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6 Dividend Challengers Under Book Value with 'Buy' or Better Rating

January 18, 2012 | About:
Dividend Challengers are stocks that have raised dividends over a period of five to nine consecutive years. Two hundred U.S.-listed companies are available for investors with such a dividend growth history. I screened stocks from the investment category by cheap P/B ratios and decided to select only those stocks with a P/B ratio below one. In fact, this means that I get for a dollar of my investment more than a dollar of the company’s equity.

Normally, the capital market expects that the company will generate losses within the next years. But sometimes the market could misjudge the income situation of the company. This is why I selected only stocks with a 'buy' or better recommendation. The recommendation scheme was created by Finviz.com and has a point scale of 1 to 5, with 1 a strong buy rating and 2 a buy. Thirteen Dividend Challengers are below book value of which six are recommended to buy. These are the results:

1. Arch Coal (ACI) hasa market capitalization of $2.99 billion. The company employs 4,700 people, generates revenues of $3,186.27 million and has a net income of $159.39 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $691.20 million. Because of these figures, the EBITDA margin is 21.69 percent (operating margin 9.96 percent and the net profit margin finally 5.00 percent).

The total debt representing 32.98 percent of the company’s assets and the total debt in relation to the equity amounts to 71.94 percent. Due to the financial situation, a return on equity of 7.30 percent was realized. Twelve trailing months earnings per share reached a value of $0.79. Last fiscal year, the company paid $0.39 in form of dividends to shareholders. ACI raised dividends for 8 consecutive years.

Here are the price ratios of the company: The P/E ratio is 17.94, Price/Sales 0.94and Price/Book ratio 1.03. Dividend Yield: 3.11 percent. The beta ratio is 1.86. The company is recommended to buy and has a rating of 2.2.

2. American Equity Investment Life Holding (AEL) hasa market capitalization of $617.86 million. The company employs 360 people, generates revenues of $1,285.59 million and has a net income of $42.93 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $1,277.34 million. Because of these figures, the EBITDA margin is 99.36 percent (operating margin 5.08 percent and the net profit margin finally 3.34 percent).

The total debt representing 2.27 percent of the company’s assets and the total debt in relation to the equity amounts to 63.88 percent. Due to the financial situation, a return on equity of 5.07 percent was realized. Twelve trailing months earnings per share reached a value of $0.68. Last fiscal year, the company paid $0.10 in form of dividends to shareholders. AEL raised dividends for 9 consecutive years.

Here are the price ratios of the company: The P/E ratio is 15.18, Price/Sales 0.48and Price/Book ratio 0.63. Dividend Yield: 1.16 percent. The beta ratio is 1.66. The company is recommended for a strong buy and has a rating of 1.3.

3. American Financial Group (AFG) hasa market capitalization of $3.65 billion. The company employs 500 people, generates revenues of $4,497.00 million and has a net income of $423.00 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $1,431.00 million. Because of these figures, the EBITDA margin is 31.82 percent (operating margin 15.32percent and the net profit margin finally 9.41 percent).

The total debt representing 10.09 percent of the company’s assets and the total debt in relation to the equity amounts to 73.27 percent. Due to the financial situation, a return on equity of 11.61 percent was realized. Twelve trailing months earnings per share reached a value of $3.49. Last fiscal year, the company paid $0.58 in form of dividends to shareholders. AFG raised dividends for 6 consecutive years.

Here are the price ratios of the company: The P/E ratio is 10.59, Price/Sales 0.81and Price/Book ratio 0.87. Dividend Yield: 1.89 percent. The beta ratio is 1.09. The company is recommended to buy and has a rating of 2.0.

4. The Travelers Companies (TRV) hasa market capitalization of $24.51 billion. The company employs 32,000 people, generates revenues of $25,112.00 million and has a net income of $3,216.00 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $8,496.00 million. Because of these figures, the EBITDA margin is 33.83 percent (operating margin17.15 percent and the net profit margin finally 12.81 percent).

The total debt representing 6.29 percent of the company’s assets and the total debt in relation to the equity amounts to 25.95 percent. Due to the financial situation, a return on equity of 12.09 percent was realized. Twelve trailing months earnings per share reached a value of $3.78. Last fiscal year, the company paid $1.41 in form of dividends to shareholders. TRV raised dividends for 7 consecutive years.

Here are the price ratios of the company: The P/E ratio is 15.69, Price/Sales 0.98and Price/Book ratio 1.02. Dividend Yield: 2.76 percent. The beta ratio is 0.70. The company is recommended to buy and has a rating of 2.4.

5. Assurant (AIZ) hasa market capitalization of $3.51 billion. The company employs 14,000 people, generates revenues of $8,527.72 million and has a net income of $279.18 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $2,494.71 million. Because of these figures, the EBITDA margin is 29.25 percent (operating margin 7.11 percent and the net profit margin finally 3.27 percent).

The total debt representing 3.70 percent of the company’s assets and the total debt in relation to the equity amounts to 20.44 percent. Due to the financial situation, a return on equity of 5.80 percent was realized. Twelve trailing months earnings per share reached a value of $2.12. Last fiscal year, the company paid $0.63 in form of dividends to shareholders. AIZ raised dividends for 8 consecutive years.

Here are the price ratios of the company: The P/E ratio is 17.97, Price/Sales 0.41and Price/Book ratio 0.81. Dividend Yield: 1.89 percent. The beta ratio is 1.32. The company is recommended to buy and has a rating of 2.4.

6. Tower Group (TWGP) hasa market capitalization of $838.62 million. The company employs 1,360 people, generates revenues of $1,458.73 million and has a net income of $121.92 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $407.50 million. Because of these figures, the EBITDA margin is 27.94 percent (operating margin 12.67percent and the net profit margin finally 8.36 percent).

The total debt representing 8.88 percent of the company’s assets and the total debt in relation to the equity amounts to 34.41 percent. Due to the financial situation, a return on equity of 11.03 percent was realized. Twelve trailing months earnings per share reached a value of $1.72. Last fiscal year, the company paid $0.39 in form of dividends to shareholders. TWGP raised dividends for 5 consecutive years.

Here are the price ratios of the company: The P/E ratio is 12.26, Price/Sales 0.57 and Price/Book ratio 0.80. Dividend Yield: 3.57 percent. The beta ratio is 0.57. The company is recommended to buy and has a rating of 2.4.

About the author:

Dividend
I am a private full time investor searching for investments and investment ideas.

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