Dividend investors can all agree that high yields are nice, but they're even better when the payouts are sustainable. Today we focused on dividend stocks with solid yields (3%+) with steady payout ratios, but that also look undervalued by their fundamentals. To hone in on the best in class, we focused in on stocks with analyst ratings of 'Buy', or 'Strong Buy'. We think you'll like the list we came up with.
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.
The Price/Earnings ratio is one of the most commonly used price-multiple metrics. Often, EPS from the last four quarters is used to derive this number. A firm that has a high P/E ratio generally indicates that investors have high expectations of the firm relative to future earnings growth. By the opposite token, investors generally have lower expectations of a firm with a low P/E ratio. A firm that holds a P/E below 10 could be viewed as having "value investment" potential. One thing to remember is that EPS is an accounting measure that could be potentially manipulated. Thus the P/E is only as good as the quality of the earnings.
We first looked for dividend stocks. From here, we then looked for companies that analysts rate as "Buy" or "Strong Buy" (mean recommendation < 3). Next, we then screened for businesses that are undervalued (P/BV<1)(P/E<10). We did not screen out any market caps or sectors.
Do you think these stocks have higher to rise? Use our list along with your own analysis.
1) United Online, Inc. (UNTD)
|Industry:||Specialty Retail, Other|
United Online, Inc. has a Dividend Yield of 9.64%, a Payout Ratio of 75.67%, a Analysts' Rating of 2.50, a Price/Book Value Ratio of 0.77, and a Price/Earnings Ratio of 7.55. The short interest was 7.23% as of 07/05/2012. 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 the ftd.
2) Ternium S.A. (TX)
|Industry:||Steel & Iron|
Ternium S.A. has a Dividend Yield of 3.60%, a Payout Ratio of 32.11%, a Analysts' Rating of 2.00, a Price/Book Value Ratio of 0.70, and a Price/Earnings Ratio of 8.73. The short interest was 0.29% as of 07/05/2012. Ternium S.A. engages in manufacturing and processing a range of flat and long steel products for construction, home appliances, capital goods, container, food, energy, and automotive industries. The company operates in three segments: Flat Steel Products, Long Steel Products, and Other Products. The Flat Steel Products segment manufactures and markets slabs, hot rolled coils and sheets, cold rolled coils and sheets, tin plate, hot dipped galvanized and electro-galvanized sheets, pre-painted sheets, beams, roll formed products, and other tailor-made products, as well as steel pipes and tubular products, such as tubes for general use, structural tubes, tubes for mechanical applications, conduction tubes, conduction electrical tubes, and oil tubes.
3) Etablissements Delhaize Freres et Cie Le Lion S.A. (DEG)
Etablissements Delhaize Freres et Cie Le Lion S.A. has a Dividend Yield of 5.98%, a Payout Ratio of 51.33%, a Analysts' Rating of 2.00, a Price/Book Value Ratio of 0.55, and a Price/Earnings Ratio of 8.56. The short interest was 0.11% as of 07/05/2012. Etablissements Delhaize Frres et Cie 'Le Lion' (Groupe Delhaize) SA, together with its subsidiaries, engages in the operation of food supermarkets in the United States, Belgium, southeastern Europe, and Asia. It also operates other store formats, such as proximity stores. In addition, the company is involved in food wholesaling to affiliated stores and independent wholesale customers; and in the retail of non-food products, such as pet products. As of December 31, 2011, it operated a network of 3,408 stores. The company was founded in 1867 and is based in Brussels, Belgium.
4) PartnerRe Ltd. (PRE)
|Industry:||Property & Casualty Insurance|
PartnerRe Ltd. has a Dividend Yield of 3.29%, a Payout Ratio of 26.74%, a Analysts' Rating of 2.50, a Price/Book Value Ratio of 0.73, and a Price/Earnings Ratio of 8.51. The short interest was 1.31% as of 07/05/2012. PartnerRe Ltd., through its subsidiaries, provides reinsurance services worldwide. It offers reinsurance coverage to insurers for property damage or business interruption losses resulting from fires, catastrophes, and other perils covered in industrial and commercial property, and homeowners' policies; and casualty reinsurance, such as third party liability, employers' liability, workers' compensation, and personal accident coverage. The company also provides coverage against agricultural yield and price/revenue risks related to flood, drought, and hail, as well as diseases related to crops, livestock, and aquaculture; specialized reinsurance protection for airline, general aviation, and space insurance business; and property catastrophe reinsurance protection against the accumulation of losses caused by windstorm, earthquake, tornado, tropical cyclone, and flood.
5) Xinyuan Real Estate Co., Ltd. (XIN)
Xinyuan Real Estate Co., Ltd. has a Dividend Yield of 5.41%, a Analysts' Rating of 2.00, a Price/Book Value Ratio of 0.33, and a Price/Earnings Ratio of 1.96. The short interest was 47.37% as of 07/05/2012. Xinyuan Real Estate Co. Ltd., together with its subsidiaries, engages in residential real estate development in China. The company's residential projects comprise various residential buildings that include multi-layer apartment buildings, sub-high-rise apartment buildings, or high-rise apartment buildings; auxiliary services and amenities, such as retail outlets, leisure and health facilities, kindergartens, and schools; and small scale residential properties. It also offers property management and other real estate related services, such as landscaping and installing intercom systems.
6) GameStop Corp. (GME)
GameStop Corp. has a Dividend Yield of 3.28%, a Payout Ratio of 6.20%, a Analysts' Rating of 2.40, a Price/Book Value Ratio of 0.81, and a Price/Earnings Ratio of 7.58. The short interest was 42.14% as of 07/05/2012. GameStop Corp. operates as a video game retailer. It sells new and used video game hardware; physical and digital video game software; and accessories and other products that primarily include controllers, memory cards, and other add-ons, as well as strategy guides, magazines, and trading cards. The company also offers personal computer (PC) entertainment and other software across various genres, including sports, action, strategy, adventure/role playing, and simulation, as well as products that relate to the digital category comprising network point cards, prepaid digital and online timecards, and digitally downloadable software.
*Company profiles were sourced from Finviz. Financial data was sourced from Yahoo Finance.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.