Dividends4Life: Finding Value Among U.S. Dividend Stocks

Finding Value Among U.S. Dividend Stocks

Posted by D4L | Tuesday, October 22, 2013 | | 0 comments »

I’m on the hunt today for U.S. dividend payers that might also appeal to value investors. When it comes to dividend stocks, I like companies with good dividend growth records because they tend to be healthier than firms that pay steady or – even worse – declining dividends. While dividend growth isn’t a perfect measure of business quality, it’s not bad indicator in most cases. Dividend growth is one thing, but I’m a value investor at heart. That means I like to buy lots of assets, or earnings, at a low price.

One good way to find bargains is to use a variant of the popular price-to-earnings ratio (P/E). Instead of price it uses enterprise value (EV) and instead of earnings it uses earnings before interest and taxes (EBIT). Just like P/E ratios, stocks with low EV/EBIT ratios tend to be loved by value investors. Based on that record I started my search with low EV/EBIT stocks and then stuck with firms that have grown their dividends recently. A few U.S. stocks that fit the bill, according to S&P/Capital IQ, are: Corning (GLW), DeVry (DV), Foot Locker (FL), Hewlett-Packard (HPQ), HollyFrontier (HFC), and The Gap (GPS).

Source: Globe and Mail

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