I look for dividend growth to confirm management’s commitment to the cash payout. This tells me that the high dividend yield isn’t just a function of a falling stock price but of an increasing dividend as well. Finally, investing decisions have to be made with an eye to the future. Fundamentals on trailing financials can confirm valuation and management’s ability but equity investing is all about future cash flows. I want to see that the outlook will support the dividend with additional price appreciation. Finding quality dividend names in value territory is getting difficult and you need to be extremely critical of any stock trading for a steep discount to the rest of its industry. These companies passed my test for cheap dividend stocks based on the criteria above...
Intel Corporation (NASDAQ:INTC) trades for a discount of 37% against the average P/E multiple of 27.8 times for its industry. Debt of 0.3 times equity is well under the average multiple of 0.45 times for semiconductor peers. Surprisingly Cheap Stocks With High Dividends: Intel Corporation (INTC)Intel dominates the microprocessor market with roughly 80% of the market share. General Motors Company (NYSE:GM) trades for less than half the average P/E ratio of 11 times for auto manufacturers. Debt is slightly higher than the 1.14 times equity average in the industry but the company easily covers interest and has a strong BBB- credit rating from Standard & Poor’s.
Source: InvestorPlace
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