The S&P index of large American companies recently traded at 14 times forecast 2011 earnings. That suggests that, even though the index has quickly doubled since hitting its recessionary low point in March 2009, shares seem priced in line with historic averages. There's one hitch, however. After-tax corporate profits are astonishingly high right now relative to the size of the economy. That's not to say a plunge is imminent, but history suggests corporate profits will revert to or below average levels.
What would happen if profits reverted to their historic share of the economy now? For one thing, the price-to-earnings ratio for the S&P 500 would inflate to a worrisome 20. Shop carefully, stock investors. Below are listed three companies that are one-third cheaper than the index based on earnings and that pay decent dividends. 1.) Pfizer (PFE: 20.98, 0.06, 0.29%) shares have gained 20% since the company announced in January 2009 that it would buy rival Wyeth for $68 billion. 2.) Tyson Foods (TSN: 18.51, -0.02, -0.11%) on Monday reported earnings that slightly missed Wall Street estimates, snapping a two-year string of upside surprises and 3.) Whirlpool (WHR: 85.10, -1.56, -1.80%) has quietly quadrupled in price since March 2009.
Source: SmartMoney
Related Articles:
- The 2011 Dividend Aristocrats
- 13 Dividend Stocks With A Good Yield/Growth Mix
- 11 Higher-Quality, High-Yield Dividend Stocks
- 6 Dividend Stocks That Will Make You Smile
- Dividend Stocks vs. Dividend ETFs
Dividend Stocks Selling at a 33% Discount
Posted by D4L | Saturday, May 21, 2011 | ArticleLinks | 0 comments »________________________________________________________________
Subscribe to:
Post Comments (Atom)
~
Popular Posts Last 30 Days
-
Dividends and diversification -- those two things can help you achieve a comfortable retirement when combined with the income you will recei...
-
As a relatively new blogger, the one thing that has stood out in my mind is the number of Canadian bloggers in the areas that I am most inte...
-
The best dividend stocks have one thing in common: resiliency. They can continue increasing their dividends even in the harshest economic en...
-
Investors wanting to enjoy steady and consistent income should consider dividend aristocrats. In fact, even in these chaotic times, dividend...
-
A good dividend stock has more than a high yield. Dividends need to be supported by cash flow, and cash flow depends on the long-term streng...
-
Higher dividend yields often imply that the underlying company paying the dividend has a higher risk profile. However, that's not always...
-
When hunting for discounted investments, one excellent starting point is to look for businesses with dividend yields trading above their fiv...
-
It's hard to beat a sustainable, high-yield dividend paired with a beaten-down valuation. The best dividend stocks offer high yields and...
-
Strange but true: seniors fear death less than running out of money in retirement. And unfortunately, even retirees who have built a nest eg...
-
BDCs can be excellent investment options for those seeking high returns, particularly when acquired at favorable valuations and supported by...
0 comments
Post a Comment
Post a Comment
Note: Only a member of this blog may post a comment.