- These 6 dividend stocks with market caps over $10 billion have traits that make them attractive to bargain-focused investors.
- HP Inc (HPQ): This printer company has a 2.7% dividend yield and a forward P/E of 8.2 times with a 16.7% FCF yield.
- Energy Transfer LP (ET): This pipeline company has a 7.2% yield paid for the last 15 years and 7.5 times forward P/E.
- Avnet (AVT): An electronics distributor with a 2.2% yield paid for the last eight years and a forward P/E of 7.2 times.
- KT Corp (KT): Korean telecom with a 5.2% yield paid for the last 6 years and a forward P/E of 6.6 times.
- NRG Energy (NRG): Houston energy company with a 3.3% yield paid for the last 11 years with a 11.8 times forward P/E.
- United Microelectronics (UMC): Taiwan chipmaker with a 3.4% yield paid for the last 11 years and a 6.7 times forward P/E.
Many investors are currently looking for dividend stocks to buy. However, it’s important to consider many factors of any stock, not just its dividend.
These six dividend stocks are attractive to value investors since they have good dividend yields and have been paid consistently for the last number of years.
In addition, the stocks have low forward price-to-earnings (P/E) metrics, mostly below 10. This means that the stocks are considered by the market as reasonably priced and could be ideal for bargain-focused investors.
|ET||Energy Transfer LP||$11.43|
HP Inc (HPQ)
HP Inc (NYSE:HPQ) is a low-tech company that has a decent 2.7% yield as well as a hefty, consistent buyback program. Its annual dividend is $1 per share, which works out to 23% of its projected $4.26 earnings per share (EPS) for 2022. Moreover, HP has produced 11 consecutive years of dividend increases, as well as 32 years of continuous dividend payments.
Based on analysts’ estimates, HPQ stock trades for just 8.2 times forward earnings estimates.
HP has ample cash flow. In Q1 it made $1.7 billion in cash flow from operations (CFFO) and FCF of $1.4 billion. From this HP paid out $271 million on dividends and spent $1.5 billion on share repurchases.
Warren Buffett likes HP and recently took a large 11.4% stake in the company. HPQ stock is likely to be one of the top dividend stocks to own for the long term.
Energy Transfer LP (ET)
This natural gas pipeline and energy storage company (operating in Texas and Oklahoma) pays out an ample dividend of 80 cents annually. That gives it a dividend yield of 7.2% based on its price of $11 as of May 16.
Moreover, Energy Transfer LP (NYSE:ET) has consistently paid dividends over the past 15 years, according to Seeking Alpha. This gives investors a lot of assurance the company will pay their investors annually even over a recession or a period of high inflation.
Bargain-focused investors will take comfort in knowing that it trades at a low forward P/E of just 7.5 times forecast EPS for 2022.
This means its valuation is very cheap and suitable for bargain investors.
Electronics distributor Avnet (NASDAQ:AVT) pays a $1.04 dividend annually which gives the stock a 2.2% dividend yield. The company has paid a dividend annually for the past 8 years.
Earnings estimates for this year are $6.85 per share, which is more than sufficient to pay out the $1.04 dividend going forward. Moreover, at $46.85 per share the stock is trading on a forward P/E of just over 7.
Earnings are forecast to rise from $2.71 earnings per share (EPS) in 2021 to $6.85 this year and $6.82 next year. This is mainly due to the higher price of chips and other technology-related items, as well as higher logistics-related revenue.
This makes Avnet a very cheap stock suitable for bargain-focused investors.
KT Corp (KT)
KT Corp (NYSE:KT) is a Korean telecom operator that also offers broadband services throughout South Korea. It also provides media and content services, including IPTV, satellite TV, digital music, e-commerce, online advertising consulting and other related services.
The company pays one annual dividend each year and recently declared its dividend on April 27 for 75.47 cents. It does not go ex-dividend until Dec. 30, 2022, until the next dividend is declared in May of 2023. That gives it a dividend yield of 5.36% if the dividend next year is the same next year.
This is one of the few cases where the ex-dividend date is actually before the declaration date by 4 months. So you have to buy the stock with the assumption that the new dividend will be close to the level of the old dividend.
The stock has a forward P/E of 6.6 times, according to Seeking Alpha. As a result, this is one of the dividend stocks that bargain-focused investors will love.
NRG Energy (NRG)
NRG Energy (NYSE:NRG) is a Houston-based integrated power company with a 3.3% yield and growing dividends. It is one of the largest U.S. independent power producers. It has 7 million customers and generates 18 gigawatts of power generation capacity primarily in Texas.
NRG stock is attractive to bargain-focused investors as it offers a 3.3% dividend yield and nine years of continuously paid dividends. Moreover, analysts forecast $3.59 in EPS this year and $4.23 next year. So, trading at $42.40 on May 16, NRG stock trades for 11.8 times earnings this year and just over 10 times 2023 earnings estimates.
Moreover, the company has plenty of FCF to cover both its dividends and buyback programs. Last year it generated $493 million in cash flow from operations and paid out just $319 million in dividends plus $48 million in buybacks.
This makes this utility stock one of the best stocks for investors who are bargain-focused.
United Microelectronics (UMC)
United Microelectronics (NYSE:UMC) is a foundry semiconductor chip manufacturer with the latest in clean rooms and related technology. It operates plants in Taiwan, Singapore, China, Hong Kong, Japan, the U.S. and Europe. It also pays a dividend once a year and the dividend ex-date is after the declaration date. Usually, the ex-date is in mid-July, so there is still time to get in on this year’s dividend.
Last year the dividend was set at 28.66 cents, which gives it a 3.4% dividend yield. However, earnings and dividends are likely to be much higher this year. Given that it has paid dividends every year since 2010, there is a good chance it will continue to pay good dividends going forward.
Last year its dividend payout was 34.5%, so assuming its EPS hits $1.12 this year, the new dividend could be as much as 38.64 cents per share. So at today’s price of $8.29, that gives UMC stock a prospective yield of 4.7%.
Moreover, UMC stock has a forward P/E of just 6.7 times. That makes it one of the best stocks for bargain-focused investors.
On the date of publication, Mark Hake did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.