Stocks With Big Dividends And Small P/Es


That’s “big dividends” in the relative sense.

With the U.S. 10-year Treasury rate at 2.7%, then stocks paying more than a 4% dividend yield are of interest. An equity has more risk intrinsically than a government bond — if you’re willing to accept that, then you may find the higher yield a more attractive choice.

All of the stocks listed here have low price/earnings ratios. Again, that’s in the relative sense. Since the p/e of the Standard & Poor’s 500 is about 30 and the p/e of the Russell 2000 is 89, I’m calling a p/e of less than 15 “small.”

Alliance Bernstein is in the business of managing financial assets. The price/earnings ratio is 10.9 and the dividend yield is 9.05%.

The company has no debt on the books and a 5-year record of positive earnings. Last year — by itself — was positive as well. Citigroup analysts moved it from “neutral” to “buy” last last year.

Bank of Nova Scotia has a price/earnings ratio of 11.9 and is paying a 4.14% dividend yield. That’s an above average payout for a typical bank stock.

This is another financial services firm with a positive earnings track record for last year and over the previous 5-years. The levels of debt are low. The bank announced last week that they’re buying back 24 million shares — this tends to help the “earnings per share” look.

Canadian Imperial Bank of Commerce is based in Toronto. The price/earnings ratio is 10 and the dividend yield is 4.65%.

The company shows a positive track record of earnings for last year and on a 5-year basis. Long term debt slightly exceeds shareholder equity.

Invesco Ltd is yet another firm in the financial services industry that makes this list. They are trading with a price/earnings ratio of 11.37 and paying a 4.25% dividend yield.

The earnings have been steadily positive over the past 5-years and over the last year. In February, the Deutsche Bank analysts moved Invesco from “hold” to “buy.” The stock has dropped from 37 to 28 since the beginning of the year.

Retail Properties of America is a real estate investment trust headquartered in Oak Brook, Illinois. They have a price/earnings ratio of 9.2 and the dividend comes to a 5.61% yield.

Earnings were in the red for last year, but the 5-year record is positive. J.P. Morgan analysts in December moved the stock from “neutral” to “overweight.”

A number of other real estate investment trusts appeared on the list that I screened, but the earnings seemed a bit too volatile and I had to question the viability of some of the current dividend payments. So, I haven’t mentioned them here.

Also, I noticed a couple of cigarette companies that showed up on the NYSE screen for “low p/e” and 4%+ dividend yield, but I’ve skipped them because of the obvious health issues.

Many other factors are relevant in the selection of stocks. This quick look based on price, earnings and dividends might only suffice as the beginning stage of further analysis depending on investment objectives.

I wrote about some other low p/e stocks right here.

I do not hold positions in these investments. No recommendations are made one way or the other.  If you’re an investor, you’d want to look much deeper into each of these situations. Always do your own independent research, due diligence and seek professional advice from a licensed investment adviser. 

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