such consolidation efforts as administration and supply ordering. Expect revenue growth from the new purchases and eventually, better profit margins and absolute profits.

The dividend deserves its own space. It's held steady at $1.04 since 2004. Up until then, management raised it every year since 1995 when it was 68 cents. At the current price, the pay out yields 8.4%. It takes about 62% of earnings to pay it. While that's a large portion of earnings, in 2009, earnings were $1.03 and the dividend was still $1.04. The board and management seem determined to keep the dividend and maybe raise it, if history is a good guide.

- Essential Numbers:
- Market Cap: $2.40 billion
- Trailing P/E: 11.2
- Forward P/E: 7.35
- Price to sales ratio: .22
- Price to book: 1.29
- Operating margin: 6.72%
- Profit margin: 2.18%
- Return on equity: 11.44%
- Return on assets: 5.02%
- Revenues for the last 12 months: $10.6 billion
- Total cash: $368.1 million
- Total cash per share: $1.96
- Total debt: $3.94 billion
- Total debt to equity: 216%
- Current ratio: 1.34
- Book value per share:
- Beta: 1.94
- 52- week change: -33.69%
- Shares Outstanding: 187.8 million
- Float: 186.2 million
- Held by insiders: .64%
- Held by insitutions: 100%

RRD is a mixed bag of good and bad. The good is that management is turning the company into an even stronger printing juggernaut (yes, printing still has a bright future). Revenues are growing. Profits most likely will after the two new acquisitions are better assimilated. But there's a lot of debt, and interest rates will most likely go higher sooner rather than later. Also, the beta on the stock is very high, meaning there's a lot of volatility in the stock. Still, that dividend has a strong siren call for investors who have the ability to live with volatility and have a positive outlook for the IPO market.