In this article I have chosen five stocks based off their high dividend yields, pay-out ratios and growth prospects for future on a relative value basis. While investors love dividend stocks these days, however they should consider a company's ability to maintain a high dividend yield in coming years too. Add cheap valuations to high dividend yielding stocks with sustainable outlook, and one gets a formula for outperforming markets indices. Here is my analysis on such stocks.
Pitney Bowes, Inc. (PBI) is an equipment and mail solutions provider. Shares of the company are currently trading around $19 per share. Over the last 52 weeks, its shares have traded within a narrow range of $17.33 and $26.36 per share. The company has a beta of 1.16, indicating that its stock is volatile in nature. The company has a relatively high dividend yield of 7.6%.
Siemens AG (SI) is a competitor of Pitney Bowes and it currently has a price-to-earnings ratio of 10.7 times versus the 9.3 times reported by Pitney Bowes. It also has a higher price-to-sales ratio of 0.9 times versus the 0.7 times reported by Pitney Bowes. These values show that Pitney Bowes is a relatively cheaper company to invest in. Xerox Corporation (XRX) is another competitor of Pitney Bowes. Siemens and Xerox Corporation reported dividend yields of 3% and 1.9% respectively, both of which are lower than that of Pitney Bowes. The performance by Pitney Bowes shows that the company has a lot of potential but needs to work on its revenue stream in order to maintain its high-yielding dividends.
Penn West Petroleum Ltd. (PWE) is an explorer and exploiter of petroleum and natural gas. Shares of the company are trading around $22 per share and have traded between $12.45 and $28.98 per share over the last 52 weeks. The company has a beta of 1.44, indicating that its shares are volatile in nature. Penn West reported a dividend yield of 5%.
Anadarko Petroleum Corporation (APC) is a competitor of Penn West. Anadarko currently has a higher five year expected price-to-earnings growth ratio of 0.9 times versus the 0.5 times reported by Penn West, showing that the future earnings growth of Penn West can be bought at a lower price. Suncor Energy, Inc. (SU), another competitor of Penn West, and Anadarko both have lower dividend yields of 1.3% and 0.5% respectively. Penn West currently has one of the best positions in the Canadian Oil Market, with more than 97% of analysts believing that the company will outperform the market. This is due to the high oil prices and the company's relatively improved performance. We are bullish on Penn West's performance.
Companhia Energetica De Minas Gerais ADS America (CIG) is a provider of electric energy in Brazil. The company's shares are currently trading around $19 per share. Over the last 52 weeks, its shares have traded within a narrow range of $14.03 and $21.09 per share. The company has a low beta of 0.66, indicating that its stock is not volatile in nature. The company also reported a return-on-equity of 19% and a dividend yield of 5.5%.
El Paso Electric Company (EE) is a competitor of Companhia Energetica. El Paso's current price-to-earnings ratio of 13.8 times is higher than that of Companhia Energetica at 9.8 times. El Paso and Companhia Paranaense de Energia (ELP), another competitor, reported lower dividend yields of 2.5% and 0.9% respectively. Companhia Energetica recently traded at eight times earnings and is doing better than its U.S. based counterparts. The company also recently improved on its two hundred day moving average and is considered one of the better performing Brazilian stocks. We are bullish on the company's stock.
Duke Realty Corporation (DRE) is a real estate investment trust. Shares of the company are currently trading around $13 per share and have traded within a narrow range of $9.29 and $15.63 per share. The company has a beta of 1.84, indicating that its shares are volatile in nature. Duke Realty reported a dividend yield of 5.1%.
Highwoods Properties, Inc. (HIW) reported a higher five year expected price-to-earnings growth ratio of 3.7 times versus the 3.4 times reported by Duke Realty. Highwoods also has a higher price-to-sales ratio of 4.9 times versus the 2.3 times reported by Duke Realty. These ratios indicate that Duke Realty is cheaper for investors. Another competitor of Duke Realty is Acadia Realty Trust (AKR). Acadia also has a higher price-to-sales ratio of 4.9 times. Acadia reported a dividend yield of 3.5%, which is less than what is offered by Duke Realty. It has a 2.1 analyst recommendation on a scale where 1.0 is a "Strong Buy" and 5.0 is a "Sell". It is expected to earn around $230 million in revenue this quarter. We are bullish on the performance of Duke Realty.
Provident Energy Ltd. (PVX) is a marketer of natural gas liquids. Shares of the company are currently trading near yearly highs at $11 per share. Over the last 52 weeks, its shares have traded between $6.90 and $11.44 per share. The company reported a return-on-equity of 23%. It has a beta of 1.25, indicating that its shares are volatile. Also, Provident Energy has a dividend yield of 4.8%.
Baytex Energy Corporation (BTE), a competitor of Provident Energy, reported a higher price-to-sales ratio of 6.7 times, versus the 1.6 times reported by Provident Energy. Another competitor of Provident Energy, namely Abraxas Petroleum Corporation (AXAS), also reported a higher price-to-sales ratio of 5 times. This shows that Provident Energy is cheaper than its competitors. Abraxas currently does not pay dividends while Baytex has a slightly lower dividend yield of 4.6%. Provident's expected acquisition by Pembina Pipeline (PBNPF) will likely raise the shares for both companies. Provident has been given a buy rating by analysts and with the company's positive performance, we reinforce the buy rating.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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