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Arie Goren, Portfolio123 (475 clicks)
Long only, value, research analyst, dividend investing
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I have searched for very profitable companies with very strong growth prospects and a very low debt that pay very rich dividends. I also looked for companies where the average analysts' recommendation is a buy or better. I have elaborated a screening method, which shows stock candidates following these lines. Nonetheless, the screening method should only serve as a basis for further research.

The screen's formula requires all stocks to comply with all following demands:

  1. Earnings growth estimates for the next 5 years (per annum) is greater than 17%.
  2. Forward P/E is less than 12.
  3. The PEG ratio is less than 1.50.
  4. Dividend yield is greater than 4.0%.
  5. Total debt to equity is less than 0.40.
  6. Average analyst recommendations are bullish (less than 2).

After running this screen on December 13, 2012, before the market open, I obtained as results the four following stocks:

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AEGON N.V (AEG)

AEGON N.V. provides life insurance, pension and asset management products and services primarily in the Americas, Europe, and Asia. The company was founded in 1900 and its headquarters is in The Hague, the Netherlands.

AEGON N.V. has a very low trailing P/E of 8.96 and a very low forward P/E of 8.96; the PEG ratio is very low at 0.50. The price-to-sales ratio is very low at 0.18 and the average annual earnings growth estimates for the next five years is quite high at 17.75%. The forward annual dividend yield is quite high at 4.16% and the payout ratio is only 38.5%. The stock price is 6.53% above its 20-day simple moving average, 8.53% above its 50-day simple moving average and 21.89% above its 200-day simple moving average, which indicates short-term, mid-term and long-term uptrend. On December 05, Aegon announced (here) its acquisition of Fidem Life, the fifth-largest life insurance company in Ukraine, further strengthening Aegon's position in the developing Central and Eastern European market. Aegon has been active in the region since 1992 and currently has operations in Hungary, Poland, the Czech Republic, Slovakia, Romania and Turkey. The cheap valuation, the strong growth prospects, the rich dividend and the fact that the AEG stock is selling way below its book value (price-to-book value is only 0.30); all these factors make the AEG stock quite attractive.

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Chart: finviz.com

Ennis Inc. (EBF)

Ennis, Inc., together with its subsidiaries, engages in the print and manufacture of business forms and other business products.

Ennis, Inc has a trailing P/E of 18.42 and a very low forward P/E of 6.80; the PEG ratio is quite low at 1.08. The price to free cash flow for the trailing 12 months is at 18.02 and the average annual earnings growth estimates for the next five years is quite high at 17%. The forward annual dividend yield is very high at 4.58% and the payout ratio is 79.3%. Only one analyst is covering the stock, rating it as a strong buy. The company is trading 10.9% below its 52-week high and has 41% upside potential based on the consensus mean target price of $21.50. On December 10, Ennis Inc. announced (here) that it will combine its scheduled third- and fourth-quarter dividends into a 35 cent payment in late December. Ennis will pay the dividend December 28, to shareholders of record on Dec. 20. The company's quarterly dividend payment had been set at 17.5 cents and its third- and fourth-quarter dividends were to be paid in early 2013. Ennis is the latest of many companies that is paying a dividend before the end of 2012 to shield investors from a potential increase in taxes on dividends next year. The cheap valuation, the strong growth prospects, the analyst's recommendation and the rich dividend; all these factors make the EBF stock quite attractive.

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Chart: finviz.com

National American University Holdings, Inc. (NAUH)

National American University Holdings, Inc. engages in the ownership and operation of National American University that provides post-secondary education services primarily for working adults and other non-traditional students in the United States.

National American University Holdings has a very low debt (total debt to equity is only 0.21) and it has a very low forward P/E of 8.67. The price-to-sales ratio is very low at 0.81 and the average annual earnings growth estimates for the next five years is quite high at 17.50%. The forward annual dividend yield is quite high at 4.10% and the payout ratio is 92.1%. Analysts recommend the stock, the four analysts covering the stock are rating it as a strong buy. The company is trading 54.7% below its 52-week high and has 80% upside potential based on the consensus mean target price of $7.00. The compelling valuation metrics, the strong growth prospects, the strong analyst's recommendation and the rich dividend; all these factors make the NAUH stock very attractive.

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Chart: finviz.com

Siliconware Precision Industries Co. Ltd. (SPIL)

Siliconware Precision Industries Co., Ltd. provides semiconductor packaging and testing services to semiconductor suppliers worldwide. Siliconware Precision Industries Co., Ltd. was founded in 1984 and its headquarters is in Taichung, Taiwan.

Siliconware Precision Industries has a very low debt (total debt to equity is only 0.29) and it has a very low forward P/E of 11.67 and a very low PEG ratio of 0.93. The average annual earnings growth estimates for the next five years is quite high at 20%. The forward annual dividend yield is quite high at 4.41% and the payout ratio is 96.5%. The stock price is 4.06% above its 20-day simple moving average, 3.36% above its 50-day simple moving average and 1.89% above its 200-day simple moving average, which indicates short-term, mid-term and long-term uptrend. Only two analysts are covering the stock; both analysts rate it as a strong buy. The compelling valuation metrics, the strong growth prospects, the strong analyst's recommendation and the rich dividend; all these factors make the SPIL stock very attractive.

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Chart: finviz.com

Source: 4 High-Yield Dividend Growth Stocks Analysts Recommend