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The Price/Book Value ratio is a valuation metric that divides the current closing price of a stock over the company’s latest book value per share. The concept is that the lower the P/BV ratio the more potential opportunity there may be due to market mispricing. If the company is trading below 1 this means the company is trading below its “break up” value. A low P/BV ratio could illustrate that there is potentially a great value investment or that something is fundamentally wrong with the company.

The Debt/Equity ratio illustrates how a company is financing its growth. A strong reliance on debt for growth is a doubled edged sword that should not be underestimated. While the company may be able to amplify its earnings during robust economic times it could also magnify losses in a weaker economic state. Further, there is no guarantee of success by attempting to grow the top line through increased debt. Should the company fail or struggle to cover the financing costs of its debt the company and its respective stock could quickly fall on hard times.

We specifically screened for dividend stocks that are trading at or below their break up value (P/BV Ratio<1). From this narrowed pool we then looked for companys that were operating with a low Debt/ Equity ratio (X<30%). We did not screen out any industries.

The companies are listed from highest to lowest by the P/BV ratio:

1. Magna International. (NYSE:MGA)

Sector

Consumer Cyclical

Industry

Auto Parts

Market Cap

$8,755M

Beta

1.39

The company offers technologically advanced automotive systems and more. The company has a dividend yield of 2.62%. MGA has a P/BV ratio of 1.00. The company has a Debt/Equity ratio is 0.01%. The short interest was N/A as of 09/30/2011.

2. Washington Post Company. (WPO)

Sector

Consumer Defensive

Industry

Education & Training Services

Market Cap

$2,697M

Beta

1.10

The company is a diversified education and media company. It has a dividend yield of 2.74%. WPO has a P/BV ratio of 1.00. The company has a Debt/Equity ratio is 0.15%. The short interest was 12.40% as of 09/30/2011.

3. Infinity Property and Casualty (NASDAQ:IPCC)

Sector

Financial Services

Industry

Insurance - Property & Casualty

Market Cap

$663M

Beta

0.53

The company offers personal automobile insurance and concentrates on nonstandard auto insurance. The company has a dividend yield of 1.25%. IPCC has a P/BV ratio of 0.99. The company has a Debt/Equity ratio is 0.29%. The short interest was 3.60% as of 09/30/2011.

4. Sterlite Industries (SLT)

Sector

Basic Materials

Industry

Industrial Metals & Minerals

Market Cap

$8,201M

Beta

2.26

The company mines for non-ferrous metals. The company has a dividend yield of 0.81%. SLT has a P/BV ratio of 0.98. The company has a Debt/Equity ratio is 0.12%. The short interest was N/A as of 09/30/2011.

5. Corning Inc. (NYSE:GLW)

Sector

Technology

Industry

Electronic Components

Market Cap

$20,519M

Beta

1.39

The company produces specialty glass and ceramics. The company has a dividend yield of 1.53%. GLW has a P/BV ratio of 0.97. The company has a Debt/Equity ratio is 0.11%. The short interest was 1.80% as of 09/30/2011.

6. SK Telecom Co., Ltd. (NYSE:SKM)

Sector

Communication Services

Industry

Telecom Services

Market Cap

$9,864M

Beta

The company is a wireless telecommunications provider. The company has a dividend yield of 4.73%. SKM has a P/BV ratio of 0.97. The company has a Debt/Equity ratio is 0.28%. The short interest was N/A as of 09/30/2011.

7. Sun Life Financial Inc. (NYSE:SLF)

Sector

Financial Services

Industry

Insurance - Life

Market Cap

$13,730M

Beta

The company is a life insurance holding company. The organization offers a dividend yield of 6.17%. SLF has a P/BV ratio of 0.97. The company has a Debt/Equity ratio is 0.15%. The short interest was N/A as of 09/30/2011.

8. Manulife Financial Corporation. (NYSE:MFC)

Sector

Financial Services

Industry

Insurance - Life

Market Cap

$21,648M

Beta

2.43

The company has a dividend yield of 4.37%. MFC has a P/BV ratio of 0.95. The company has a Debt/Equity ratio is 0.24%. The short interest was N/A% as of 09/30/2011.

9. Molson Coors Brewing Company. (NYSE:TAP)

Sector

Consumer Defensive

Industry

Beverages - Brewers

Market Cap

$7,711M

Beta

0.78

The company operates a variety of subsidiaries that include Coors Brewers Limited, Molson Canada, and name brands. The company has a dividend yield of 2.91%. TAP has a P/BV ratio of 0.95. The company has a Debt/Equity ratio is 0.24%. The short interest was 1.80% as of 09/30/2011.

10. Sims Metal Management Ltd. (SMS)

Sector

Basic Materials

Industry

Steel

Market Cap

$2,851M

Beta

2.01

The company is a international metals and electronics recycler. The company has a dividend yield of 3.43%. SMS has a P/BV ratio of 0.95. The company has a Debt/Equity ratio is 0.05%. The short interest was N/A as of 09/30/2011.

We hope this list helps as investors do their own due diligence on dividend stocks that are undervalued according to their P/BV ratio and operate with a low debt/equity ratio. These were the top ten companies at the time when the article was written relative to the criteria.

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

Source: 10 Cheap, Out Of Favor Dividend Stocks That Operate With Little Debt