Are you a dividend investor on the hunt for moderate to high yields? If so, you're in luck, because today we focused on dividend stocks offering yields at 3% and greater, while at the same time appearing undervalued by their fundamentals. To find the best available, we only included stocks that analysts recently rated as 'Buy' or 'Strong Buy'. We came up with a diverse and interesting list of high-yielders.
The Price/Cash Flow ratio is a price-multiple valuation metric that also measures a firm's future financial health. An advantage of using cash flow is that it removes non-cash factors, which helps provide a clearer picture of how much money the firm is taking in from a valuation standpoint.
Price/Cash Flow Ratio = Current Stock Price/Cash Flow Per Share
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 company that has a high P/E ratio generally indicates that investors have high expectations of the company 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. We next screened for businesses that are trading at low price-multiple valuations (P/CFO<10)(P/E<10). We next screened for businesses 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 break through to new highs? Use our screened list as a starting point for your own analysis.
1) Barclays PLC (BCS)
|Industry:||Foreign Money Center Banks|
Barclays PLC has a Dividend Yield of 3.68%, a Payout Ratio of 24.21%, a Price/Cash Flow Ratio of 0.19, a Price/Earnings Ratio of 6.92, and an Analysts' Rating of 1.30. The short interest was 0.29% as of July 16, 2012. Barclays PLC provides various financial products and services worldwide. It offers retail and commercial banking, credit cards, investment banking, wealth management, and investment management services. The company's personal banking products include bank accounts, a range of credit cards through Barclaycard, savings accounts, loans, insurance, online banking, and mortgages through Woolwich.
2) Deluxe Corpoation (DLX)
Deluxe Corp. has a Dividend Yield of 3.78%, a Payout Ratio of 32.88%, a Price/Cash Flow Ratio of 22.98, a Price/Earnings Ratio of 8.76, and an Analysts' Rating of 1.30. The short interest was 14.69% as of July 16, 2012. Deluxe Corporation, together with its subsidiaries, provides printed products, forms, and marketing solutions to small businesses and financial institutions primarily in the United States, Canada, Europe, and South America.
The company offers checks; printed forms, including billing forms, work orders, job proposals, purchase orders, invoices, and personnel forms, as well as computer forms, deposit tickets, and check registers; and accessories and other products, such as envelopes, office supplies, stamps, and labels, as well as retail packaging supplies and checkbook covers.
It also provides marketing solutions, which include web design, hosting and other web services, logo design, search engine marketing, and digital printing services for the sales and marketing needs of small businesses, business cards, greeting cards, brochures, and apparel; and customer acquisition programs and marketing communications services, and package insert programs. In addition, the company offers fraud protection services; payroll services; and financial institution profitability, regulatory, and compliance programs.
3) Guangshen Railway Company Limited (GSH)
Guangshen Railway Company Limited has a Dividend Yield of 5.08%, a Payout Ratio of 39.26%, a Price/Cash Flow Ratio of 2.79, a Price/Earnings Ratio of 7.80, and an Analysts' Rating of 2.00. The short interest was 3.59% as of July 16, 2012. Guangshen Railway Company Limited provides passenger and freight transportation services on the Shenzhen-Guangzhou-Pingshi railway in the People's Republic of China. The company's freight services include the transportation of full load and single load cargo, containers, bulky and overweight cargo, dangerous cargo, fresh and live cargo, and oversized cargo.
It also offers long distance passenger transportation services. In addition, the company engages in the sale of food, beverages, and merchandise on board the trains and in railway stations, as well as materials and supplies, maintenance, and repair of trains. Further, it provides travel agency, warehousing, hotel management, catering management and services, and advertising services; and railway network usage and services, including the locomotive traction, track usage, electric catenaries, vehicle coupling, and other services, as well as engages in the property management and supervision of construction projects.
4) Staples, Inc. (SPLS)
|Industry:||Specialty Retail, Other|
Staples, Inc. has a Dividend Yield of 3.55%, a Payout Ratio of 28.94%, a Price/Cash Flow Ratio of 7.10, a Price/Earnings Ratio of 8.86, and an Analysts' Rating of 2.50. The short interest was 7.65% as of July 16, 2012. Staples, Inc., together with its subsidiaries, operates as an office products company. The company offers various office supplies and services, office machines and related products, computers and related products, and office furniture under Staples, Quill, and other proprietary brands. It also provides copy and print services to retail and delivery customers, as well as technology services through its EasyTech business.
5) Aircastle Limited (AYR)
|Industry:||Rental & Leasing Services|
Aircastle Limited has a Dividend Yield of 4.78%, a Payout Ratio of 35.54%, a Price/Cash Flow Ratio of 3.53, a Price/Earnings Ratio of 8.15, and an Analysts' Rating of 2.40. The short interest was 3.44% as of July 16, 2012. Aircastle Limited, through its subsidiaries, engages in the acquisition, lease, and sale of high-utility commercial jet aircraft to passenger and cargo airlines worldwide.
The company also makes investments in various aviation assets, including debt investments secured by commercial jet aircraft. As of December 31, 2011, its aircraft portfolio consisted of 144 aircraft that were leased to 65 lessees located in 36 countries, and managed through offices in the United States, Ireland, and Singapore.
*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.