These 5 stocks all have respectable or great current dividend yields, relatively low P/E ratios, and good long term growth prospects:
Siemens (SI): Siemens is a German Conglomerate, very similar to the American General Electric (GE). Near term, there are some headwinds for Siemens. Mr. Loscher, Siemens' CEO, is planning on selling their lighting business, Orsam, in an IPO for (hopefully) more than $4 billion. With the proceeds from that sale, Siemens plans on entering more strategic, higher margin businesses like "green products," and further penetrating the high growth emerging market infrastructure business. On a pure valuation basis, Siemens is seriously compelling. SI trades at 8.30 times next year's earnings, has a stunningly low .25 PEG ratio, and a .75 price-to-sales ratio. Currently, Siemens has a 3.10% dividend yield, that's grown at a wild 17.6% per year for the last 5 years.
Southern Copper (SCCO): The yield just keeps on getting sweeter, though there is some undeniable risk involved with SCCO. Currently yielding a hefty 8.0%, that yield is expected to see continual growth, just as it has seen an increase of 26% per year for the last five years. SCCO only trades at 9 times next year's earnings, and 13 times last year's earnings. The risk in Southern Copper lies with the fact that mines in Peru (a major profit center for SCCO) could, at some point in the future, be nationalized by the new regime in charge.
Seadrill (SDRL): A drilling service company, the recent sell-off in crude has caused investors to sell Seadrill heavily, assuming the lower oil prices are going to reduce the demand for drilling services. This appears highly unlikely. Although the drillers aren't going to be making ridiculous profits on $115 barrel, they'll now be making only fantastic profits on $85-$90 oil. Seadill's drilling fleet is one of the newest, most advanced in its industry, giving them a significant competitive advantage over their counterparts. Seadrill has a 7.00% dividend yield, and since last year (the first year they began making quarterly payouts), they've grown it 22.95%. Trading at only 6.5 times earnings now, SDRL may see some earnings pressure in the short term, but the long term profitability of drilling is clearly still existent.
Chevron (CVX): Chevron is arguably the most stable of all of these stocks. With a very respectable 3.30% current yield, their dividend growth history has been solid, with increases of about 8% per year over the last five years. The most important aspect to note about their dividends, however, is that the payout ratio based on earnings is only 25%. As Chevron fails to find better usage for capital, their shareholder-oriented management should expand that ratio, while continued earnings growth and cash flow generation will keep it stable. Chevron is levered to oil, natural gas, and other energy demand.
Tal International (TAL): Tal leases steel containers that are used in the shipping, rail, and truck businesses. Tal's business, which is levered to the global goods transportation business, has been absolutely surging, evidenced by its 400% year-over-year earnings growth, and 40% YoY revenue growth. Tal yields 7.70%, and the strength in their business allowed them to increase that more than 48% this year from last. Trading at only 8.30 times last year's earnings and a .67 PEG ratio, Tal appears to be a cheap income play.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in SDRL over the next 72 hours.
