These 5 dividend stocks have average upside of 79% along with 7.7% yields, or 40% annual total returns over 2 years
Today I wanted to highlight five high-yield dividend stocks
that also have a very cheap price. They sell well below the company’s tangible
book value per share. In addition, the companies have low price-earnings (P/E)
multiples.
Selling below tangible book value means that the stock is
below shareholders’ equity after deducting intangible assets. Typically these
assets are things like the value of patents and written up technology assets.
It also includes things like goodwill (overpayments of fair value from prior
acquisitions), as well as deferred expenses or charges.
This means that the value left is only tangible assets like
real estate, cash, securities, loans, etc. Values can be put on these kinds of
assets more easily than intangibles. In addition, all liabilities are deducted
to determine the net tangible book value.
Therefore, if the high-yield dividend stocks are selling
well below these levels, you know you are getting a bargain. This is the
original theory that Benjamin Graham taught in his books and popularized with
The Intelligent Investor. That is the book that Warren Buffett used to start
his career as an investor.
In addition, I have modeled out three ways of valuing each
of these stocks. These three methods are based on the historical dividend yield
of the stock, the historical P/E ratio and the historical price-to-tangible
book value per share (TBVPS).
The five high-yield dividend stocks selling below their
TBVPS are:
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