Seeking Alpha
Profile| Send Message| ()  

Historically, buying stocks with low valuations has outperformed the broader market. This variant on buying low and selling high makes sense as long as the low prices of cheaper stocks correct themselves over time. If they do not, a value investor might be stuck holding their stocks at low prices.

One way to avoid relying on fickle market sentiment is to buy value stocks which pay dividends. By paying shareholders directly, firms can compensate them without relying on the equity markets. Dividends are a direct channel for stock returns that does not depend on market sentiment.

The price-to-book ratio (PB ratio or P/B ratio) is a measure of how cheap a stock is. Eight stocks are listed below that have PB ratios under 1 (they are cheaper than their accounting values), have grown equity value over the last 10 fiscal years, and also have histories of paying handsome dividends:

International Shipholding Corp. (ISH) recently traded at $18.41 per share. At this price level, the stock has a 8.0% dividend yield. For 4 out of the past 10 fiscal years, a share of ISH paid a total of $4.26 in dividends. Of these dividend payments, a total of $4.13 were paid in the last five years.

ISH shareholders have suffered a -20.6% change in share price over the past year. At present, shares of this microcap stock trade at a price-to-book ratio of 0.5, a price-to-earnings multiple of 3.5, and a price-to-sales multiple of 0.5 (trailing twelve months). Over the past decade shareholders saw a 2.1% average annual return on equity.

Kewaunee Scientific Corp. (KEQU) recently traded at $8.27 per share. At this price level, the stock has a 4.8% dividend yield. For 10 out of the past 10 fiscal years, a share of KEQU paid a total of $3.06 in dividends. Of these dividend payments, a total of $1.66 were paid in the last five years.

KEQU shareholders have suffered a -37.4% change in share price over the past year. At present, shares of this nanocap stock trade at a price-to-book ratio of 0.7, a price-to-earnings multiple of 92.2, and a price-to-sales multiple of 0.2 (trailing twelve months). Over the past decade shareholders enjoyed a 6.3% average annual return on equity.

Overseas Shipholding Group Inc. (OSG) recently traded at $10.05 per share. At this price level, the stock has a 8.4% dividend yield. For 10 out of the past 10 fiscal years, a share of OSG paid a total of $10.31 in dividends.

OSG shareholders have suffered a -68.7% plunge in share price and negative earnings over the past year. At present, shares of this smallcap stock trade at a price-to-book ratio of 0.2 and a price-to-sales multiple of 0.3 (trailing twelve months). Over the past decade shareholders savored a 12.5% average annual return on equity.

Universal Corp. (UVV) recently traded at $42.79 per share. At this price level, the stock has a 4.6% dividend yield. For 10 out of the past 10 fiscal years, a share of UVV paid a total of $16.09 in dividends.

UVV shareholders have enjoyed a 11.0% increase in share price over the past year. At present, shares of this smallcap stock trade at a price-to-book ratio of 0.9, a price-to-earnings multiple of 15.5, and a price-to-sales multiple of 0.4 (trailing twelve months). Over the past decade shareholders savored a 13.2% average annual return on equity.

Air T Inc. (AIRT) recently traded at $8.48 per share. At this price level, the stock has a 3.0% dividend yield. For 9 out of the past 10 fiscal years, a share of AIRT paid a total of $2.18 in dividends. Of these dividend payments, a total of $1.46 were paid in the last five years.

AIRT shareholders have endured a -10.6% drop in share price over the past year. At present, shares of this nanocap stock trade at a price-to-book ratio of 0.8, a price-to-earnings multiple of 10.1, and a price-to-sales multiple of 0.2 (trailing twelve months). Over the past decade shareholders savored a 12.8% average annual return on equity.

Brown Shoe Co. Inc. (BWS) recently traded at $8.67 per share. At this price level, the stock has a 3.2% dividend yield. For 10 out of the past 10 fiscal years, a share of BWS paid a total of $2.23 in dividends. Of these dividend payments, a total of $1.33 were paid in the last five years.

BWS shareholders have suffered a -34.7% fall in share price over the past year. At present, shares of this smallcap stock trade at a price-to-book ratio of 0.9, a price-to-earnings multiple of 18.2, and a price-to-sales multiple of 0.2 (trailing twelve months). Over the past decade shareholders enjoyed a 5.0% average annual return on equity.

Courier Corporation (CRRC) recently traded at $10.67 per share. At this price level, the stock has a 7.8% dividend yield. For 10 out of the past 10 fiscal years, a share of CRRC paid a total of $4.78 in dividends. Of these dividend payments, a total of $3.68 were paid in the last five years.

CRRC shareholders have suffered a -24.5% drop in share price over the past year. At present, shares of this microcap stock trade at a price-to-book ratio of 0.9, a price-to-earnings multiple of 1084.0, and a price-to-sales multiple of 0.5 (trailing twelve months). Over the past decade shareholders savored a 11.7% average annual return on equity.

Frisch's Restaurants Inc. (FRS) recently traded at $20.23 per share. At this price level, the stock has a 3.2% dividend yield. For 10 out of the past 10 fiscal years, a share of FRS paid a total of $4.48 in dividends. Of these dividend payments, a total of $2.47 were paid in the last five years.

FRS shareholders have endured a -8.7% fall in share price over the past year. At present, shares of this microcap stock trade at a price-to-book ratio of 0.8, a price-to-earnings multiple of 22.8, and a price-to-sales multiple of 0.3 (trailing twelve months). Over the past decade shareholders savored a 10.9% average annual return on equity.

These eight stocks are value plays that pay you dividends while you wait for investor sentiment to change. Waiting is hard, but being paid to wait helps a lot!

Disclaimer: This article was written to provide investor information and education, and should not be construed as a guarantee or investment advice. I have no idea what your individual risk, time-horizon, and tax circumstances are: please seek the personal advice of a financial planner. This article uses third-party data and may contain approximations and errors. Please check estimates and data for yourself before investing.

Source: 8 Dividend Stocks Selling Below Book Value