Wednesday, June 21, 2017

6 Dividend Growth Stocks With A Low P/E

We all want to find the best value when we buy a stock. There are many ways people value a stock. Ultimately, true value is defined by future cash flows. The catch is no one knows exactly what the future cash flows will be. As a result, some go to great lengths to estimate future cash flows, while others use historical metrics to estimate cash flows or to compare stocks.

One of the oldest metrics used is the price earnings (P/E) ratio. It is calculated as the market value per share divided by earnings per share (EPS). A high P/E ratio infers that investors expect strong future earnings growth. Conversely, a low P/E suggests limited future growth. These are the companies that have historically been in a position to return large sums of cash to their investors as dividends.

This week week, I screened my dividend growth stocks database for ultra-low P/Es. Below are 10 dividend stocks stocks with a P/E less than 13:

Aflac Incorporated (AFL) provides supplemental health and life insurance in Japan and the U.S. Products are marketed at work sites and help fill gaps in primary coverage.
Yield: 2.2% | P/E: 12.8

Air Products and Chemicals Inc. (APD) is a major producer of industrial gases and electronics and specialty chemicals also has interests in environmental and energy-related businesses.
Yield: 2.6% | P/E: 10.1

Lockheed Martin Corp. (LMT) is the world's largest military weapons manufacturer, and also a significant supplier to NASA and other non-defense government agencies. LMT receives about 93% of its revenues from global defense sales.
Yield: 2.6% | P/E: 11.4

Old Republic Intl (ORI) is an insurance holding company that engages mainly in the general (property and liability), title, and mortgage guaranty and consumer credit indemnity run-off businesses.
Yield: 3.8% | P/E: 12.9

IBM's (IBM) global offerings include information technology services, software, computer hardware equipment, fundamental research, and related financing.
Yield: 3.9% | P/E: 12.8

Target Corp. (TGT) operates nearly 1,800 Target, SuperTarget and CityTarget general merchandise stores across the U.S.
Yield: 4.8% | P/E: 10.8

As with past screens, the data presented above is in its raw form. Some of the the companies would be disqualified for poor dividend fundamentals. However some of the others may be worth additional due diligence.

My database, D4L-Data, is an Open Office spreadsheet containing more than 20 columns of information on the 200+ companies that I track. The data is sortable and has built-in buttons and macros to make it easy to use. Companies included in the list are those that have had a history of dividend growth. The D4L-Data spreadsheet is a part of D4L-Premium Services and is updated each Saturday for subscribers.

Full Disclosure: Long AFL, LMT, IBM, ORI. See a list of all my Dividend Growth Portfolio holdings here.

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Tags: AFL, APD, LMT, IBM, ORI, TGT,

1 comment:

  1. Some risky businesses in the form of TGT and IBM. Recently have made significant losses on the stock market due to poor performance but perhaps now is the time to buy?

    ReplyDelete

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