3 Large-Cap Stocks With High Dividend Yields And Low P/E

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 |  Includes: AEP, COP, INTC
by: Arie Goren

I have searched for very profitable large-cap companies that pay very rich dividends and that raise their payouts each year. 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.

1. The screen's formula requires all stocks to comply with all the following demands: The stock is included in the S&P 100 index. Description from Standard & Poor's:

The S&P 100 Index, a sub-set of the S&P 500®, measures the performance of large cap companies in the United States. Known by its ticker symbol, OEX, the index is comprised of 100 major, blue chip companies across multiple industry groups. The primary criterion for index inclusion is the availability of individual stock options for each constituent.

2. Dividend yield is greater than 4.0%.

3. The payout ratio is less than 65%.

4. Annual rate of dividend growth over the past five years is positive.

5. Trailing P/E is less than 15.

6. Forward P/E is less than 15.

After running this screen on January 26, 2013, before the market open, I discovered the following three stocks:

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ConocoPhillips (NYSE:COP)

ConocoPhillips explores for, produces, transports, and markets crude oil, natural gas, natural gas liquids, liquefied natural gas and bitumen on a worldwide basis.

ConocoPhillips has a very low trailing P/E of 10.98 and a low forward P/E of 10.58. The forward annual dividend yield is quite high at 4.32%, and the payout ratio is only 47.5%. The annual rate of dividend growth over the past five years was quite high at 10.1%.

COP has a total cash per share of $1.05, and it is expected to post a profit of $5.91 a share in the current year and $5.77 in 2013, which should be enough to sustain dividend payments of $2.64.

COP stock is trading 3.81% above its 20-day simple moving average, 5.67% above its 50-day simple moving average and 10.29% above its 200-day simple moving average, which indicates short-term, mid-term and long-term uptrend.

COP will report its latest quarterly financial results on January 29. COP is expected to post a profit of $1.42 a share, a 29.7% decline from the company's actual earnings for the same quarter a year ago. The reported results will probably affect the stock price in the short term.

Data: Yahoo Finance

Holding COP stock during the last five years has given an average annual return of 3.8%. Holding COP stock during the last 10 years has given a nice average annual return of 16.3%, and during the last 20 years an average annual return of 12.7%.

The cheap valuation metrics, the rich dividend, the long history of steadily increasing dividend and the fact that the stock is in an uptrend are all factors that make COP quite attractive.

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Data: Yahoo Finance

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Chart: finviz.com

American Electric Power Co., Inc. (NYSE:AEP)

American Electric Power Company, Inc., a public utility holding company, engages in the generation, transmission and distribution of electric power to retail customers.

American Electric Power has a low trailing P/E of 14.92 and a low forward P/E of 14.20. The forward annual dividend yield is quite high at 4.23%, and the payout ratio is at 63.1%. The annual rate of dividend growth over the past five years was at 1.4%.

AEP has a total cash per share of $1.08 and it is expected to post a profit of $3.04 a share in the current year and $3.13 in 2013, which should be enough to sustain dividend payments of $1.88.

AEP is trading 2.66% above its 20-day simple moving average, 3.96% above its 50-day simple moving average and 8.11% above its 200-day simple moving average, which indicates short-term, mid-term and long-term uptrend.

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Data: Yahoo Finance

Holding the AEP stock during the last five years has given an average annual return of 5.8%. Holding the AEP stock during the last 10 years has given a high annual return of 11.6%, and during the last 20 years an average annual return of 7.0%.

The quite cheap valuation metrics, the rich dividend and the fact that the stock is in an uptrend are all factors that make AEP stock quite attractive.

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Data: Yahoo Finance

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Chart: finviz.com

Intel Corporation (NASDAQ:INTC)

Intel Corporation designs, manufactures, and sells integrated digital technology platforms primarily in the Asia-Pacific, the Americas, Europe and Japan.

Intel has a very low debt (total debt to equity is only 0.26), and it has a very low trailing P/E of 9.84 and a very low forward P/E of 10.03. The forward annual dividend yield is quite high at 4.29%, and the payout ratio is only 40.8%. The annual rate of dividend growth over the past five years was very high at 14.8%.

INTC has a total cash per share of $3.66 and it is expected to post a profit of $1.94 a share in the current year and $2.08 in 2013, which is more than enough to sustain dividend payments of $0.90.

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Data: Yahoo Finance

Holding INTC during the last five years has given an average annual return of 3.1%. Holding INTC during the last 10 years has given an annual return of 5.3%, and during the last 20 years a nice average annual return of 11.0%.

The cheap valuation, the rich dividend and the long history of steadily increasing dividends are all factors that make INTC quite attractive.

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Data: Yahoo Finance

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Chart: finviz.com

Disclosure: I am long INTC. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.