How To Buy Mammoth Yields At Half The Cost Of The Market

 | Feb 25, 2022 04:11AM ET

The S&P 500 is about as pricey as it ever gets. It’s also in freefall as I write.

This is good news for anyone looking for a future bargain. The plunge, however, is really bad news for most retirees who don’t read this column. They tend to own nothing except “America’s ticker” via the SPDR S&P 500 Trust ETF (NYSE:SPY).

At 24-times earnings (P/E ratio), SPY is expensive. After all, who has 24 years to wait to get paid back?

But the actual payback period is even worse for SPY. Most of its firms don’t pay out all of their profits as dividends. Collectively they yield just 1.4%, which means anyone buying SPY today can confidently “cash out” their initial investment by 2093.

(I’m not sure about you, but my lifestyle is not designed to make it another 71 years. My organs believe every new year is a gift.)

Since you and I are in “pay us back soon” mode, we want our retirement portfolio in stocks that:

  • Are inexpensive (low P/E ratios).
  • Pay a lot (high dividend yields).

This is the secret to retiring on dividends. Buy right and sit tight while good stocks pay us serious yields.

Today we’re going to highlight 12 single-digit P/E stocks that yield between 4.2% and 25.6%. Yes, that’s no typo. These potential “retirement makers” are priced right, and their payouts provide us with serious cash flow.

h2 12 Cheap Dividend Plays/h2

You won’t be surprised to learn that most of these stocks run in packs—or at least pairs. In many cases, entire slivers of the market are trading on the cheap, and these dividend payers represent the most discount-priced among them.

The financial space is teeming with underappreciated dividends. OneMain Holdings (NYSE:OMF, 14.2% yield), for instance, provides personal installment loans to more than 2 million Americans, and its dirt-cheap 6.1 forward P/E comes despite the fact that shares are actually positive over the past year. New York Community Bancorp (NYSE:NYCB, 5.9%) is a more traditional banking name, but at a nearly 6% yield, it’s delivering roughly 4x what the broader financial sector is.

Insurers have been largely overlooked, too. Unum Group (NYSE:UNM, 4.2%) and Old Republic International (NYSE:ORI, 13.0%) are both trading under 10 times earnings estimates and boast large (and growing!) payouts.

h2 4 Deeply Underloved Financials/h2