3 Undervalued, High-Yielding, Solvent Investments

Includes: CXS, HCLP, SB
by: Dividend_Investor

In screening through the many thousands of investments, I set parameters to filter for high dividend yielding stocks that trade on low valuations, with likelihood of maintaining the current dividends.

In setting the parameters for the equities, I sought to minimize downside risk by buying into cheap valuations, while maintaining a healthy balance sheet to support future dividend payouts. I filtered through equities with current and forward P/E ratios of under 15, while Ideally being in the lower single digit ranges. By doing so, we could mitigate downside risk by buying into already cheap valuations, and increase our chances for P/E expansion, leading to capital gains.

I also filtered for equities with dividend yields of above 5%, to help create a nice income stream. Finally, in attempts to mitigate the chances of future dividend cuts, I looked for companies with current ratios above 2.0, which implied very strong balance sheets and a strong ability to pay current liabilities. With these parameters, and an outlook for dividend income, I believe the following equities seem attractive:

Safe Bulkers (SB)

"The Company is an international provider of marine drybulk transportation services, transporting bulk cargoes, particularly coal, grain and iron ore, along worldwide shipping routes for some of the consumers of marine drybulk transportation services" (MorningStar).


Safe Bulkers trades at a bleak P/E ratio of 3.26 and forward P/E ratio of 3.66. It recently cut its dividend from $0.15/share to $0.05/share, sending the stocks shooting down, with recent uptrends. Given an incredibly conservative 5-year EPS growth projection of 5%, SB trades at a PEG of 0.65 and under its share price of $3.88 trades under its book value of $5.18/share. The company also provides a dividend yield of 5.15% and will likely continue its payments because of its high liquidity, as pronounced by its current ratio of 2.38.

Hi-Crush Partners (HCLP)

"Hi-Crush Partners LP is a low-cost, domestic producer of premium monocrystalline sand, a specialized mineral that is used as a proppant to enhance the recovery rates of hydrocarbons from oil and natural gas wells" (MorningStar).


The company trades at a trailing P/E of 5.48, and forward P/E of 6.52. It has experienced strong sales and earnings growth of 27.90% and 53.23% Q/Q, respectively. The company also has efficient utilization of its assets, as represented by its 49.91%, and has shown incredible profitability with its 72.92% gross margin and 57.55% profit margin.

Furthermore, the company's current ratio of 5.19 and quick ratio of 4.54 illustrate strong liquidity and an ability to continue paying its dividends, which are currently yielding 10.88%.

Crexus Investments Group (CXS)

"CreXus Investment Corp, is a commercial real estate company that acquires, manages, and finances commercial mortgage loans and other commercial real estate debt, commercial real property, commercial mortgage-backed securities" (MorningStar).


CreXus is currently trading at a trailing P/E of 11.18 and forward P/E of 12.91, which is relatively undervalued for the industry. The company's gross margin of 98.67%, operating margin of 83.56%, and profit margin of 83.53% are well above that of its peers. With a current ratio of 17.23, and total asset/total liability ratio of 1.43, the company seems amply able to maintain its current dividend stream, which is yielding 9.62%

Disclosure: I am long SB. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.