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If you are looking to increase your portfolio’s income profile, then you may find this article to be a good starting point for your own analysis.

To construct this list we looked for companies with dividend yield above 2%, a payout ratio below 50% and trading below book value, i.e. P/B < 1. Once we had gathered this universe of over 50 stocks, we went trough each of these names’ operating and levered free cash flows and kept those with:

  • Operating cash flow/annual dividend > 1.5
  • Levered free cash flow/annual dividend > 1.5

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.

We also created a price-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. To access a complete analysis of this list's recent performance, click here.

Considering these data points, which of these names would you rate as the best income stock in this list?

1. Fresh Del Monte Produce Inc. (NYSE:FDP): Farm Products Industry. Market cap of $1.58B. Dividend yield at 7.48%, with a payout ratio of 7.14%. Price to book value at 0.94. TTM operating cash flow at $238.90M, or $4.04 on a per-share basis (vs. annual dividend per share at $0.2, TTM Operating Cash Flow per share / annual dividend per share stands at 20.19). TTM Levered Free Cash Flow at $155.68M, or $2.63 on a per-share basis (vs. annual dividend per share at $0.2, TTM Levered Free Cash Flow per share / dividend per share stands at 13.16). The stock has gained 31.93% over the last year.

2. FLY Leasing Limited (NYSE:FLY): Rental & Leasing Services Industry. Market cap of $348.57M. Dividend yield at 6.13%, with a payout ratio of 42.59%. Price to book value at 0.71. TTM operating cash flow at $109.45M, or $4.27 on a per-share basis (vs. annual dividend per share at $0.64, TTM Operating Cash Flow per share / annual dividend per share stands at 6.67). TTM Levered Free Cash Flow at $101.82M, or $3.97 on a per-share basis (vs. annual dividend per share at $0.64, TTM Levered Free Cash Flow per share / dividend per share stands at 6.2). The stock has gained 19.18% over the last year.

3. Telecom Italia SpA (NYSE:TI): Diversified Communication Services Industry. Market cap of $26.48B. Dividend yield at 6.13%, with a payout ratio of 37.84%. Price to book value at 0.61. TTM operating cash flow at $11.21B, or $5.81 on a per-share basis (vs. annual dividend per share at $0.59, TTM Operating Cash Flow per share / annual dividend per share stands at 9.84). TTM Levered Free Cash Flow at $5.82B, or $3.02 on a per-share basis (vs. annual dividend per share at $0.59, TTM Levered Free Cash Flow per share / dividend per share stands at 5.11). The stock has gained 20.91% over the last year.

4. Transocean Ltd. (NYSE:RIG): Oil & Gas Drilling & Exploration Industry. Market cap of $20.46B. Dividend yield at 4.94%, with a payout ratio of 0.0%. Price to book value at 0.94. TTM operating cash flow at $3.16B, or $9.89 on a per-share basis (vs. annual dividend per share at $0.9, TTM Operating Cash Flow per share / annual dividend per share stands at 10.99). TTM Levered Free Cash Flow at $1.34B, or $4.19 on a per-share basis (vs. annual dividend per share at $0.9, TTM Levered Free Cash Flow per share / dividend per share stands at 4.66). The stock has gained 33.54% over the last year.

5. Kansas City Life Insurance Company (NASDAQ:KCLI): Life Insurance Industry. Market cap of $333.66M. Dividend yield at 3.71%, with a payout ratio of 47.4%. Price to book value at 0.49. TTM operating cash flow at $18.82M, or $1.64 on a per-share basis (vs. annual dividend per share at $1.08, TTM Operating Cash Flow per share / annual dividend per share stands at 1.52). TTM Levered Free Cash Flow at $118.09M, or $10.3 on a per-share basis (vs. annual dividend per share at $1.08, TTM Levered Free Cash Flow per share / dividend per share stands at 9.53). The stock has gained 1.57% over the last year.

6. Unitrin Inc. (UTR): Property & Casualty Insurance Industry. Market cap of $1.73B. Dividend yield at 3.35%, with a payout ratio of 28.71%. Price to book value at 0.82. TTM operating cash flow at $106.20M, or $1.76 on a per-share basis (vs. annual dividend per share at $0.96, TTM Operating Cash Flow per share / annual dividend per share stands at 1.83). TTM Levered Free Cash Flow at $436.16M, or $7.22 on a per-share basis (vs. annual dividend per share at $0.96, TTM Levered Free Cash Flow per share / dividend per share stands at 7.52). The stock has gained 3.69% over the last year.

7. Selective Insurance Group Inc. (NASDAQ:SIGI): Property & Casualty Insurance Industry. Market cap of $855.14M. Dividend yield at 3.28%, with a payout ratio of 33.77%. Price to book value at 0.79. TTM operating cash flow at $154.08M, or $2.85 on a per-share basis (vs. annual dividend per share at $0.52, TTM Operating Cash Flow per share / annual dividend per share stands at 5.49). TTM Levered Free Cash Flow at $159.62M, or $2.95 on a per-share basis (vs. annual dividend per share at $0.52, TTM Levered Free Cash Flow per share / dividend per share stands at 5.68). The stock has gained 4.7% over the last year.

8. United Fire & Casualty Company (NASDAQ:UFCS): Property & Casualty Insurance Industry. Market cap of $487.58M. Dividend yield at 3.22%, with a payout ratio of 46.41%. Price to book value at 0.68. TTM operating cash flow at $72.77M, or $2.78 on a per-share basis (vs. annual dividend per share at $0.6, TTM Operating Cash Flow per share / annual dividend per share stands at 4.63). TTM Levered Free Cash Flow at $342.38M, or $13.07 on a per-share basis (vs. annual dividend per share at $0.6, TTM Levered Free Cash Flow per share / dividend per share stands at 21.78). The stock has lost 13.04% over the last year.

9. Endurance Specialty Holdings Ltd. (NYSE:ENH): Property & Casualty Insurance Industry. Market cap of $1.66B. Dividend yield at 2.93%, with a payout ratio of 24.81%. Price to book value at 0.69. TTM operating cash flow at $460.75M, or $11.37 on a per-share basis (vs. annual dividend per share at $1.2, TTM Operating Cash Flow per share / annual dividend per share stands at 9.48). TTM Levered Free Cash Flow at $234.73M, or $5.79 on a per-share basis (vs. annual dividend per share at $1.2, TTM Levered Free Cash Flow per share / dividend per share stands at 4.83). The stock is a short squeeze candidate, with a short float at 8.78% (equivalent to 7.16 days of average volume). The stock has gained 7.79% over the last year.

10. Axis Capital Holdings Ltd. (NYSE:AXS): Property & Casualty Insurance Industry. Market cap of $4.08B. Dividend yield at 2.92%, with a payout ratio of 37.3%. Price to book value at 0.69. TTM operating cash flow at $1.13B, or $8.73 on a per-share basis (vs. annual dividend per share at $0.92, TTM Operating Cash Flow per share / annual dividend per share stands at 9.49). TTM Levered Free Cash Flow at $1.54B, or $11.9 on a per-share basis (vs. annual dividend per share at $0.92, TTM Levered Free Cash Flow per share / dividend per share stands at 12.93). The stock has gained 2.01% over the last year.

11. Horace Mann Educators Corp. (NYSE:HMN): Property & Casualty Insurance Industry. Market cap of $601.39M. Dividend yield at 2.92%, with a payout ratio of 18.51%. Price to book value at 0.67. TTM operating cash flow at $156.91M, or $3.93 on a per-share basis (vs. annual dividend per share at $0.44, TTM Operating Cash Flow per share / annual dividend per share stands at 8.94). TTM Levered Free Cash Flow at $286.35M, or $7.18 on a per-share basis (vs. annual dividend per share at $0.44, TTM Levered Free Cash Flow per share / dividend per share stands at 16.32). Might be undervalued at current levels, with a PEG ratio at 0.92, and P/FCF ratio at 4.26. The stock has performed poorly over the last month, losing 10.72%.

12. The Travelers Companies, Inc. (NYSE:TRV): Property & Casualty Insurance Industry. Market cap of $24.57B. Dividend yield at 2.8%, with a payout ratio of 19.63%. Price to book value at 0.98. TTM operating cash flow at $3.16B, or $7.54 on a per-share basis (vs. annual dividend per share at $1.64, TTM Operating Cash Flow per share / annual dividend per share stands at 4.6). TTM Levered Free Cash Flow at $6.01B, or $14.35 on a per-share basis (vs. annual dividend per share at $1.64, TTM Levered Free Cash Flow per share / dividend per share stands at 8.75). The stock has gained 17.58% over the last year.

13. Petrobras Argentina SA (NYSE:PZE): Major Integrated Oil & Gas Industry. Market cap of $1.87B. Dividend yield at 2.4%, with a payout ratio of 0.0%. Price to book value at 0.77. TTM operating cash flow at $573.00M, or $5.68 on a per-share basis (vs. annual dividend per share at $0.32, TTM Operating Cash Flow per share / annual dividend per share stands at 17.74). TTM Levered Free Cash Flow at $199.87M, or $1.98 on a per-share basis (vs. annual dividend per share at $0.32, TTM Levered Free Cash Flow per share / dividend per share stands at 6.19). The stock has performed poorly over the last month, losing 11.26%.

14. StanCorp Financial Group Inc. (NYSE:SFG): Accident & Health Insurance Industry. Market cap of $1.86B. Dividend yield at 2.1%, with a payout ratio of 22.89%. Price to book value at 0.98. TTM operating cash flow at $361.30M, or $7.99 on a per-share basis (vs. annual dividend per share at $0.86, TTM Operating Cash Flow per share / annual dividend per share stands at 9.29). TTM Levered Free Cash Flow at $5.42B, or $119.83 on a per-share basis (vs. annual dividend per share at $0.86, TTM Levered Free Cash Flow per share / dividend per share stands at 139.34). The stock has lost 7.75% over the last year.

15. Computer Sciences Corporation (NYSE:CSC): Information Technology Services Industry. Market cap of $5.97B. Dividend yield at 2.08%, with a payout ratio of 15.44%. Price to book value at 0.79. TTM operating cash flow at $1.56B, or $10.08 on a per-share basis (vs. annual dividend per share at $0.8, TTM Operating Cash Flow per share / annual dividend per share stands at 12.6). TTM Levered Free Cash Flow at $623.38M, or $4.03 on a per-share basis (vs. annual dividend per share at $0.8, TTM Levered Free Cash Flow per share / dividend per share stands at 5.03). The stock has performed poorly over the last month, losing 13.39%.

16. Assurant Inc. (NYSE:AIZ): Accident & Health Insurance Industry. Market cap of $3.40B. Dividend yield at 2.04%, with a payout ratio of 25.85%. Price to book value at 0.73. TTM operating cash flow at $602.47M, or $6.24 on a per-share basis (vs. annual dividend per share at $0.72, TTM Operating Cash Flow per share / annual dividend per share stands at 8.67). TTM Levered Free Cash Flow at $239.11M, or $2.48 on a per-share basis (vs. annual dividend per share at $0.72, TTM Levered Free Cash Flow per share / dividend per share stands at 3.44). The stock is currently stuck in a downtrend, trading -5.07% below its SMA20, -7.94% below its SMA50, and -9.75% below its SMA200. The stock has lost 2.81% over the last year.

*Data sourced from Yahoo! Finance and Finviz.

Source: Income Ideas: 16 Undervalued High Yield Stocks With Good Dividend Coverage Ratios