Seeking Alpha
Long only, value, long-term horizon, dividend growth investing
Profile| Send Message| ()  

To avoid the painful market swings of late, many investors are trading in their growth stocks for value plays. There are many different formulas for finding value, each with its own flaws. While no method is perfect, we’ve tried to identify a few undervalued dividend stocks.

We drilled down pretty far on our screen to identify stocks with significant value. Our screen included a price to book value less than one, a forward P/E and PEG ratio less than each stock's respective industry average and a dividend yield of 3% or higher. Most stocks listed also have a positive 5 year dividend growth rate. We then excluded REITs and financial stocks, because many stocks in the finance sector are trading at low multiples and under book value right now. We ended up with 20 potentially undervalued stocks. We stuck with a diversified group of stocks that have upside potential.

Speedway Motor Sports – (TRK)

Speedway Motor owns and operates many different professional racetracks in Charlotte, Atlanta, Kentucky, Las Vegas and other venues in the United States. They also provide merchandising, food and beverage services and media promotional programming.

TRK has a price to book value of .63 with a forward P/E ratio of 10.5 and a PEG ratio of 2.1. They have a dividend yield of 3.1% and have raised their dividend for 8 consecutive years. They have a 5 year dividend growth rate of 4.5%.

Hooker Furniture Corporation – (HOFT)

Hooker furniture Corp is in the residential furniture business and operates mostly in the United States. They specialize in modern home entertainment, office and living furniture.

HOFT has a price to book ratio of .86, a forward P/E ratio of 9.49 and a PEG ratio of .79. Their dividend yield is 4% and their 5 year dividend growth rate is 6.3%.

Brown Shoe Company – (BWS)

Brown Shoe Company is, you guessed it, a shoe company. They own and operate retails stores and websites to facilitate the sale of their footwear. They have over 1300 retail shops in the US, Canada and China.

BWS has a price to book value of .95 with a forward P/E ratio of 7.3 and a PEG ratio of .48. They pay an annual dividend of $.28 per share giving them a 3.2% dividend yield. Their 5 year dividend average is 9.5%.

Transocean Ltd - (RIG)

Transocean is an offshore drilling contactor that provides services for oil and gas wells. This is the one of two stocks our list that does not have a positive 5 year dividend growth rate. RIG just started paying dividends in 2011, so we don’t have any dividend growth rate information.

Transocean has a price to book ratio of .77, a forward P/E of 10.8 and a PEG ratio of .54. Their annual dividend is $3.16 giving them a dividend yield of 6.3%.

American Greetings Corporation – (AM-OLD)

American Greetings is an international greeting card company. They design and sell greeting cards for every occasion. Their AG Interactive business specializes in e-cards and social products.

AM has a price to book ratio of .81 and a forward P/E of 5.5. Their PEG ratio is .55 and their dividend yield is 3.7%. They have been growing their dividend for 6 consecutive years and have a 5 year dividend growth rate over 13%.

Seaspan Corporation – (SSW)

Seaspan owns a fleet of container ships and enters into charter agreements to transport products around the world. They have almost 60 vessels which have an average age of 5 years.

SSW has a price to book ratio of .68 a forward P/E of 8.9 and a PEG ratio of 5.85. Their dividend yield is 5.9%.

ArcelorMittal - (MT)

Arcelor Mittal is a global steel company that produced over 90 million tons of steel in 2010. MT produces a range of steel products.

ArcelorMittal has a price to book value of .51 and a forward P/E Ratio of 7.5. Their PEG ratio is .38. Arcelor is the 2nd stock on this list that does not have a positive 5 year dividend growth rate. Their current yield is 3.3%.

Source: 7 High Yield, Undervalued Dividend Paying Stocks