Are you a dividend investor looking to cash in on stocks with extremely high yields, such as yields of 10% or more? Would it be even better if you could get those stocks at a discount? If so, we ran a screen that uncovered some pretty interesting picks.
The PEG ratio (price/earnings to growth ratio) is a valuation metric for determining the relative trade-off between the price of a stock, the earnings generated per share [EPS], and the company's expected growth. In general, the P/E ratio is higher for a company with a higher growth rate. Thus using just the P/E ratio would make high-growth companies appear overvalued relative to others. It is assumed that by dividing the P/E ratio by the earnings growth rate, the resulting ratio is better for comparing companies with different growth rates. A lower ratio is 'better' (cheaper) and a higher ratio is 'worse' (expensive) - a PEG ratio of 1 means the company is fairly priced.
The Price/Book Value Ratio is a great price-multiple valuation metric to find companies that could be potentially undervalued or overvalued. If a firm has a Price/Book Value Ratio of less than 1 it is stated to be trading below "break up" value. A lower P/BV Ratio can indicate a potentially mispriced company or indicate that something is fundamentally wrong with it.
We first looked for stocks with a very high yield (more than 10%). We then looked for businesses that appear undervalued to earnings growth (PEG < 1)(P/BV<1). We then looked for companies that analysts rate as "Buy" or "Strong Buy" (mean recommendation < 3). We did not screen out any market caps or sectors.
Do you think these stocks will offer healthy returns? Use this list as a starting-off point for your own analysis.
1) United Online, Inc. (UNTD)
|Industry:||Specialty Retail, Other|
United Online, Inc. has a Dividend Yield of 10.13% and Payout Ratio of 75.67% and Price/Earnings to Growth Ratio of 0.48 and Price/Book Value Ratio of 0.73 and Analysts' Rating of 2.50. The short interest was 9.12% as of 06/01/2012. United Online, Inc., through its subsidiaries, provides consumer products and services over the Internet in the United States, Europe, and internationally. The company operates in three segments: FTD, Content and Media, and Communications. The FTD segment provides floral and related products, including occasion gifts, bath and beauty products, jewelry, wine, fruit and other gift baskets, chocolates, and stuffed animals to consumers and retail florists, as well as to other retail locations offering floral and related products and services primarily through FTD.
2) Apollo Commercial Real Estate Finance, Inc. (ARI)
|Industry:||REIT - Diversified|
Apollo Commercial Real Estate Finance, Inc. has a Dividend Yield of 10.08% and Payout Ratio of 107.95% and Price/Earnings to Growth Ratio of 0.88 and Price/Book Value Ratio of 0.97 and Analysts' Rating of 2.10. The short interest was 3.88% as of 06/01/2012. Apollo Commercial Real Estate Finance, Inc. operates as a commercial real estate finance company in the United States. It originates, acquires, invests in, and manages performing commercial first mortgage loans, commercial mortgage-backed securities, mezzanine financings, and other commercial real estate-related debt investments. The company is qualified as a real estate investment trust (REIT) under the Internal Revenue Code.
3) PennyMac Mortgage Investment Trust (PMT)
|Industry:||REIT - Residential|
PennyMac Mortgage Investment Trust has a Dividend Yield of 11.91% and Payout Ratio of 73.68% and Price/Earnings to Growth Ratio of 0.27 and Price/Book Value Ratio of 0.96 and Analysts' Rating of 1.80. The short interest was 3.46% as of 06/01/2012. PennyMac Mortgage Investment Trust is based in the United States..
4) Enduro Royalty Trust (NDRO)
|Industry:||Independent Oil & Gas|
Enduro Royalty Trust has a Dividend Yield of 10.70% and Price/Earnings to Growth Ratio of 0.61 and Price/Book Value Ratio of 0.78 and Analysts' Rating of 2.40. The payout ratio could not be determined. The short interest was 0.27% as of 06/01/2012. Enduro Royalty Trust focuses on acquiring and owning a net profits interest representing the right to receive an 80% of the net profits from the sale of oil and natural gas production from certain properties located in the states of Texas, Louisiana, and New Mexico held by Enduro Resource Partners LLC. The company was founded in 2011 and is based in Austin, Texas. Enduro Royalty Trust is a subsidiary of Enduro Resource Partners LLC.
*Company profiles were sourced from Finviz. Financial data was sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.