7 Undervalued Large Cap Basic Materials Dividend Stocks With Analyst Confidence

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Includes: BBL, CEO, CVX, E, FCX, TOT, VALE
by: ZetaKap

Are you a dividend investor looking for reasonable yields that don't break the bank? Today we focused on large cap basic materials stocks that not only pay hearty dividends, but that do so with disciplined payout ratios. We further honed in on companies that look undervalued from a price-multiple perspective. The list that our screen produced is not only diverse, but also rather interesting.

The forward P/E is a price multiple valuation metric, which is similar to the current P/E ratio, except that it uses the forecasted earnings instead. While this number might not be as accurate because it uses "forecasted" numbers, it does offer the benefit of illustrating analysts' expectations of a firm. If the market believes that earnings will grow moving forward, then the forward P/E should be lower than the current P/E. Financial Leverage, also known as the Equity Multiplier, illustrates how a firm is financing its assets. The lower the number the more a firm is financing its assets internally through stockholder equity. The higher this metric is the more the firm is relying on debt to finance its assets.

The Price/Earnings ratio is one of the most commonly used price-multiple metrics. Often, EPS from the last four quarters is used to derive this number. A firm that has a high P/E ratio generally indicates that investors have high expectations of the firm relative to future earnings growth. By the opposite token, investors generally have lower expectations of a firm with a low P/E ratio. A firm that holds a P/E below 10 could be viewed as having "value investment" potential. One thing to remember is that EPS is an accounting measure that could be potentially manipulated. Thus the P/E is only as good as the quality of the earnings.

We first looked for large cap basic materials dividend stocks. We then screened for businesses that analysts rate as "Buy" or "Strong Buy" (mean recommendation < 3). We next screened for businesses with a low price-multiple premium (forward P/E<10)(P/E<10).

Do you think these large-cap stocks have a positive future in store? Please use our list to assist with your own analysis.

1) Total SA (NYSE:TOT)

Sector: Basic Materials
Industry: Major Integrated Oil & Gas
Market Cap: $102.94B
Beta: 1.01

Total SA has a Dividend Yield of 6.94%, a Payout Ratio of 42.84%, a Analysts' Rating of 1.90, a Forward Price/Earnings Ratio of 5.73, and a Price/Earnings Ratio of 6.64. The short interest was 0.23% as of 06/08/2012. TOTAL S.A., together with its subsidiaries, operates as an integrated oil and gas company worldwide.

2) Chevron Corporation (NYSE:CVX)

Sector: Basic Materials
Industry: Major Integrated Oil & Gas
Market Cap: $198.92B
Beta: 0.78

Chevron Corporation has a Dividend Yield of 3.57%, a Payout Ratio of 23.27%, a Analysts' Rating of 2.00, a Forward Price/Earnings Ratio of 7.52, and a Price/Earnings Ratio of 7.41. The short interest was 1.11% as of 06/08/2012. Chevron Corporation, through its subsidiaries, engages in petroleum, chemicals, mining, power generation, and energy operations worldwide. It operates in two segments, Upstream and Downstream. The Upstream segment is involved in the exploration, development, and production of crude oil and natural gas; liquefaction, transportation, and regasification associated with liquefied natural gas; transportation of crude oil through pipelines; and processing, transportation, storage, and marketing of natural gas, as well as holds an interest in a gas-to-liquids project.

3) Vale S.A. (NYSE:VALE)

Sector: Basic Materials
Industry: Industrial Metals & Minerals
Market Cap: $96.08B
Beta: 1.55

Vale S.A. has a Dividend Yield of 3.12%, a Payout Ratio of 44.93%, a Analysts' Rating of 2.30, a Forward Price/Earnings Ratio of 5.09, and a Price/Earnings Ratio of 5.00. The short interest was 1.55% as of 06/08/2012. Vale S.A. engages in the exploration, production, and sale of basic metals in Brazil and internationally. The company is also involved in fertilizers, logistics, and steel businesses. Its Bulk Material segment engages in the extraction of iron ore and pellet production, as well as operation of Brazilian northern and southern transportation systems, including railroads, ports, and terminals related to mining operations.

4) BHP Billiton plc (NYSE:BBL)

Sector: Basic Materials
Industry: Industrial Metals & Minerals
Market Cap: $146.27B
Beta: 1.57

BHP Billiton plc has a Dividend Yield of 4.00%, a Payout Ratio of 25.60%, a Analysts' Rating of 2.50, a Forward Price/Earnings Ratio of 8.99, and a Price/Earnings Ratio of 6.47. The short interest was 0.05% as of 06/08/2012. BHP Billiton Plc, together with its subsidiaries, operates as a diversified natural resources company. The company engages in the exploration, development, production, and marketing of oil and gas properties. It also involves in mining of bauxite, refining of bauxite into alumina, and smelting of alumina into aluminum metal; and mining of copper, silver, lead, zinc, molybdenum, uranium, gold, diamond, titanium, nickel, iron ore, metallurgical coal, and thermal or steaming coal.

5) Eni SpA (NYSE:E)

Sector: Basic Materials
Industry: Major Integrated Oil & Gas
Market Cap: $80.19B
Beta: 1.10

Eni SpA has a Dividend Yield of 6.91%, a Payout Ratio of 46.60%, a Analysts' Rating of 2.20, a Forward Price/Earnings Ratio of 7.35, and a Price/Earnings Ratio of 7.39. The short interest was 0.13% as of 06/08/2012. Eni SpA, an integrated energy company, engages in the exploration, production, transportation, transformation, and marketing of oil and natural gas. The company is also involved in the production and sale of electricity; refining and marketing of petroleum products; and production and sale of petrochemical products and hydrocarbons. In addition, it engages in the offshore and onshore hydrocarbon field construction.

6) Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX)

Sector: Basic Materials
Industry: Copper
Market Cap: $32.11B
Beta: 1.95

Freeport-McMoRan Copper & Gold Inc. has a Dividend Yield of 3.69%, a Payout Ratio of 38.80%, a Analysts' Rating of 1.80, a Forward Price/Earnings Ratio of 6.47, and a Price/Earnings Ratio of 8.44. The short interest was 2.06% as of 06/08/2012. Freeport-McMoRan Copper & Gold Inc. engages in the exploration, mining, and production of mineral resources. The company primarily explores for copper, gold, molybdenum, cobalt hydroxide, silver, and other metals, such as rhenium and magnetite. It holds interests in various mines located in the Grasberg minerals district in Indonesia; Morenci minerals district in North America; South America; and Tenke Fungurume minerals district in the Democratic Republic of Congo.

7) CNOOC Ltd. (NYSE:CEO)

Sector: Basic Materials
Industry: Independent Oil & Gas
Market Cap: $80.61B
Beta: 1.43

CNOOC Ltd. has a Dividend Yield of 3.77%, a Payout Ratio of 27.65%, a Analysts' Rating of 2.30, a Forward Price/Earnings Ratio of 6.53, and a Price/Earnings Ratio of 7.33. The short interest was 0.32% as of 06/08/2012. CNOOC Limited, through its subsidiaries, engages in the exploration, development, production, and sale of crude oil, natural gas, and other petroleum products. Its oil and natural gas properties are located in offshore China, which include Bohai Bay, western South China Sea, eastern South China Sea, and East China Sea, as well as in Indonesia, Iraq, other regions in Asia, Australia, Nigeria, Uganda, the United States of America, Canada, and Argentina. As of December 31, 2011, the company had net proved reserves of approximately 3.19 billion barrels-of-oil equivalent.

*Company profiles were sourced from Finviz. Financial data was sourced from Finviz.

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