by Isabelle Sender, S&P Capital IQ, The Outlook
In our latest stock screen, we looked for dividend paying stocks with
low P/E multiples, that also earn a strong buy recommendation from our
For investors who believe U.S. equity valuations are
unduly depressed, there are several stocks that carry S&P Capital
top ranking of 5 STARS or strong buy that trade significantly below
current and historical benchmark valuations and offer attractive yields.
Currently, valuations appear attractive when compared to historical
data. As of the S&P 500's August 10 close, the large-cap benchmark
was trading at a price-to-earnings (P/E) multiple 13.6 times S&P
Capital IQ equity analysts' earnings per share estimates for 2012, while
the S&P 1500 Composite 1500's P/E was 14.1.
the median P/E for the 500's operating results since 1988 is 17.9 times
and 15.7 times for earnings reported under generally accepted accounting
principles (GAAP) since 1936.
S&P Capital IQ Chief Equity
Strategist Sam Stovall's interpretation of S&P 500 history and
technical indicators suggests the market has a good chance of extending
its current rally. He believes the S&P 500 "could rise to between
1450 and 1500+ by the end of 2012."
The 10 stocks listed below
are U.S.-traded companies ranked 5-STARS (our highest, strong buy
rating) with a P/E ratio equal to or less than 10, and a dividend yield
higher than 2%.
- Aflac (AFL) -- yielding 2.9 with a p/e of 7.1
- Barrick Gold (ABX) -- yielding 2.2% with a p/e of 8.2
- Chevron (CVX) -- yielding 3.2% with a p/e of 8.3
- Huntington Bancshares (HBAN) -- yielding 2.7% with a p/e of 8.8
- Johnson Controls (JCI) -- yielding 2.7% with a p/e of 10
- Magna International (MGA) -- yielding 2.4% with a p/e of 8.3
- Microsoft (MSFT) -- yielding 2.6% with a p/e of 9.9
- Rio Tinto (RIO) -- yielding 3.5% with a p/e of 6.9
- Travelers (TRV) -- yielding 2.9% with a p/e of 10
- Valero Energy (VLO) -- yielding 2.4% with a p/e of 7.6