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If a company’s P/E ratio has fallen over time, as its earnings steadily rise, it is a sign that price has not proportionately increased with earnings. In other words, the company’s earnings may not be fully priced into the stock, and the stock may be undervalued.

We ran a screen on dividend champions (companies with 10-year dividend growth rates over 10%) for those exhibiting these signs of falling P/E with rising EPS.

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 (SPY) index over the last month.

(Click chart for more detail)



Do you think these stocks should be trading higher? Use this list as a starting-off point for your own analysis.

List sorted by dividend yield.

1. SK Telecom Co. Ltd. (SKM): Provides wireless telecommunications services using code division multiple access (CDMA) and wide-band CDMA technologies. Market cap of $9.30B. Dividend yield at 5.47%, payout ratio at 48.82%. 10-year dividend growth rate at 33.07%. TTM P/E ratio at 7.0 vs. 3-year average at 10.68. Last year diluted EPS at $19.00 vs. prior year diluted EPS at $16.72. The stock has lost 16.34% over the last year.

2. TIM Participacoes S.A. (TSU): Provides mobile telecommunications services through global system mobile (GSM) technology to business and individual customers in Brazil. Market cap of $5.86B. Dividend yield at 5.31%, payout ratio at 19.30%. 10-year dividend growth rate at 20.93%. TTM P/E ratio at 8.37 vs. 3-year average at 21.47. Last year diluted EPS at $1.40 vs. prior year diluted EPS at $0.02. It's been a rough couple of days for the stock, losing 11.42% over the last week.

3. Strayer Education Inc. (STRA): Provides various academic programs through traditional classrooms and Internet. Market cap of $975.45M. Dividend yield at 4.92%, payout ratio at 39.13%. 10-year dividend growth rate at 29.24%. TTM P/E ratio at 8.06 vs. 3-year average at 24.27. Last year diluted EPS at $9.70 vs. prior year diluted EPS at $7.60. The stock is a short squeeze candidate, with a short float at 17.85% (equivalent to 7.35 days of average volume). It's been a rough couple of days for the stock, losing 5.92% over the last week.

4. Meredith Corp. (MDP): Engages in magazine publishing and related brand licensing, television broadcasting, integrated marketing, interactive media, and video production businesses in the United States. Market cap of $1.04B. Dividend yield at 4.48%, payout ratio at 33.61%. 10-year dividend growth rate at 11.38%. TTM P/E ratio at 7.78 vs. 3-year average at 31.38. Last year diluted EPS at $2.87 vs. prior year diluted EPS at $2.28. The stock is a short squeeze candidate, with a short float at 22.93% (equivalent to 10.97 days of average volume). The stock has lost 28.44% over the last year.

5. Siemens AG (SI): Operates in the industry, energy, and healthcare sectors worldwide. Market cap of $83.26B. Dividend yield at 4.05%, payout ratio at 18.43%. 10-year dividend growth rate at 15.01%. TTM P/E ratio at 11.02 vs. 3-year average at 19.84. Last year diluted EPS at $6.12 vs. prior year diluted EPS at $3.52. The stock has lost 10.36% over the last year.

6. China Petroleum & Chemical Corp. (SNP): Engages in the exploration, development, production, and marketing of crude oil and natural gas properties primarily in China. Market cap of $82.0B. Dividend yield at 3.75%, payout ratio at 25.73%. 10-year dividend growth rate at 10.13%. TTM P/E ratio at 6.80 vs. 3-year average at 8.29. Last year diluted EPS at $0.13 vs. prior year diluted EPS at $0.11. The stock has gained 12.96% over the last year.

7. Molex Inc. (MOLX): Manufactures and sells electronic components worldwide. Market cap of $3.41B. Dividend yield at 3.74%, payout ratio at 41.19%. 10-year dividend growth rate at 21.52%. TTM P/E ratio at 12.19 vs. 3-year average at 619.60. Last year diluted EPS at $1.70 vs. prior year diluted EPS at $0.44. The stock is a short squeeze candidate, with a short float at 5.65% (equivalent to 5.14 days of average volume). The stock has gained 6.58% over the last year.

8. AFLAC Inc. (AFL): Provides supplemental health and life insurance. Market cap of $15.22B. Dividend yield at 3.68%, payout ratio at 30.74%. 10-year dividend growth rate at 21.18%. TTM P/E ratio at 8.25 vs. 3-year average at 13.0. Last year diluted EPS at $4.95 vs. prior year diluted EPS at $3.19. Might be undervalued at current levels, with a PEG ratio at 0.71, and P/FCF ratio at 1.95. It's been a rough couple of days for the stock, losing 8.07% over the last week.

9. Linear Technology Corp. (LLTC): Designs, manufactures, and markets a line of linear integrated circuits. Market cap of $6.60B. Dividend yield at 3.31%, payout ratio at 36.67%. 10-year dividend growth rate at 21.88%. TTM P/E ratio at 11.47 vs. 3-year average at 17.21. Last year diluted EPS at $2.50 vs. prior year diluted EPS at $1.58. The stock has lost 2.13% over the last year.

10. Erie Indemnity Co. (ERIE): Provides sales, underwriting, and policy issuance services to the policyholders of Erie Insurance Exchange in the United States. Market cap of $3.36B. Dividend yield at 2.99%, payout ratio at 30.79%. 10-year dividend growth rate at 13.37%. TTM P/E ratio at 11.73 vs. 3-year average at 15.85. Last year diluted EPS at $2.85 vs. prior year diluted EPS at $1.89. The stock has gained 28.5% over the last year.

11. BHP Billiton Ltd. (BHP): Industrial Metals & Minerals Industry. Market cap of $183.88B. Dividend yield at 2.92%, payout ratio at 23.32%. 10-year dividend growth rate at 22.48%. TTM P/E ratio at 7.93 vs. 3-year average at 14.61. Last year diluted EPS at $4.27 vs. prior year diluted EPS at $2.28. The stock is currently stuck in a downtrend, trading 11.65% below its SMA20, 15.45% below its SMA50, and 22.41% below its SMA200. It's been a rough couple of days for the stock, losing 9.57% over the last week.

12. Wal-Mart Stores Inc. (WMT): Operates retail stores in various formats worldwide. Market cap of $178.64B. Dividend yield at 2.82%, payout ratio at 29.84%. 10-year dividend growth rate at 17.56%. TTM P/E ratio at 11.49 vs. 3-year average at 13.85. Last year diluted EPS at $4.18 vs. prior year diluted EPS at $3.72. Relatively low correlation to the market (beta = 0.32), which may be appealing to risk averse investors. The stock has lost 0.5% over the last year.

13. Applied Industrial Technologies, Inc. (AIT): Distributes industrial supply products for maintenance, repair, and operational needs in the government and commercial sectors in the United States, Canada, and Mexico. Market cap of $1.20B. Dividend yield at 2.69%, payout ratio at 30.72%. 10-year dividend growth rate at 12.62%. TTM P/E ratio at 12.30 vs. 3-year average at 16.49. Last year diluted EPS at $2.24 vs. prior year diluted EPS at $1.54. The stock has lost 5.93% over the last year.

14. Gap Inc. (GPS): Operates as a specialty retailing company. Market cap of $8.78B. Dividend yield at 2.61%, payout ratio at 22.36%. 10-year dividend growth rate at 16.24%. TTM P/E ratio at 8.94 vs. 3-year average at 11.51. Last year diluted EPS at $1.88 vs. prior year diluted EPS at $1.58. The stock has lost 5.54% over the last year.

15. Teva Pharmaceutical Industries Limited (TEVA): Develops, produces, and markets generic drugs; and proprietary branded pharmaceuticals in various therapeutic categories and active pharmaceutical ingredients worldwide. Market cap of $33.35B. Dividend yield at 2.45%, payout ratio at 24.94%. 10-year dividend growth rate at 29.24%. TTM P/E ratio at 10.11 vs. 3-year average at 22.12. Last year diluted EPS at $3.66 vs. prior year diluted EPS at $2.23. It's been a rough couple of days for the stock, losing 6.02% over the last week.

16. Credicorp Ltd. (BAP): Provides a range of financial products and services in Peru, Bolivia, and Panama. Market cap of $7.42B. Dividend yield at 2.09%, payout ratio at 21.36%. 10-year dividend growth rate at 34.59%. TTM P/E ratio at 11.27 vs. 3-year average at 13.75. Last year diluted EPS at $7.17 vs. prior year diluted EPS at $5.90. It's been a rough couple of days for the stock, losing 7.78% over the last week.

17. Prosperity Bancshares Inc. (PRSP): Operates as the holding company for Prosperity Bank that provides retail and commercial banking services to small and medium-sized businesses and consumers. Market cap of $1.58B. Dividend yield at 2.08%, payout ratio at 23.74%. 10-year dividend growth rate at 13.52%. TTM P/E ratio at 11.54 vs. 3-year average at 15.19. Last year diluted EPS at $2.73 vs. prior year diluted EPS at $2.41. The stock is a short squeeze candidate, with a short float at 13.39% (equivalent to 17.86 days of average volume). The stock has gained 7.04% over the last year.

18. Newmont Mining Corp. (NEM): Engages in the acquisition, exploration, and production of gold and copper properties. Market cap of $34.99B. Dividend yield at 1.86%, payout ratio at 13.30%. 10-year dividend growth rate at 15.34%. TTM P/E ratio at 13.07 vs. 3-year average at 17.93. Last year diluted EPS at $4.61 vs. prior year diluted EPS at $2.69. The stock has gained 4.21% over the last year.

19. Honda Motor Co., Ltd. (HMC): Engages in the development, manufacture, and distribution of motorcycles, automobiles, and power products primarily in North America, Europe, and Asia. Market cap of $54.20B. Dividend yield at 1.65%, payout ratio at 35.01%. 10-year dividend growth rate at 16.73%. TTM P/E ratio at 13.76 vs. 3-year average at 16.88. Last year diluted EPS at $3.85 vs. prior year diluted EPS at $1.92. The stock has lost 15.26% over the last year.

20. SEI Investments Co. (SEIC): Provides investment processing, fund processing, and investment management business outsourcing solutions to corporations, financial institutions, financial advisors, and high-net-worth families. Market cap of $2.84B. Dividend yield at 1.54%, payout ratio at 10.24%. 10-year dividend growth rate at 17.46%. TTM P/E ratio at 12.51 vs. 3-year average at 20.80. Last year diluted EPS at $1.22 vs. prior year diluted EPS at $0.91. The stock has lost 21.08% over the last year.

*Dividend growth data, P/E, and EPS data sourced from Screener.co, all other data sourced from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: 20 Dividend Champions With Falling P/E And Rising EPS