If you are a dividend investor, chances are you see investing as a discipline rather than a game. When the goal is steady wealth accumulation, you know that it takes focus. Investing in dividends that offer high yields is probably already part of your strategy. Today we offer a list of companies of that nature. Additionally, they appear underpriced according to their fundamentals and have been rated 'Buy' by industry analysts.
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 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.
We first looked for stocks that have a high dividend yield (Div. Yield > 5%). We then screened for businesses that analysts rate as "Buy" (2 < mean recommendation < 3). We then looked for companies that are undervalued (P/BV<1)(PEG < 1). We did not screen out any market caps or sectors.
Do you think these stocks have what it takes to grow? Please use our list to assist with your own analysis.
1) Xinyuan Real Estate Co., Ltd. (XIN)
Xinyuan Real Estate Co., Ltd. has a Dividend Yield of 6.43%, a Analysts' Rating of 2.00, a Price/Book Value Ratio of 0.28, and a Price/Earnings to Growth Ratio of 0.33. The short interest was 0.53% as of 08/05/2012. Xinyuan Real Estate Co., Ltd., together with its subsidiaries, engages in the development of residential real estate projects in China. The company's residential projects comprise various multiple residential buildings that include multi-layer apartment buildings, sub-high-rise apartment buildings, or high-rise apartment buildings; and small scale residential properties. Its projects include auxiliary services and amenities, such as retail outlets, leisure and health facilities, kindergartens, and schools.
2) Navios Maritime Holdings Inc. (NM)
Navios Maritime Holdings Inc. has a Dividend Yield of 6.63%, a Payout Ratio of 28.25%, a Analysts' Rating of 2.00, a Price/Book Value Ratio of 0.35, and a Price/Earnings to Growth Ratio of 0.30. The short interest was 0.55% as of 08/05/2012. Navios Maritime Holdings Inc. operates as a seaborne shipping and logistics company. It focuses on the transportation and transshipment of dry bulk commodities, including iron ore, coal, fertilizers, and grains. The company controls a fleet of 31 owned vessels and 26 chartered-in vessels.
3) Cliffs Natural Resources Inc. (CLF)
|Industry:||Steel & Iron|
Cliffs Natural Resources Inc. has a Dividend Yield of 5.94%, a Payout Ratio of 8.82%, a Analysts' Rating of 2.30, a Price/Book Value Ratio of 0.98, and a Price/Earnings to Growth Ratio of 0.54. The short interest was 7.10% as of 08/05/2012. Cliffs Natural Resources Inc., a mining and natural resources company, engages in the production of iron ore pellets, fines and lump ore, and metallurgical coal. It operates five iron ore mines located in Michigan and Minnesota; five metallurgical coal mines located in West Virginia and Alabama; and one thermal coal mine located in West Virginia. The company also operates two iron ore mines in eastern Canada that primarily provide iron ore to steel producers in Asia; and two iron ore mining complexes in Western Australia.
4) United Online, Inc. (UNTD)
|Industry:||Specialty Retail, Other|
United Online, Inc. has a Dividend Yield of 7.81%, a Payout Ratio of 75.67%, a Analysts' Rating of 2.50, a Price/Book Value Ratio of 0.94, and a Price/Earnings to Growth Ratio of 0.62. The short interest was 7.29% as of 08/05/2012. 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.
*Company profiles were sourced from Google Finance and Yahoo Finance. 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.