3 Healthcare Dividend Stocks Undervalued By Levered Free Cash Flows

Includes: AZN, CHE, PDLI
by: Kapitall

Do you prefer stocks that can offer both value and growth prospects? For ideas, we ran a screen.

We screened the healthcare sector, generally considered a growth sector, for stocks paying dividend yields above 1% and sustainable payout ratios below 50% (a value characteristic).

We then screened these stocks for those that appear undervalued relative to levered free cash flows/enterprise value.

Levered free cash flow is the free cash flow after deducting interest payments on outstanding debt. Enterprise value is the sum of the firm's value from all ownership sources: market cap, outstanding debt, and preferred shares. Companies with high ratios of levered free cash flow/enterprise value may be undervalued by the market.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the 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 index over the last month. To access a complete analysis of this list's recent performance, click here.

Do you think these stocks offer both value and growth? Use this list as a starting point for your own analysis.

1. AstraZeneca PLC (NYSE:AZN): Develops, and commercializes prescription medicines for cardiovascular, gastrointestinal, infection, neuroscience, oncology, and respiratory and inflammation diseases worldwide. Dividend yield at 6.21%, payout ratio at 36.88%. Levered free cash flow at $6.22B vs. enterprise value at $56.23B (implies a LFCF/EV ratio at 11.06%).

2. Chemed Corp. (NYSE:CHE): Provides hospice care, and repair and cleaning services in the United States. Dividend yield at 1.03%, payout ratio at 14.28%. Levered free cash flow at $150.29M vs. enterprise value at $1.33B (implies a LFCF/EV ratio at 11.3%).

3. PDL BioPharma, Inc. (NASDAQ:PDLI): Engages in the management of antibody humanization patents and royalty assets, which consist of Queen et al. Dividend yield at 9.29%, payout ratio at 42.08%. Levered free cash flow at $146.42M vs. enterprise value at $1.14B (implies a LFCF/EV ratio at 12.84%).

*LFCF/EV data sourced from Yahoo! Finance, 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.