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If you are looking for momentum ideas to boost your portfolio’s income, then this may be an interesting starting point for your own analysis.

To construct this list we looked for stocks with the following characteristics:

  • Trading above the 20-,50- and 200-day moving averages
  • Dividend yield above 2%
  • Trading at a significant discount to the Graham Number

click for expanded images

The Graham Number was considered to be the maximum price an investor should pay for a stock, according to the formula developed by Benjamin Graham. ?

It is calculated as follows:?

Graham Number = Square Root of (22.5) x (Earnings per Share) x (Book Value per Share).?

This equation is predicated on Graham’s belief that the price-to-earnings (P/EPS) ratio should be no more than 15, and the price-to-book value (P/BVPS) ratio should be no more than 1.5.?

Therefore we only included companies that meet both of these criteria. As a result, the product of the two should not be more than 22.5. In other words, (P/EPS of 15) x (P/BVPS of 1.5) = 22.5.

We also created an equal weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. As the graph shows, beginning last week our list's performance values have rose above the market. To access a complete analysis of this list's recent performance, click here.

Considering this data, which of these dividend-paying names do you think is more likely to reach its Graham Number in the coming weeks or months?

1. Brookfield Properties Corporation (NYSE:BPO): Property Management Industry. Market cap of $9.87B. This stock is trading 0.01% above its 20-day MA, 5.72% above its 50-day MA, and 14.44% above its 200-day MA. Dividend yield at 2.85%. BVPS at $16.02, diluted EPS at $2.84. Graham number = sqrt(22.5 x $16.02 x $2.84) = $31.99. This implies a discount of 39.9%, given the current price of $19.23. The stock has gained 30.71% over the last year.

2. Annaly Capital Management, Inc. (NYSE:NLY): REIT Industry. Market cap of $14.44B. This stock is trading 1.28% above its 20-day MA, 2.48% above its 50-day MA, and 6.51% above its 200-day MA. Dividend yield at 13.82%. BVPS at $15.76, diluted EPS at $2.5. Graham number = sqrt(22.5 x $15.76 x $2.5) = $29.77. This implies a discount of 39.88%, given the current price of $17.9. The stock has gained 30.26% over the last year.

3. American National Insurance Co. (NASDAQ:ANAT): Life Insurance Industry. Market cap of $2.14B. This stock is trading 0.95% above its 20-day MA, 1.12% above its 50-day MA, and 0.03% above its 200-day MA. Dividend yield at 3.85%. BVPS at $136.77, diluted EPS at $5.4. Graham number = sqrt(22.5 x $136.77 x $5.4) = $128.91. This implies a discount of 38.44%, given the current price of $79.36. The stock has lost 23.23% over the last year.

4. Anworth Mortgage Asset Corporation (NYSE:ANH): REIT Industry. Market cap of $919.87M. This stock is trading 1.79% above its 20-day MA, 3.83% above its 50-day MA, and 8.53% above its 200-day MA. Dividend yield at 13.76%. BVPS at $6.95, diluted EPS at $0.85. Graham number = sqrt(22.5 x $6.95 x $0.85) = $11.53. This implies a discount of 37.38%, given the current price of $7.22. The stock has gained 27.77% over the last year.

5. OneBeacon Insurance Group, Ltd. (NYSE:OB): Surety & Title Insurance Industry. Market cap of $1.34B. This stock is trading 2.44% above its 20-day MA, 3.79% above its 50-day MA, and 2.92% above its 200-day MA. Dividend yield at 5.94%. BVPS at $13.25, diluted EPS at $1.69. Graham number = sqrt(22.5 x $13.25 x $1.69) = $22.45. This implies a discount of 37.36%, given the current price of $14.06. The stock has gained 16.09% over the last year.

6. Fidelity National Financial, Inc. (NYSE:FNF): Surety & Title Insurance Industry. Market cap of $3.48B. This stock is trading 3.65% above its 20-day MA, 8.1% above its 50-day MA, and 11.43% above its 200-day MA. Dividend yield at 3.08%. BVPS at $15.56, diluted EPS at $1.74. Graham number = sqrt(22.5 x $15.56 x $1.74) = $24.68. This implies a discount of 36.67%, given the current price of $15.63. The stock has gained 9.49% over the last year.

7. The Travelers Companies, Inc. (NYSE:TRV): Property & Casualty Insurance Industry. Market cap of $26.75B. This stock is trading 2.36% above its 20-day MA, 5.08% above its 50-day MA, and 14.46% above its 200-day MA. Dividend yield at 2.57%. BVPS at $59.9, diluted EPS at $7.32. Graham number = sqrt(22.5 x $59.9 x $7.32) = $99.33. This implies a discount of 36.45%, given the current price of $63.12. The stock has gained 31.86% over the last year.

8. MFA Financial, Inc. (NYSE:MFA): REIT Industry. Market cap of $2.30B. This stock is trading 3.73% above its 20-day MA, 3.16% above its 50-day MA, and 8.47% above its 200-day MA. Dividend yield at 11.46%. BVPS at $8.13, diluted EPS at $0.91. Graham number = sqrt(22.5 x $8.13 x $0.91) = $12.9. This implies a discount of 36.37%, given the current price of $8.21. The stock has gained 29.34% over the last year.

9. PennantPark Investment Corporation (NASDAQ:PNNT): Asset Management Industry. Market cap of $559.27M. This stock is trading 1.04% above its 20-day MA, 1.35% above its 50-day MA, and 7.6% above its 200-day MA. Dividend yield at 8.8%. BVPS at $11.3, diluted EPS at $1.4. Graham number = sqrt(22.5 x $11.3 x $1.4) = $18.87. This implies a discount of 36.02%, given the current price of $12.07. The stock has gained 34.25% over the last year.

10. Capstead Mortgage Corp. (NYSE:CMO): Mortgage Investment Industry. Market cap of $934.83M. This stock is trading 0.74% above its 20-day MA, 1.99% above its 50-day MA, and 12.52% above its 200-day MA. Dividend yield at 12.3%. BVPS at $12.07, diluted EPS at $1.52. Graham number = sqrt(22.5 x $12.07 x $1.52) = $20.32. This implies a discount of 35.28%, given the current price of $13.15. The stock has gained 41.06% over the last year.

11. Prospect Capital Corporation (NASDAQ:PSEC): Asset Management Industry. Market cap of $1.06B. This stock is trading 1.08% above its 20-day MA, 0.11% above its 50-day MA, and 14.03% above its 200-day MA. Dividend yield at 10.08%. BVPS at $10.25, diluted EPS at $1.36. Graham number = sqrt(22.5 x $10.25 x $1.36) = $17.71. This implies a discount of 33.15%, given the current price of $11.84. The stock is a short squeeze candidate, with a short float at 9.42% (equivalent to 5.48 days of average volume). The stock has gained 21.84% over the last year.

12. Guangshen Railway Co. Ltd. (NYSE:GSH): Railroads Industry. Market cap of $3.03B. This stock is trading 7.01% above its 20-day MA, 11.75% above its 50-day MA, and 12.47% above its 200-day MA. Dividend yield at 3.22%. BVPS at $26.25, diluted EPS at $1.7. Graham number = sqrt(22.5 x $26.25 x $1.7) = $31.69. This implies a discount of 33.0%, given the current price of $21.23.

13. SK Telecom Co. Ltd. (NYSE:SKM): Wireless Communications Industry. Market cap of $12.89B. This stock is trading 3.61% above its 20-day MA, 5.39% above its 50-day MA, and 9.23% above its 200-day MA. Dividend yield at 3.95%. BVPS at $16.41, diluted EPS at $2.31. Graham number = sqrt(22.5 x $16.41 x $2.31) = $29.2. This implies a discount of 32.99%, given the current price of $19.57.

14. PNC Financial Services Group Inc. (NYSE:PNC): Money Center Banks Industry. Market cap of $33.35B. This stock is trading 2.05% above its 20-day MA, 2.41% above its 50-day MA, and 9.14% above its 200-day MA. Dividend yield at 2.21%. BVPS at $57.96, diluted EPS at $6.61. Graham number = sqrt(22.5 x $57.96 x $6.61) = $92.84. This implies a discount of 31.61%, given the current price of $63.5. The stock has lost 6.51% over the last year.

15. Triangle Capital Corporation (NYSE:TCAP): Asset Management Industry. Market cap of $353.57M. This stock is trading 3.96% above its 20-day MA, 3.49% above its 50-day MA, and 9.33% above its 200-day MA. Dividend yield at 8.82%. BVPS at $13.42, diluted EPS at $2.4. Graham number = sqrt(22.5 x $13.42 x $2.4) = $26.92. This implies a discount of 30.53%, given the current price of $18.7.

*Relevant data sourced from Yahoo! Finance and Finviz.

Source: 15 Rallying High-Yield Stocks Undervalued by Graham's Standards