Dividend investors love reliable yields, but even more so when they can get them for cheap. Today we focused on dividend stocks offering yields at 3% and greater, enough to put income back in the pockets of investor. To find the best deals, we searched for those whose fundamentals suggest that they're trading below their true worth. As a way to hone in on the best available, of these cheap stocks, we only included stocks that analysts have recently rated as 'Buy' or better. We came up with a diverse and interesting list.
The forward P/E is a price multiple valuation metric, which is similar to the current P/E ratio, except that it uses the forecasted earnings instead. While this number might not be as accurate because it uses "forecasted" numbers, it does offer the benefit of illustrating analysts' expectations of a firm. If the market believes that earnings will grow moving forward, then the forward P/E should be lower than the current P/E. Financial Leverage, also known as the Equity Multiplier, illustrates how a firm is financing its assets. The lower the number the more a firm is financing its assets internally through stockholder equity. The higher this metric is the more the firm is relying on debt to finance its assets.
The Price/Sales ratio is a price-multiple valuation metric used to help identify if a firm is cheap by its 12-month trailing sales numbers. In the most basic terms it let's an investor know how much the investment community is willing to pay for every dollars worth of sales. A firm with a P/S ratio of one or lower would be viewed as cheap because investors are paying $1 or less for every dollars worth of a firm's sales. On the other hand, a firm is generally considered to be expensive when the P/S ratio is above three. These are general guidelines used by the investment community not hard rules to be clear. Price/Sales Ratio = Current Stock Price/Revenue (sales) per Share.
We first looked for dividend stocks. Next, we then screened for businesses that analysts rate as "Buy" or "Strong Buy" (mean recommendation < 3). We then looked for companies with a low price-multiple premium (forward P/E<10)(P/S<1). We did not screen out any market caps or sectors.
Do you think these stocks have what it takes to grow? Use our list to help with your own analysis.
1) Kronos Worldwide Inc. (KRO)
Kronos Worldwide Inc. has a Dividend Yield of 3.38%, a Payout Ratio of 17.51%, an Analysts' Rating of 2.50, a Forward Price/Earnings Ratio of 7.01, and a Price/Sales Ratio of 0.99. The short interest was 27.58% as of 08/07/2012. Kronos Worldwide, Inc. engages in the production and marketing of titanium dioxide pigments under the Kronos brand name primarily in North America and Europe. It produces titanium dioxide pigments in two crystalline forms, rutile and anatase to impart whiteness, brightness, opacity, and durability for products, such as coatings, plastics, papers fibers, and ceramics, as well as for various specialty products, including inks, food, and cosmetics.
The company also offers ilmenite, a raw material used directly as a feedstock by sulfate-process titanium dioxide pigment plants; iron-based chemicals, which are co-products and processed co-products of the titanium dioxide pigment production process and used as treatment and conditioning agents for industrial effluents and municipal wastewater, as well as in the manufacture of iron pigments, cement, and agricultural products; and titanium oxychloride and titanyl sulfate, which are side-stream products from the production of titanium dioxide pigments.
2) GameStop Corp. (GME)
GameStop Corp. has a Dividend Yield of 3.75%, a Payout Ratio of 6.20%, an Analysts' Rating of 2.40, a Forward Price/Earnings Ratio of 4.75, and a Price/Sales Ratio of 0.23. The short interest was 38.67% as of 08/07/2012. 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.
3) BT Group plc (BT)
|Industry:||Telecom Services - Foreign|
BT Group plc has a Dividend Yield of 3.80%, a Payout Ratio of 31.62%, an Analysts' Rating of 2.00, a Forward Price/Earnings Ratio of 8.49, and a Price/Sales Ratio of 0.93. The short interest was 0.01% as of 08/07/2012. BT Group plc provides communications solutions and services worldwide. It operates in four segments: BT Global Services, BT Retail, BT Wholesale, and Openreach. BT Global Services segment provides networked IT services to multinational corporations, domestic businesses, and national and local government departments.
4) Cresud Sociedad An (CRESY)
Cresud Sociedad An has a Dividend Yield of 3.45%, a Payout Ratio of 50.03%, an Analysts' Rating of 2.30, a Forward Price/Earnings Ratio of 9.71, and a Price/Sales Ratio of 0.62. The short interest was 0.71% as of 08/07/2012. Cresud, Inc., an agricultural company, engages in crop production, cattle raising, and milk production in Argentina. The company engages in the planting and harvesting, and sale of fine and coarse grains and oilseeds, including wheat, corn, soybeans, and sunflowers.
5) Endurance Specialty Holdings Ltd. (ENH)
|Industry:||Property & Casualty Insurance|
Endurance Specialty Holdings Ltd. has a Dividend Yield of 3.47%, a Payout Ratio of 72.10%, an Analysts' Rating of 2.40, a Forward Price/Earnings Ratio of 7.95, and a Price/Sales Ratio of 0.72. The short interest was 1.57% as of 08/07/2012. Endurance Specialty Holdings Ltd. underwrites specialty lines of personal and commercial property and casualty insurance and reinsurance worldwide. Its Insurance segment offers agriculture insurance covering traditional multi-peril crop insurance, crop hail, livestock risk protection, and other agriculture risk management products; and professional lines of insurance products, including directors' and officers' liability, errors and omissions, employment practices liability, environmental liability, and pension trust liability insurance. This segment also offers casualty insurance comprising third party liability insurance; property insurance for various industries; healthcare liability line focusing on hospital medical professional liability insurance; and surety and other specialty products, such as contract and commercial surety, and workers' compensation.
6) PartnerRe Ltd. (PRE)
|Industry:||Property & Casualty Insurance|
PartnerRe Ltd. has a Dividend Yield of 3.41%, a Payout Ratio of 24.93%, an Analysts' Rating of 2.50, a Forward Price/Earnings Ratio of 9.69, and a Price/Sales Ratio of 0.82. The short interest was 1.55% as of 08/07/2012. 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.
7) Staples, Inc. (SPLS)
|Industry:||Specialty Retail, Other|
Staples, Inc. has a Dividend Yield of 3.36%, a Payout Ratio of 28.94%, an Analysts' Rating of 2.50, a Forward Price/Earnings Ratio of 8.28, and a Price/Sales Ratio of 0.36. The short interest was 7.51% as of 08/07/2012. 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.
*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.