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I have searched for highly profitable financial companies that pay solid dividends that have consistently raised dividend payments, and that have a very low trailing and forward P/E ratio. I also looked for companies that are in a short-term, mid-term and long-term uptrend. Stocks in an uptrend are performing well and are in a buying mode.

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. All the data for this article were taken from Yahoo Finance and finviz.com.

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

  1. The forward dividend yield is greater than 3.10%.
  2. The payout ratio is less than 50%.
  3. The annual rate of dividend growth over the past five years is greater than 5%.
  4. Average annual earnings growth estimates for the next five years is greater than 7%.
  5. Trailing P/E is less than 12.
  6. Forward P/E is less than 11.
  7. Stock price is above 20-day simple moving average (short-term uptrend).
  8. Stock price is above 50-day simple moving average (mid-term uptrend).
  9. Stock price is above 200-day simple moving average (long-term uptrend).

After running this screen on May 08, 2013, before the market open, I discovered the following three stocks:

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Horace Mann Educators Corp. (NYSE:HMN)

Horace Mann Educators Corporation, through its subsidiaries, operates as a multi-line insurance company in the United States.

Horace Mann Educators has a very low trailing P/E of 8.92 and a very low forward P/E of 10.50. The price-to-sales ratio is very low at 0.88, and the price to book value is also very low at 0.71. The average annual earnings growth estimates for the next five years is quite high at 8%. The forward annual dividend yield is quite high at 3.46%, and the payout ratio is only 31%. The annual rate of dividend growth over the past five years was very high at 13.17%.

The HMN stock price is 0.75% above its 20-day simple moving average, 5.45% above its 50-day simple moving average and 15.87% above its 200-day simple moving average. That indicates a short-term, mid-term and long-term uptrend.

On April 24, Horace Mann Educators reported its first-quarter 2013 financial results.

In the report, Horace Mann's President and CEO Peter H. Heckman said:

Horace Mann's first quarter operating income was $0.55 per share -- consistent with our expectations, and a solid start for the year. In property and casualty, while the combined ratio was higher compared to first quarter 2012, both written and earned premiums increased, retention ratios improved, catastrophe losses were modest and prior years' reserves continued to develop favorably. In our annuity business, assets under management were up 9% over prior year, more than offsetting the impact of modest spread compression, and earnings benefited from another quarter of positive deferred policy acquisition cost unlocking. And, in our life segment, first quarter sales of Horace Mann products increased 28% compared to a year earlier, while earnings were negatively impacted by higher -- but more typical -- mortality losses.

The compelling valuation metrics, the fact that the stock is in an uptrend, the rich dividend and the fact that the company consistently has raised dividend payments are all factors that make HMN stock quite attractive.

HMN Dividend Chart

HMN Dividend data by YCharts

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Chart: finviz.com

Validus Holdings, Ltd. (NYSE:VR)

Validus Holdings, Ltd. through its subsidiaries, provides reinsurance, insurance, and insurance linked securities fund management services in the property, marine, and specialty lines markets worldwide.

Validus Holdings has a very low debt (total debt to equity is only 0.20), and has a very low trailing P/E of 8.02 and a very low forward P/E of 7.18. The PEG ratio is very low at 0.86, and the average annual earnings growth estimates for the next five years is quite high at 9.33%. The forward annual dividend yield is quite high at 3.11%, and the payout ratio is only 25%. The annual rate of dividend growth over the past five years was quite high at 8.38%.

The VR stock price is 1.48% above its 20-day simple moving average, 3.43% above its 50-day simple moving average and 15.07% above its 200-day simple moving average. That indicates a short-term, mid-term and long-term uptrend.

On April 25, Validus Holdings reported its first-quarter 2013 financial results, which beat EPS expectations by $0.43. The Company reported net income available to Validus of $223.2 million, or $1.90 per diluted common share for the three months ended March 31, 2013, compared to $124.2 million, or $1.18 per diluted common share, for the three months ended March 31, 2012.

In the report, Validus' Chairman and CEO Ed Noonan stated:

Our results were excellent with Validus reporting record first quarter net income in the amount of $223.2 million. Diluted operating earnings were $1.83 per share and we grew diluted book value per share in the quarter by 5.3% inclusive of our special dividend and recently increased common share dividend. Both gross and net premiums written at Validus Re grew measurably, largely due to the agricultural reinsurance business we described in our earnings call a quarter ago and the business we acquired from Flagstone. All three of our segments - Validus Re, Talbot and AlphaCat - reported strong earnings which taken together allowed us to achieve a record result for the first quarter.

All these factors -- the very low multiples, the solid dividend, the fact that the company consistently has raised dividend payments and the fact that the stock is in an uptrend -- make VR stock quite attractive.

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Chart: finviz.com

The Toronto-Dominion Bank (NYSE:TD)

The Toronto-Dominion Bank, together with its subsidiaries, provides financial and banking services in North America and internationally.

The Toronto-Dominion Bank has a very low trailing P/E of 11.76 and a very low forward P/E of 9.78. The price to free cash flow for the trailing 12 months is very low at 13.15, and the average annual earnings growth estimates for the next five years is quite high at 7.50%. The forward annual dividend yield is quite high at 3.85%, and the payout ratio is only 45%. The annual rate of dividend growth over the past five years was at 5.64%.

The TD stock price is 3.18% above its 20-day simple moving average, 1.97% above its 50-day simple moving average and 2.41% above its 200-day simple moving average. That indicates a short-term, mid-term and long-term uptrend.

The compelling valuation metrics, the fact that the stock is in an uptrend, the rich dividend and the fact that the company consistently has raised dividend payments are all factors that make TD stock quite attractive.

TD Dividend Chart

TD Dividend data by YCharts

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Chart: finviz.com

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in HMN, VR, TD over the next 72 hours. 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.

Source: 3 Good-Yielding Financial Stocks With Very Low P/E Ratio In An Uptrend