Introduction
Dividends add a tremendous amount of confidence when looking for value stocks. A dividend helps reaffirm that the company is indeed flowing cash positively. A value investor can then have greater confidence waiting for the undervaluation to correct. Dividend payments also re-compensates the investor for his patience.
Large cap dividend stocks seldom become undervalued - so finding some is a rare event.
Screen Details
This screen looks for large cap stocks above $5 Billion in market capitalization paying dividends. We require other filters to ensure attractive valuation and growing sales and earnings. Some of the other parameters include:
- Dividend Yield > 2%
- Dividend 5 Year Avg > 1%
- EPS 5 Year Avg Growth > 8%
- Payout Ratio < 60%
- Price/Book < 1.2
- Price/Sales < 2
- Sales 5 Year Avg Growth > 3%
The Screen Results
Stock | Company | Dividend Yield | P/B Ratio | P/E ratio | P/S Ratio |
|---|---|---|---|---|---|
CNA | CNA Financial | 3.2% | 1.1 | 12.3 | 1.2 |
KB | KB Financial Group | 3.1% | 0.5 | 6.7 | 1.5 |
MFC | Manulife Financial | 4.3% | 1.1 | 9.8 | 0.9 |
PTR | PetroChina Co | 6.4% | 0.4 | 7.7 | 0.2 |
Notes and Observations
- CNA/MFC: They are both insurance companies, CNA focuses on Commercial Property and Casualty insurance while MFC focuses on Personal insurance, investments and wealth management. MFC appears to be better financially as well as a better value. This stock is worth considering.
- KB: KB Financial is the largest bank in South Korea. There is a tremendous amount of country risk in the stock. It is cheap but the risk likely makes it not worth the trouble.
- PTR: I generally avoid stocks from China due to audit risk.
Ending Note
These stocks are very nice dividend paying stock with solid financials. They can all be a very good addition to any portfolio. We will continue researching the 1 stock from this screen.