As many income investors know, dividend investing can result in the guarantee of income or in certain cases where the investor has a dividend reinvestment account, more shares. I personally prefer the latter, but that's just me. The following three stocks have P/E ratios under 20 and have increased their respective dividends by at least 10% in the last 48 hours.
Associated Banc-Corp (ASBC) - ASBC currently has a P/E ratio of 12.59 and a forward yield of 2.35% ($0.32). On Tuesday, November 13th the company announced a 60.0% increase in its quarterly dividend and a plan to repurchase $125 million worth of its common stock. The company's quarterly dividend will increase $0.03/share from a previous distribution $0.05/share to a new distribution of $0.08/share payable on December 17th to all shareholders on record as of December 3rd.
When it comes to Associated Banc-Corp, the dividend hike and share buyback aren't the only two catalysts long-term investors should consider. The first variable to consider is the fact the stock is trading at a 5.06% discount to its current 50 DMA and 200 DMA. The second thing to consider is the fact the company has surpassed earnings estimates by an average of 2.07% in each of the last four quarters. Lastly, and probably the most important thing to consider is the fact Fitch recently revised its outlook on the company to positive, noting "that ASBC has sustained strong capital levels in conjunction with double digit loan growth over the last year. Regulatory capital ratios have remained strong, with the company reporting a Tier 1 Leverage Ratio of 9.99% and a Total Risk Based Capital ratio of 15.00% at 3Q'12. Moreover, Fitch believes ASBC is well-positioned for proposed Basel III requirements."
Automatic Data Processing (ADP) - ADP currently has a P/E ratio of 19.63 and a forward yield of 3.11% ($1.72). On Tuesday, November 13th the company announced a 10.1% increase in its quarterly dividend which marked the 38th consecutive year of dividend increases from the company. The company's quarterly dividend will increase $0.04/share from a previous distribution $0.40/share to a new distribution of $0.43/share payable on January 17th to all shareholders on record as of December 14th.
In the case of Automatic Processing the dividend hike and share buyback aren't the only two catalysts long-term investors should consider. The first variable to consider is the fact the stock is trading at a 4.68% discount to its current 50 DMA and a 1.87% discount to its current 200 DMA. The second thing to consider is the fact the company has been in-line with earnings estimates in each of the last four quarters. Lastly, and probably the most important thing to consider is the fact ADP has agreed to sell its ADP Taxware Business to Vista Equity Partners which should give the company much needed cash to pursue various other options.
Primerica, Inc. (PRI) - PRI currently has a P/E ratio of 9.71 and a forward yield of 1.28% ($0.36). On Monday, November 12th the company announced a 26.8% increase in its quarterly dividend which most would consider a very nice complement to the company's recent earnings beat of 5.90%. The company's quarterly dividend will increase $0.04/share from a previous distribution $0.40/share to a new distribution of $0.43/share payable on January 17th to all shareholders on record as of December 14th.
For potential investors of Primerica, the dividend hike and share buyback aren't the only two catalysts long-term investors should consider. The first variable to consider is the fact the stock is trading at a 4.68% discount to its current 50 DMA and a 1.87% premium to its current 200 DMA. The second thing to consider is the fact the company has surpassed earnings estimates in each of the last two quarters by an average of 7.55%. Lastly, and probably the most important thing to consider is the fact Primerica has agreed to purchase $60 million of own stock from Warburg Pincus. Investors should note that this transaction is part of the company's previously announced $75 million dollar share buyback program.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
