Sometimes it makes sense to observe shares that have reached new lows. The background is to detect a possible turnaround. If the company pays stable dividends, it could increase the expected total return for an investor.
I screened the capital market by stocks with a dividend yield of more than 5 percent (high yields) that are traded close to 52-week lows (up to 5 percent). The result was dominated of 52 companies, of which the most were small and micro caps. To exclude risks by this investment category, I screened stocks with a market capitalization of more than $2 billion. Finally, I sorted the list by highest dividend yield. As a result, I had eight interesting stocks.
Here are my three most promising stocks from our screening results.
1. Veolia Environnement S.A. (VE) acts within the waste management industry. The company has a market capitalization of $11.6 billion, generates revenues in an amount of $50.1 billion and a net income of $ 870.4 million. Its Price/Earnings ratio is 12.4, Price/Sales 0.23 and Price/Book ratio 0.95. Dividend yield: 7.75 percent, years of consecutive dividend increasing: 0. Five-year dividend growth: 32.8 percent. Dividends since 2002. VE is traded 2.4 percent above 52-week low.
2. Spectra Energy Partners, LP (SEP) is within the oil and gas pipeline industry. The company has a market capitalization of $2.9 billion, generates revenues in an amount of $198.4 million and a net income of $145.1 million. Price/Earnings ratio is 17.1, Price/Sales 14.7 and Price/Book ratio 1.8. Dividend yield: 6.25 percent. Years of consecutive dividend increasing: 3. Five-year dividend growth: 0 percent. Dividends since 2007. SEP is traded 0.3 percent above 52-week low.
3. Mercury General Corporation (MCY) is within the property and casualty insurance. The company has a market capitalization of $2.0 billion, generates revenues in an amount of $2.8 billion and a net income of $149.3 million. Price/Earnings ratio is 13.7, Price/Sales 0.7 and Price/Book ratio 1.12. Dividend yield: 6.5 percent. Years of consecutive dividend increasing: 19 Years. Five-year dividend growth: 5.7 percent. Dividends since 1990. MCY is traded 4 percent above 52-week low.
Take a closer look at the full table. The average price to earnings ratio (P/E ratio) of the list amounts to 13.69 while the average forward price to earnings ratio is 9.74. The dividend yield has an average value of 7.55 percent. Price to book ratio is 5.04 and price to sales ratio 3.27. The average operating margin amounts to 20.04 percent.