7 Undervalued Dividend Stocks With Strong Profitability

Includes: GES, KSS, NSC, PL, RES, SNA, SYA
by: Kapitall

Do you prefer stocks that can offer both income and the possibility for growth? For ideas on how to start your own search, we ran a screen.

We began by screening for stocks paying dividend yields above 2% and sustainable payout ratios below 50%. We then searched for those that appear undervalued by earnings growth, with PEG below 1.

Finally, we screened for those with high profitability, with higher gross, operating, and pretax margins than their industry peers.

Interactive Chart: Press Play to compare changes in market cap over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.

Do you think these stocks offer both income and the possibility for growth? Use this list as a starting point for your own analysis.

1. Guess? Inc. (NYSE:GES): Engages in the design, marketing, distribution, and licensing of apparel and accessories for men, women, and children. PEG at 0.96. Dividend yield at 2.46%, payout ratio at 28.08%. TTM gross margin at 43.72% vs. industry average at 37.71%. TTM operating margin at 11.55% vs. industry average at 10.07%.TTM pretax margin at 15.56% vs. industry average at 9.3%.

2. Kohl's Corp. (NYSE:KSS): Operates department stores in the United States. PEG at 0.84. Dividend yield at 2.63%, payout ratio at 22.74%. TTM gross margin at 38.18% vs. industry average at 35.1%. TTM operating margin at 11.48% vs. industry average at 8.1%.TTM pretax margin at 9.89% vs. industry average at 6.71%.

3. Norfolk Southern Corp. (NYSE:NSC): Engages in the rail transportation of raw materials, intermediate products, and finished goods primarily in the United States. PEG at 0.78. Dividend yield at 2.80%, payout ratio at 29.73%. TTM gross margin at 36.99% vs. industry average at 35.85%. TTM operating margin at 29.28% vs. industry average at 25.8%.TTM pretax margin at 26.12% vs. industry average at 23.16%.

4. Protective Life Corp. (NYSE:PL): Engages in the production, distribution, and administration of insurance and investment products in the United States. PEG at 0.93. Dividend yield at 2.19%, payout ratio at 15.48%. TTM gross margin at 17.57% vs. industry average at 14.28%. TTM operating margin at 17.57% vs. industry average at 11.38%.TTM pretax margin at 14.42% vs. industry average at 8.7%.

5. RPC Inc. (NYSE:RES): Provides a range of oilfield services and equipment to the oil and gas companies primarily in the United States. PEG at 0.32. Dividend yield at 3.15%, payout ratio at 15.97%. TTM gross margin at 45.15% vs. industry average at 34.05%. TTM operating margin at 26.85% vs. industry average at 18.27%.TTM pretax margin at 26.46% vs. industry average at 13.55%.

6. Snap-on Inc. (NYSE:SNA): Manufactures and markets tools, diagnostics, equipment, software, and service solutions for professional users in the United States, the United Kingdom, Canada, Germany, Japan, France, Australia, Spain, the Netherlands, Italy, China, and Sweden. PEG at 0.99. Dividend yield at 2.25%, payout ratio at 27.76%. TTM gross margin at 51.85% vs. industry average at 31.98%. TTM operating margin at 15.76% vs. industry average at 13.49%.TTM pretax margin at 14.02% vs. industry average at 11.53%.

7. Symetra Financial Corporation (NYSE:SYA): Operates as a financial services company in the life insurance industry in the United States. PEG at 0.8. Dividend yield at 2.49%, payout ratio at 13.13%. TTM gross margin at 15.56% vs. industry average at 14.23%. TTM operating margin at 15.56% vs. industry average at 11.33%.TTM pretax margin at 13.96% vs. industry average at 8.64%.

*Profitability data sourced from Fidelity, all other data sourced from Finviz.

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