11 Inexpensive Dividend Stocks With Extremely High Yields
Dividend Yield | Mar 18, 2013 06:34AM ET
Readers often ask themselves what are the highest yielding stocks in the market. When they read articles about the highest dividend paying shares names such as Pitney Bowes (PBI) or Annaly Capital Management (NLY) generally appear.
Both have a double digit yield at a higher market capitalization and investors who got into those stocks early likely made their first money with these stocks. However, right now conditions are unsettled, and stocks with very high yields and huge debt loads can be very risky. I'm a believer in dividend growth and I like starting out with stocks that have a yield between 1-2 percent but then increase their yield during the time I own them, ideally to double-digit rates.
PBI shares have gained 44 percent over the recent quarter and the stock now has a yield below the 10 percent mark, but the P/E ratio is still in single-digit range. This article features all higher capitalized dividend stocks (over $2 billion market capitalization) with low P/E ratios (under 15). Eleven stocks fit this criteria, of which eight have a buy or better recommendation.
ARMOUR Residential (ARR) has a market capitalization of $2.38 billion. The company generates revenue of $308.85 million and has a net income of $222.31 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $222.28 million. The EBITDA margin is 71.97 percent (the operating margin is 71.97 percent and the net profit margin 71.98 percent).
Financial Analysis: The total debt represents 87.96 percent of the company’s assets and the total debt in relation to the equity amounts to 795.84 percent. Due to the financial situation, a return on equity of 15.02 percent was realized. Twelve trailing months earnings per share reached a value of $0.98. Last fiscal year, the company paid $1.20 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 6.51, the P/S ratio is 7.71 and the P/B ratio is finally 0.85. The dividend yield amounts to 13.19 percent and the beta ratio has a value of 0.20.
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Annaly Capital Management (NLY) has a market capitalization of $14.83 billion. The company employs 147 people, generates revenue of $3.259 billion and has a net income of $1.735 billion. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $2.198 billion. The EBITDA margin is 67.45 percent (the operating margin is 54.36 percent and the net profit margin 53.26 percent).
Financial Analysis: The total debt represents 78.99 percent of the company’s assets and the total debt in relation to the equity amounts to 662.00 percent. Due to the financial situation, a return on equity of 11.09 percent was realized. Twelve trailing months earnings per share reached a value of $1.70. Last fiscal year, the company paid $2.05 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 9.21, the P/S ratio is 4.55 and the P/B ratio is finally 0.99. The dividend yield amounts to 11.49 percent and the beta ratio has a value of 0.31.
VimpelCom (VIP) has a market capitalization of $24.15 billion. The company employs 65,950 people, generates revenue of $23.061 billion and has a net income of $1.982 billion. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $9.177 billion. The EBITDA margin is 39.79 percent (the operating margin is 18.09 percent and the net profit margin 8.59 percent).
Financial Analysis: The total debt represents 46.88 percent of the company’s assets and the total debt in relation to the equity amounts to 174.56 percent. Due to the financial situation, a return on equity of 14.84 percent was realized. Twelve trailing months earnings per share reached a value of $1.32. Last fiscal year, the company paid $0.80 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 8.92, the P/S ratio is 0.83 and the P/B ratio is finally 1.62. The dividend yield amounts to 6.80 percent and the beta ratio is not calculable.
Take a closer look at the full list of cheap stocks with 10+ percent yields. The average P/E ratio amounts to 7.94 and forward P/E ratio is 8.32. The dividend yield has a value of 15.13 percent. Price to book ratio is 1.10 and price to sales ratio 4.96. The operating margin amounts to 31.45 percent and the beta ratio is 0.39. Stocks from the list have an average debt to equity ratio of 3.99.
Here is the full table with some fundamentals (TTM):
Related stock ticker symbols:
VIP, EBR, APO, TWO, AGNC, ARR, KKR, CYS, IVR, NLY, HTS
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I receive no compensation to write about any specific stock, sector or theme.
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