Top 10 Undervalued, Dividend-Paying Stocks
May 10, 2012 12:41 PM
Top 10 Undervalued, Dividend-Paying Stocks<br><br>
Dividend investing has always had a certain appeal with investors. Over time, dividend income has comprised a significant portion of long-term stock gains.
Even better, over the long run, dividend-paying stocks have delivered better total return performance than non-dividend payers and generally have done so with lower volatility.
Potentially higher returns and lower risk...is that something your clients might be interested in?
Heres a look at 10 undervalued stocks that boast a dividend payout above or close to the current 3% yield on the 30-year Treasury bond.
Source: John Buckingham, CIO and portfolio manager at Al Frank Asset Management.
Even better, over the long run, dividend-paying stocks have delivered better total return performance than non-dividend payers and generally have done so with lower volatility.
Potentially higher returns and lower risk...is that something your clients might be interested in?
Heres a look at 10 undervalued stocks that boast a dividend payout above or close to the current 3% yield on the 30-year Treasury bond.
Source: John Buckingham, CIO and portfolio manager at Al Frank Asset Management.
1. Navios Maritime (NYSE: NM)<br><br>
Yield as of May 9: 6.8%
Current Share Price: $3.64
Price-to-Earnings Ratio: 9.35
Profile: A sea-borne shipping and logistics company focused on the transport of dry bulk commodities like iron ore, coal and grains, Navios has significant contract coverage for its core fleet, ample dividend support from its affiliated companies, including a South American logistics provider, and a single-digit P/E ratio to go with a very inexpensive price-to-book value multiple of less than 0.4.
Current Share Price: $3.64
Price-to-Earnings Ratio: 9.35
Profile: A sea-borne shipping and logistics company focused on the transport of dry bulk commodities like iron ore, coal and grains, Navios has significant contract coverage for its core fleet, ample dividend support from its affiliated companies, including a South American logistics provider, and a single-digit P/E ratio to go with a very inexpensive price-to-book value multiple of less than 0.4.
2. Total SA (NYSE: TOT)<br><br>
Yield as of May 9: 5.7%
Current Share Price: $45.50
Price-to-Earnings Ratio: 6.59
Profile: One of the worlds largest integrated oil and gas companies, Total SA boasts a low cost structure, high profitability and solid balance sheet while the struggling European economy, the sovereign debt drama across the Eurozone, the plunge in natural gas prices and the fallout from the Elgin gas leak in the North Sea provide a very attractive entry point given the current sub-7 P/E ratio.
Current Share Price: $45.50
Price-to-Earnings Ratio: 6.59
Profile: One of the worlds largest integrated oil and gas companies, Total SA boasts a low cost structure, high profitability and solid balance sheet while the struggling European economy, the sovereign debt drama across the Eurozone, the plunge in natural gas prices and the fallout from the Elgin gas leak in the North Sea provide a very attractive entry point given the current sub-7 P/E ratio.
3. Lockheed Martin (NYSE: LMT)<br><br>
Yield as of May 9: 4.6%
Current Share Price: $86.27
Price-to-Earnings Ratio: 10.31
Profile: Though concerns about cutbacks in defense spending have been long playing, backlog stood at a record $80.7 billion at the end of 2011 for the worlds largest military weapons manufacturer. Also a significant supplier to NASA and other non-defense government agencies, while international sales opportunities represent a key business driver, Lockheed remains poised to continue to utilize its strong cash-flow generation to buy back stock and support the generous dividend.
Current Share Price: $86.27
Price-to-Earnings Ratio: 10.31
Profile: Though concerns about cutbacks in defense spending have been long playing, backlog stood at a record $80.7 billion at the end of 2011 for the worlds largest military weapons manufacturer. Also a significant supplier to NASA and other non-defense government agencies, while international sales opportunities represent a key business driver, Lockheed remains poised to continue to utilize its strong cash-flow generation to buy back stock and support the generous dividend.
4. Merck & Co. (NYSE: MRK)<br><br>
Yield as of May 9: 4.3%
Current Share Price: $38.39
Price-to-Earnings Ratio: 17.11
Profile: Offering pharmaceutical products to treat conditions in a number of therapeutic areas, including cardiovascular disease, asthma and osteoporosis, we like that Merck also has a substantial vaccine business and is further diversified with animal health and consumer products divisions. A new drug pipeline with solid potential and the lack of the significant earnings hit over the next few years that many competitors face due to major patent expirations add to the appeal.
Current Share Price: $38.39
Price-to-Earnings Ratio: 17.11
Profile: Offering pharmaceutical products to treat conditions in a number of therapeutic areas, including cardiovascular disease, asthma and osteoporosis, we like that Merck also has a substantial vaccine business and is further diversified with animal health and consumer products divisions. A new drug pipeline with solid potential and the lack of the significant earnings hit over the next few years that many competitors face due to major patent expirations add to the appeal.
5. Waste Management (NYSE: WM)<br><br>
Yield as of May 9: 4.2%
Current Share Price: $33.75
Price-to-Earnings Ratio: 16.74
Profile: The largest integrated waste services provider in the U.S., operating close to 300 active landfill transfer stations, WM has nearly a 30% domestic market share of trash hauling and almost a 40% share of overall landfill capacity, while its well-diversified revenue stream provides significant and consistent growth potential at a reasonable price with strong free cash flow enabling share buybacks and dividend hikes.
Current Share Price: $33.75
Price-to-Earnings Ratio: 16.74
Profile: The largest integrated waste services provider in the U.S., operating close to 300 active landfill transfer stations, WM has nearly a 30% domestic market share of trash hauling and almost a 40% share of overall landfill capacity, while its well-diversified revenue stream provides significant and consistent growth potential at a reasonable price with strong free cash flow enabling share buybacks and dividend hikes.
6. Hasbro (NASDAQ: HAS)<br><br>
Yield as of May 9: 4.0%
Current Share Price: $35.28
Price-to-Earnings Ratio: 12.94
Profile: The second-largest toy company in the world with brands like Milton Bradley, Parker Brothers, G.I. Joe, Transformers, My Little Pony, Playskool and Tonka, Hasbro where international sales made up 50% of 2011 revenue is well-positioned for strong second-half growth this year thanks to tie-ins to the box-office smash The Avengers and the upcoming Battleship and The Amazing Spider-Man movies.
Current Share Price: $35.28
Price-to-Earnings Ratio: 12.94
Profile: The second-largest toy company in the world with brands like Milton Bradley, Parker Brothers, G.I. Joe, Transformers, My Little Pony, Playskool and Tonka, Hasbro where international sales made up 50% of 2011 revenue is well-positioned for strong second-half growth this year thanks to tie-ins to the box-office smash The Avengers and the upcoming Battleship and The Amazing Spider-Man movies.
7. Intel (NASDAQ: INTC)<br><br>
Yield as of May 9: 3.3%
Current Share Price: $27.07
Price-to-Earnings Ratio: 11.47
Profile: The largest semiconductor manufacturer in the world, Intel has a strong competitive position with a material lead in process manufacturing, which is key to preserving margins during pricing wars. In addition, the tech titan owns a fortress-like balance sheet, produces robust free-cash-flow that can be used in shareholder friendly activities, like the recent 7% bump in the already-rich dividend, and enjoys handsome growth potential related to the McAfee and Infineon acquisitions.
Current Share Price: $27.07
Price-to-Earnings Ratio: 11.47
Profile: The largest semiconductor manufacturer in the world, Intel has a strong competitive position with a material lead in process manufacturing, which is key to preserving margins during pricing wars. In addition, the tech titan owns a fortress-like balance sheet, produces robust free-cash-flow that can be used in shareholder friendly activities, like the recent 7% bump in the already-rich dividend, and enjoys handsome growth potential related to the McAfee and Infineon acquisitions.
8. Pepsico (NYSE: PEP)<br><br>
Yield as of May 9: 3.2%
Current Share Price: $66.79
Price-to-Earnings Ratio: 16.55
Profile: The second-largest global food and beverage company by revenue, Pepsico has a stellar product lineup and a diversified growing international business, while synergistic cost savings from bottler acquisitions are still to be realized. With a history of returning wealth to shareholders, an income statement that generates strong cash flow and a proven ability to refresh existing brands and introduce new ones, PEP offers above-average growth potential at an attractive valuation.
Current Share Price: $66.79
Price-to-Earnings Ratio: 16.55
Profile: The second-largest global food and beverage company by revenue, Pepsico has a stellar product lineup and a diversified growing international business, while synergistic cost savings from bottler acquisitions are still to be realized. With a history of returning wealth to shareholders, an income statement that generates strong cash flow and a proven ability to refresh existing brands and introduce new ones, PEP offers above-average growth potential at an attractive valuation.
9. Newmont Mining (NYSE: NEM)<br><br>
Yield as of May 9: 3.0%
Current Share Price: $46.69
Price-to-Earnings Ratio: 69.29
Profile: One of the worlds largest gold producers with significant assets, operations and reserves spread over five continents, Newmont churned out in 2011 record revenue, cash from continuing operations and adjusted net income, while producing at a cost of sales of $597 per ounce, yet the undervalued stock has cratered this year on the drop in the price of the precious yellow even though it received little love from investors when gold was all the rage.
Current Share Price: $46.69
Price-to-Earnings Ratio: 69.29
Profile: One of the worlds largest gold producers with significant assets, operations and reserves spread over five continents, Newmont churned out in 2011 record revenue, cash from continuing operations and adjusted net income, while producing at a cost of sales of $597 per ounce, yet the undervalued stock has cratered this year on the drop in the price of the precious yellow even though it received little love from investors when gold was all the rage.
10. JPMorgan Chase & Co. (NYSE: JPM)<br><br>
Yield as of May 9: 2.9%
Current Share Price: $40.90
Price-to-Earnings Ratio: 9.14
Profile: One of the largest financial institutions in the U.S. with more than $2 trillion in assets and operations in more than 60 countries, we like that during the global financial panic well-respected CEO Jamie Dimon was able to successfully pilot the JPMorgan ship through the icebergs while picking up distressed assets on the cheap and we think that the big rewards of the superb navigation are still to be enjoyed.
Current Share Price: $40.90
Price-to-Earnings Ratio: 9.14
Profile: One of the largest financial institutions in the U.S. with more than $2 trillion in assets and operations in more than 60 countries, we like that during the global financial panic well-respected CEO Jamie Dimon was able to successfully pilot the JPMorgan ship through the icebergs while picking up distressed assets on the cheap and we think that the big rewards of the superb navigation are still to be enjoyed.
