5 Under-the-Radar Low P/E Dividend Paying Stocks

Includes: DLX, NC, NLY, STO, TRV
by: NakedValue

Travelers Company (NYSE:TRV)
Forward P/E: 10.00
Dividend: $1.44 (2.50%)

The international property & casualty insurance company rebounded from March 2009 lows of $35 to the current price of $61.32. In addition to the low forward P/E and solid dividend yield, the company trades at a price/sales of 1.01, a price/book of 1.01 and return on assets of 2.77%. The company has grown its revenues over the last three years, albeit slowly. From 2009 to 2010, revenues grew at 1.8%.

Travelers is an insurance company with a great brand name and a reputation for excellence. Despite the financial crisis of 2008, the company has grown their per share book value and dividends every year from 2006 to 2010. Travelers appears to be a good stock trading at a good price. But considering the reasonable valuations in the rest of the industry and the sizeable equity rally since March 2009, we think investors should be greedy and wait for stock price weakness. While 97% of their fixed income investment portfolio was rated investment grade, the company is still sensitive to market declines.

Annaly Capital Management (NYSE:NLY)
Forward P/E: 7.74
Dividend: $2.48 (14.30%)

The real estate investment trust owns, manages and finances a portfolio of real estate investments. After doing a masterful job of navigating its way through the financial crisis as their stock fell from $21 to $13, Annaly Capital stock has stagnated.

From 2008 to 2010, total interest income was $3.12 billion, $2.92 billion and $2.68 billion. While interest income yield on total assets has declined to 3.23% from its 2008 peak of 5.41%, return on assets was strong in 2010. The 2010 return on assets dropped off from 2009 levels, but the results were affect by strong volatility in unrealized gains and losses from interest rate swaps.

Deluxe Corporation (NYSE:DLX)
Forward P/E: 8.49
Dividend: $1.00 (3.70%)

The personalized printed products company once thrived because of their steady, high margin check business. Even now, the company's checks and contract settlements business accounts for 63.9% of total sales. From 2006 to 2010, revenues declined from $1.619 billion to $1.402 billion. Despite declining sales, the company has successfully increased gross margins and reduced operating expenses. From 2006 to 2010, gross margins increased from 62.9% of sales to 65.2% and operating expenses decreased from 47.6% of sales to 44.5%.

The company's flagship business is clearly in decline as orders decreased from 64,670 to 56,736 between 2006 and 2010, but revenues per order have remained steady. While the company has cut back on employees, from 8,728 in 2006 to 5,765 in 2010, Deluxe Corporation is still investing in growth. In 2010, the company spent $136 million in investing activities. The company is a cheap stock with declining revenues. There are likely better places for investors to look. Interested investors should wait for additional stock price weakness.

NACCO Industries (NYSE:NC)
Forward P/E: 8.37
Dividend: $2.09 (2.00%)

The company operates a wide range of businesses including materials handling, small household appliances, kitchenware and North American coal. Their portfolio contains famous brands such as Le Gourmet Chef, Hamilton Beach, Hyster and Yale.

The company as a price/sales of 0.33 and a 5 year PEG ratio of 0.17. While the company carries $355 million of debt on the balance sheet, their trailing EV/EBITDA is 6.70.

Investors should take a close look at this company. We would consider buying on weakness. Management has previously shown a willingness to sell businesses like the Red River Mining assets. While breaking the company apart could expose the kitchen brands segment to weakness, any reorganization or special situation would unlock shareholder value at this conglomerate.

Statoil ASA (NYSE:STO)
Forward P/E: 8.04
Dividend: $0.94 (3.50%)

The petroleum exploration and product company is headquartered in Norway and operates through Scandinavia, Poland, Estonia, Latvia, Russia and Lithuania. Like other oil companies, Statoil had a strong year in 2008, a sharp drop-off in 2009 and a nice bounce in 2010 as oil prices returned to pre-crisis levels. In 2010, the company produced 1,888 million barrels of oil equivalent each day. This was relatively in line with production over the last five years.

The company has upside potential as they leverage their expertise to find opportunities in Deep Water, Harsh environments like the Artic, Heavy Oil (Norway, Canada, Brazil, Venezuela and the UK) and gas value chain. At the end of 2010, Statoil had 1,241 mmbbl of proved oil reserves and 16.3 tcf of proved natural gas reserves.

Statoil could be an interesting stock for an investor looking for a foreign integrated oil company. While the company has not returned to the 2008 highs of around $42, the stock has almost doubled from its March 2009 lows. Considering the runaway strength in oil prices, investors may want to wait for stock price weakness.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in NC over the next 72 hours.