5 Large Cap Financials Paying Hefty Dividends

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Includes: AFL, BLK, JPM, PNC, TRV
by: Efsinvestment

Since the beginning of this year, financial stocks have fallen off the cliff, loosing almost 25% on average. While I am not a big fan of financials, the recent sell-off created a good opportunity to snap up solid dividend stocks with single-digit P/E ratios. I have looked for the top financial companies that offer excellent dividends and are priced with low P/Es. I have investigated all of these stocks from a fundamental perspective, adding my opinion about them. I have applied my O-Metrix Grading System where possible.

Data obtained from Finviz/Morningstar, and is current as of October 4 close. You can download the O-Metrix calculator here.

Aflac Inc. (AFL): Aflac is a general business holding company that primarily operates in the insurance field. It was trading at a P/E ratio of 9.4, and a forward P/E ratio of 5.5, as of the October 4 close. Analysts expect the company to have a 12.6% annualized EPS growth in the next five years. With a profit margin of 8.6%, shareholders enjoyed a 3.32% dividend last year.

Earnings increased 55.25% this year, and it has an O-Metrix score of 10.68. The stock is currently trading 37.93% lower than its 52-week high. Target price implies a 54.2% upside potential, while it returned -30.7% in a year. Debt-to equity ratio is zero, better than the industry average of 0.3. SMA20 is 5.77%, and institutions own 62.04% of the shares. Debts are far from being a threat, while cash flow is doing great. PEG value is 0.4. Yields are consistent. Moreover, it has a four-star rating from Morningstar. You can read a full analysis of Aflac here. Recent dividend payments are as follows:

08/15/11

$0.30

05/16/11

$0.30

02/11/11

$0.30

11/15/10

$0.30

BlackRock Inc. (BLK): BlackRock is an independent investment management firm. It was trading at a P/E ratio of 12.2, and a forward P/E ratio of 11.0, as of the October 4 close. Estimated annualized EPS growth for the next five years is 13.0%. With a profit margin of 26.0%, shareholders enjoyed a 3.74% dividend last year.

BlackRock had a 72.52% EPS growth this year, and 45.16% this quarter. It returned -13.2% in a year, whereas its O-Metrix score is 7.21. Gross margin and operating margin are 60.0% and 35.9%, respectively. Target price indicates an about 40.6% increase potential, while the stock is currently trading 27.67% lower than its 52-week high. Yields are awesome. Debt-to equity ratio is 0.2, far better than the industry average of 1.7. Although it is having hard times, I believe it will outperform in the long run. Moreover, it has a five-star rating from Morningstar. Recent dividend history of the stock per share is as follows:

12/01/11

$1.37

10/04/11

$0.48

08/31/11

$1.37

06/03/11

$1.37

JPMorgan Chase & Co (JPM): JPMorgan Chase & Co is one of the oldest financial holding companies in the world. The New York-based financial titan has a P/E ratio of 6.2, and a forward P/E ratio of 5.9, as of October 4. Analysts expect the company to have an 8.8% annualized EPS growth in the next five years. It offers a 3.30% dividend, while the profit margin (18.3%) is way higher than the industry average of 11.4%.

JPMorgan returned -24.0% in a year, whereas its target price shows a 64.5% upside potential. Earnings increased by 76.81% this year. The stock is trading 36.19% lower than its 52-week high, and it has an O-Metrix score of 10.00. Institutions own 75.19% of the shares. PEG value is 0.7, and analysts give a 1.70 rating for JPMorgan (1=Buy, 5=Sell). Moreover, it has a five-star rating from Morningstar. P/E ratio, profit margin, ROE (11.0%), and debt-to-equity ratio are all green flags. The recent sell-off created a rare opportunity to buy this stock way below its fair value. Consider adding this stock to your portfolio. Here is the recent dividend history of JPMorgan:

10/04/11

$0.25

07/01/11

$0.25

04/04/11

$0.25

01/04/11

$0.05

PNC Financial Services Group Inc (PNC): PNC Financial Services is a diversified financial services company in the United States. As of October 4, PNC shows a trailing P/E ratio of 7.8, and a forward P/E ratio of 8.1. Analysts estimate a 4.8% annualized EPS growth in the next five years. With a profit margin of 24.5%, shareholders enjoyed a 3.00% dividend last year.

The stock is currently trading 27.32% lower than its 52-week high. Target price implies a 39.3% upside potential, while it returned -12.3% in a year. O-Metrix score of PNC is 4.90, whereas institutions own 80.63% of the shares. Debt-to-equity ratio is 0.5, far better than the industry average of 1.7. P/E ratio, profit margin, ROE (11.9%), and debt-to equity ratio are strong green flags. Earnings increased by 18.03% this year, and 16.69% this quarter. Moreover, it has a four-star rating from Morningstar. 18 out of 32 analysts recommend buying, and my opinion is no different. Here is the recent dividend history of the stock:

07/14/11

$0.35

04/14/11

$0.35

01/12/11

$0.10

10/13/10

$0.10

The Travelers Companies Inc. (TRV): The Travelers Companies is a holding company. The New York-based financial shows a trailing P/E ratio of 9.3, and a forward P/E ratio of 8.3, as of the October 4 close. Five-year annualized EPS growth is 10.0%. With a profit margin of 9.3%, it offers a 3.41% dividend.

Target price is $62.22, indicating a 28.5% upside movement potential. Travelers returned -8.9% in a year. Debt-to equity ratio is 0.3, better than the industry average of 0.5. Institutions own 85.37% of the shares, and it is currently trading 23.40% lower than its 52-week high. Yields are great, and debts are decreasing for the last five quarters. O-Metrix score is 7.61, while Beta value is 0.63. PEG value is 0.8. Moreover, it has a four-star rating from Morningstar. Travelers Company is a dividend pick for the next five years. Recent dividend payments are as follows:

09/07/11

$0.41

06/08/11

$0.41

03/08/11

$0.36

12/08/10

$0.36

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.