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10 High-Yield Stocks With A Low Price To Book

 December 08, 2011 10:41 AM
 


When looking for value-priced stocks, the Price-To-Book (P/B) ratio is one that I like to focus on. P/B is calculated as share price divided by book value per share. Book value is most often calculated as Assets less Liabilities. Some people conservatively calculate book value as Assets less Intangibles less Liabilities. I prefer the latter since it excludes goodwill and other intangibles which would be difficult to recover in a liquidation, and that is what is used in the calculations below.

P/B is like yield, when it is at an extreme you have to question why it is there. If you determine it is the result of an irrational market movement, a purchase could result in both a higher yield and significant future capital appreciation.

A low P/B ratio could indicate a stock is undervalued or distressed. Since GAAP accounting is mostly based on historical cost, a viable growing company will normally be worth more than its book value. However, there are times when good companies will be punished along with the bad. It is our job as investors to separate the good companies from those that have fundamental problems.

This week week, I screened my dividend growth stocks database for stocks with a P/B of 1.5 or lower, 10 or more years of dividend increases and with a dividend yield at or above 4%. The results are presented below:

Middlesex Water Co. (MSEX)
Yield: 4.0% | Years of Growth: 38 | P/B: 0.92
Middlesex Water Co. primarily provides regulated water utility service in parts of New Jersey and Delaware, as well as operates wastewater systems and conducts municipal contract operations.

Artesian Resource (ARTNA)
Yield: 4.1% | Years of Growth: 14 | P/B: 1.41
Artesian Resource distributes and sells water to residential, commercial, industrial, governmental, municipal, and utility customers in the state of Delaware.


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Rich
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