Ten High Yield, Below Book Stocks

When looking for high yield investments, it is important to consider the safety and security of the company, not just the high dividend payout. One metric to look at is the Price to Book Ratio, which is the price of the stock in relation to the net worth of the stock, in other words, what each share would be worth if all the company assets were sold off, all the debts paid off, and what is left over divided by the number of shares outstanding. The lower the Price to Book Ratio, the better the buy. If the ratio is less than one, the shareholder would receive more for their shares are trading at if the company immediately went out of business and sold everything off.

Obviously, the book value can be nebulous in many circumstances, especially with companies that own a lot of real estate, but the ratio can still be used as a good comparison indicator. According to WallStreetNewsNetwork.com, there are over 35 stocks with market caps over $500 million, yields above 5%, and price to book value ratios less than one. They also have P/E ratios less than 20 and PEG ratios less than one. [Many of the very high yield stocks have yields that are tenuous]. Here are ten of those stocks:

• ProLogis (PLD) The company pays a yield of 14.8% and has a Price to Book Value of 0.51. The stock has a P/E of 7 and a PEG of 0.91.
• Protective Life Corp. (PL) The company pays a yield of 11.3% and has a Price to Book Value of 0.28. The stock has a P/E of 3 and a PEG of 0.31.
• Lincoln National Corporation (LNC) The company pays a yield of 9.6% and has a Price to Book Value of 0.46. The stock has a P/E of 6 and a PEG of 0.58.
• Colonial BancGroup, Inc. (CNB) The company pays a yield of 9.4% and has a Price to Book Value of 0.34. The stock has a P/E of 7 and a PEG of 0.78.
• Genworth Financial, Inc. (GNW) The company pays a yield of 8.3% and has a Price to Book Value of 0.17. The stock has a P/E of 4 and a PEG of 0.44.
• ArcelorMittal (MT) The company pays a yield of 5.7% and has a Price to Book Value of 0.58. The stock has a P/E of 3 and a PEG of 0.35.
• Ternium S.A. (TX) The company pays a yield of 5.7% and has a Price to Book Value of 0.33. The stock has a P/E of 2 and a PEG of 0.35.
• Royal Caribbean Cruises Ltd. (RCL) The company pays a yield of 5.5% and has a Price to Book Value of 0.41. The stock has a P/E of 5 and a PEG of 0.35.
• Teekay Corporation (TK) The company pays a yield of 5.4% and has a Price to Book Value of 0.55. The stock has a P/E of 11 and a PEG of 0.67.
• Oshkosh Corporation (OSK) The company pays a yield of 5.2% and has a Price to Book Value of 0.38. The stock has a P/E of 5 and a PEG of 0.24.

A downloadable Excel database of the stocks with high yields that are selling below book value can be found at WallStreetNewsNetwork.com, which can be changed, added to, and updated.

Disclosure: Author does not own any of the above.

Comments

[Shiv Kapoor:]

MT dividend is $1.50/share. The $1.28/share is after Lux withholding tax which should be creditable to taxpayers. So yield is over 7%.

2008 Nov 09 09:04 AM

[SteveTheHawk:]

You have some serious risk lurking in pretty much all of these stocks. Many will continue crashing as the economy sinks further. In addition, Genworth (GNW) is dead meat in my view. They have suspended their dividend payout and their stock is down about 90% on a 52wk basis. Thanks, but I think I'll take a pass.

2008 Nov 09 11:18 AM

[ArtfulDodger:]

It's fine to look at the PE & PEG, but surely what is more important in the current economic arena is the balance sheet.

For a dividend-paying stock I want a company that has a relatively low long-term debt to equity ratio. I would put that ratio far above the PE & PEG.

Moreover, I would want to make sure the company had actual earnings, i.e., free cash flow --- and plenty of it. And a nice fat net profit margin, which shows how efficient the company is run, and in these times it may well take an efficiently run company to survive and thrive to the point of continuing to pay its dividend.

Here are a couple of those type of companies, all of which I own:
French Telecom (FTE)
Statrolhydro (STO)
Taiwan Semi (TSM)
Yanzhou Coal (YZC)
Huaneng Power (HNG)
Frontline (FRO) [FRO has a little more debt than I generally like, but it has lots of cash, plenty of free cash flow, a huge NPM, and the dividend is a monster, which the company has paid for quite a while.]
Dominion Resources Black Warrior Trust (DOM)
Pfizer (PFE) [The only worry here is the new leftist US government putting price caps on drugs; otherwise the yield is about 7.5% and the company makes about $15b in free cash flow.]

Artful

2008 Nov 09 01:22 PM

[Dave L.:]

I believe that Colonial BancGroup (CNB) suspended its dividend last month.

2008 Nov 09 01:38 PM

[stonebluff:]

lincoln national has cut its dividend in half.

2008 Nov 10 10:51 AM

[Jake2:]

Writer did not use due diligence in his recommedations, thus reader, as usual, must.

2008 Nov 10 01:09 PM

[Jake2:]

Artful Dodger: "The only worry here is the new leftist US government . . . "
Being a little presumptuous, aren't you? What about the crippled duck goverment (old rightest US government) that put the economy down the tubes?

2008 Nov 10 01:20 PM

[Old Trader:]

Jake,

Politics aside, Dodger has a valid point, PFE (as well as other healthcare stocks) may suffer under a Dem administration and healthcare changes.

2008 Nov 10 11:46 PM

[ArtfulDodger:]

Although I have found over the last fifty years of dealing with them, albeit as little as possible, that no amount of evidence, proof, or reason will convince a Dumborat of anything, but here's a little evidence of who really caused the Subprime Blowout that has caused at least 80% of the current economic turmoil.

Try this on Jake.


How The Democrats Caused The Financial Crisis
www.youtube.com/watch?...

2008 Nov 11 01:25 AM

[alpha_zeta:]

Today with GNW i think you've seen the reason for its low P/BV...and the risk of a catastrophic drop in stock price of low P/BV stocks.

The larger Life/annuity insurers are down bigtime today and before the day started they already had lower P/BV's.

So, what about the smaller/mid-size Life/Annuity insurers , some of which had P/BV's rather higher than the P/BV's of larger co's??

Look out for the smaller/mid-size Life/Annuity insurer stock prices to crater!

2008 Nov 11 03:29 PM

[PeteK:]

Steve Thehawk,
Don't worry about GNW, it will survive. At a buck a share, I bought
with a smile. I treat this as a great opportunity of a life time.
In fact, Boeing is at higher risk than GNW now.

2008 Nov 15 10:18 AM