Stocks from the Share Buyback Achievers Index with cheap price ratios and growth potential originally published at "long-term-investments.blogspot.com". As you might know, I love growing dividends from a company but my dividend approach has a great fault: It doesn't take great cash cows with no dividend payments into account.
A dividend payment is only one way to distribute money back to shareholders. A second way is to buy own shares back. Some companies repurchase their shares instead of the dividend payment and they try to boost earnings per share growth with this model. It's a very tax-optimized method, especially if you use debt for this process as happened with Apple.
I also look at the number of shares repurchases when I consider buying a stock. The total amount of cash distribution is critical and not the amount of dividend payments in the past. Some companies gave back money in the amount of their whole company over the recent five years and they try to follow this approach for the future. That's what I really like.
Out there is a great index that covers some of the best dividend growth stocks with share repurchases and adds the best share buyback companies. Within the recent 12 months, all constituents needed to buy at least five percent of their own outstanding shares.
Today I like to screen the Share Buyback Achievers Index by the cheapest dividend stocks with additional growth potential. I selected stocks with a low forward P/E (under 15) as well as a P/B and P/S ratio of less than one. In addition, the five year earnings per share should grow at least with five percent or more.
Fifteen stocks fulfilled the above mentioned criteria. Half of the results pay a dividend between 1 percent and 2.5 percent. The rest is only focused on share buybacks. The good thing is that nine companies have a current buy or better rating.
Here is the full table with some fundamentals:
Take a closer look at the full list. The average P/E ratio amounts to 11.71 and forward P/E ratio is 9.71. The dividend yield has a value of 0.88 percent. Price to book ratio is 0.77 and price to sales ratio 0.60. The operating margin amounts to 12.80 percent and the beta ratio is 1.86. Stocks from the list have an average debt to equity ratio of 0.62.
Related stock ticker symbols:
XRX, AIZ, UNM, AFG, BBOX, AGII, LNC, CNO, MWW, AIG, PJC, GTI, GPRE, TECD, AMKR