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The price/book Value Ratio is a valuation metric often used by investors who focus on distressed companys. This valuation metric divides the market value of a company by the company’s book value. The lower the number the more undervalued it may be if there is nothing fundamentally wrong with the company. In the case that the company is trading below 1 it is said to be trading below “break up” value.

The debt/equity ratio is a metric that illustrates the capital structure of a company. A high debt/equity ratio signifies that the company is financing growth heavily through debt. The risk here is that should the “enhanced” earnings of the company fail to cover the overall financing costs incurred this can lead the company into bankruptcy down the line.

We ran a screen for dividend stocks with a price/book value ratio of less than 1. From this narrowed pool we then screened for companys that have a debt/equity ratio of less than 0.3.

The forward P/BV ratio ranks the companys highest to lowest:

1. Fred's, Inc. (NASDAQ:FRED)

Sector

Consumer Defensive

Industry

Discount Stores

Market Cap

$427 million

Beta

0.87

The company sells general merchandise through discount and full service pharmacies. The company’s forward P/BV ratio is 0.99. FRED’s debt/equity ratio is 0.02. The dividend yield is 1.71%. The short interest was 17.90% as of 08/15/2011.

2. Torchmark Corporation (NYSE:TMK)

Sector

Financial Services

Industry

Insurance - Life

Market Cap

$3,756 million

Beta

1.61

The company offers life and other insurance products. The company’s forward P/BV ratio is 0.99. TMK’s debt/equity ratio is 0.21. The dividend yield is 1.10%.

3. G & K Services, Inc. (GKSR)

Sector

Industrials

Industry

Business Services

Market Cap

$504 million

Beta

1.24

The company offers facility services and apparel that enhance image and safety in the workplace. The company’s forward P/BV ratio is 0.98. GKSR’s debt/equity ratio is 0.29. The dividend yield is 1.41%. The short interest was 2.90% as of 08/15/2011.

4. GFI Group, Inc. (NYSE:GFIG)

Sector

Financial Services

Industry

Capital Markets

Market Cap

$482 million

Beta

2.02

The company is an inter-dealer broker with OTC products and securities. The company’s forward P/BV ratio is 0.98. GFIG’s debt/equity ratio is 0.12. The dividend yield is 5.04%. The short interest was 5.30% as of 08/15/2011.

5. Magna International (NYSE:MGA)

Sector

Consumer Cyclical

Industry

Auto Parts

Market Cap

$8,548 million

Beta

1.35

The company supplies technologically advanced automotive components, systems, and other products. The company’s forward P/BV ratio is 0.97. MGA’s debt/equity ratio is 0.01. The dividend yield is 2.69%. The short interest was N/A as of 08/15/2011.

6. Washington Post Company (WPO)

Sector

Comsumer Defensive

Industry

Education & Training Services

Market Cap

$2,617 million

Beta

1.07

The company is a diversified education and media company. The company’s forward P/BV ratio is 0.97. WPO’s debt/equity ratio is 0.15. The dividend yield is 2.82%.

7. Molson Coors Brewing Company(NYSE:TAP)

Sector

Consumer Defensive

Industry

Beverages - Brewers

Market Cap

$7,829 million

Beta

0.73

The company is a holding company for subsidiaries such as Coors Brewing Company and others. The company’s forward P/BV ratio is 0.96. TAP’s debt/equity ratio is 0.24. The dividend yield is 2.87. The short interest was 13.60% as of 08/15/2011.

8. Domtar Corp (NYSE:UFS)

Sector

Basic Materials

Industry

Paper & Paper Products

Market Cap

$3,048 million

Beta

3.01

The company manufactures uncoated sells fine paper. The company’s forward P/BV ratio is 0.95. UFS’s’s debt/equity ratio is 0.26. The dividend yield is 1.26%. The short interest was 4.80% as of 08/15/2011.

9. Manulife Financial Corporation (NYSE:MFC)

Sector

Financial Services

Industry

Insurance - Life

Market Cap

$22,187 million

Beta

2.25

The company’s forward P/BV ratio is 0.95. MFC’s debt/equity ratio is 0.24. The dividend yield is 4.25%. The short interest was N/A as of 08/15/2011.

10. Sinopec Shanghai Petrochemical(NYSE:SHI)

Sector

Energy

Industry

Oil & Gas Refining & Marketing

Market Cap

$2,707 million

Beta

1.15

The company produces synthetic resins, plastics, fibers, petrochemicals, and more. The company’s forward P/BV ratio is 0.94. SHI’s debt/equity ratio is 0.01. The dividend yield is 3.64%. The short interest was N/A as of 08/15/2011.

We hope this list helps as investors do their own due diligence on dividend stocks.

Source: 10 Cheap Dividend Stocks With Low Debt