There are a number of great companies in the market today. By using the ModernGraham Valuation Model, I've selected 10 of the best dividend-paying stocks for the Enterprising dividend stock investor. These companies have the highest dividend yields among the undervalued companies reviewed by ModernGraham, which are suitable for Enterprising Investor according to the ModernGraham approach.
Defensive Investors are defined as investors who need to select only the companies that present the least amount of risk. Enterprising Investors, on the other hand, are able to do substantial research and can select companies that present a moderate (though still low) amount of risk. Each company suitable for the Defensive Investor is also suitable for Enterprising Investors.
The companies selected for this list may not pay what some consider to be a huge dividend, but they have demonstrated strong financial positions through passing the requirements of the Enterprising Investor and show potential for capital growth based on their current price in relation to intrinsic value. As such, these defensive dividend stocks may be a great investment if they prove to be suitable for your portfolio after your own additional research.
Lucara Diamond Corp. (TSE:LUC, Financial)
Lucara Diamond Corp. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, insufficient earnings stability or growth over the last 10 years, and the poor dividend history. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.
As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from 8 cents in 2014 to an estimated 22 cents for 2018. This level of demonstrated earnings growth outpaces the market's implied estimate of 0.98% annual earnings growth over the next seven to 10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.
At the time of valuation, further research into Lucara Diamond Corp. revealed the company was trading above its Graham Number of $1.96. The company pays a dividend of 1 cent per share, for a yield of 4.3%, putting it among the best dividend-paying stocks today. Its PEmg (price over earnings per share - ModernGraham) was 10.45, which was below the industry average of 42.77, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of -3 cents.Â
Hanesbrands Inc. (HBI, Financial)
Hanesbrands Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, poor dividend history, and the high PB ratio. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.
As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from 75 cents in 2014 to an estimated $1.11 for 2018. This level of demonstrated earnings growth supports the market's implied estimate of 4.92% annual earnings growth over the next seven to 10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.
At the time of valuation, further research into Hanesbrands Inc. revealed the company was trading above its Graham Number of $8.59. The company pays a dividend of 6 cents per share, for a yield of 3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share - ModernGraham) was 18.35, which was below the industry average of 40.48, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-7.73.Â
H & R Block Inc. (HRB, Financial)
H & R Block Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio and high price-book ratio. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.
As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.44 in 2014 to an estimated $2.02 for 2018. This level of demonstrated earnings growth outpaces the market's implied estimate of 2.21% annual earnings growth over the next seven to 10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns in an estimate of intrinsic value above the price.
At the time of valuation, further research into H & R Block Inc. revealed the company was trading above its Graham Number of $0. The company pays a dividend of 88 cents per share, for a yield of 3.4%, putting it among the best dividend-paying stocks today. Its PEmg (price over earnings per share - ModernGraham) was 12.92, which was below the industry average of 25.5, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-9.45.Â
LyondellBasell Industries NV (LYB, Financial)
LyondellBasell Industries NV is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last 10 years, the poor dividend history and the high price-book ratio. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.
As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $6.13 in 2014 to an estimated $9.75 for 2018. This level of demonstrated earnings growth outpaces the market's implied estimate of 1.3% annual earnings growth over the next seven to 10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.
At the time of valuation, further research into LyondellBasell Industries NV revealed the company was trading above its Graham Number of $66.06. The company pays a dividend of $3.55 per share, for a yield of 3.3%, putting it among the best dividend-paying stocks today. Its PEmg (price over earnings per share - ModernGraham) was 11.1, which was below the industry average of 30.04, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-13.94.Â
Gilead Sciences Inc. (GILD, Financial)
Gilead Sciences Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the poor dividend history and the high price-book ratio. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.
As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $3.61 in 2014 to an estimated $7.05 for 2018. This level of demonstrated earnings growth outpaces the market's implied estimate of 1.33% annual earnings growth over the next seven to 10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.
At the time of valuation, further research into Gilead Sciences, Inc. revealed the company was trading above its Graham Number of $46.47. The company pays a dividend of $2.08 per share, for a yield of 2.6%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share - ModernGraham) was 11.16, which was below the industry average of 28.67, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-13.66.Â
Signet Jewelers Ltd. (SIG, Financial)
Signet Jewelers Ltd. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years, and the poor dividend history. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.
As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $3.86 in 2014 to an estimated $6.07 for 2018. This level of demonstrated earnings growth outpaces the market's implied estimate of 0.22% annual earnings loss over the next seven to 10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.
At the time of valuation, further research into Signet Jewelers Ltd. revealed the company was trading below its Graham Number of $61.99. The company pays a dividend of $1.04 per share, for a yield of 2.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share - ModernGraham) was 8.06, which was below the industry average of 30.22, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-3.32.Â
Duke Realty Corp. (DRE, Financial)
Duke Realty Corp. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio and insufficient earnings stability or growth over the last 10 years. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.
As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from 24 cents in 2014 to an estimated $1.78 for 2018. This level of demonstrated earnings growth outpaces the market's implied estimate of 3.82% annual earnings growth over the next seven to 10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.
At the time of valuation, further research into Duke Realty Corp. revealed the company was trading above its Graham Number of $9.72. The company pays a dividend of 77 cents per share, for a yield of 2.7%, putting it among the best dividend-paying stocks today. Its PEmg (price over earnings per share - ModernGraham) was 16.14, which was below the industry average of 46.75, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-7.03.Â
AbbVie Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability over the last 10 years, the poor dividend history and the high PEmg and price-book ratios. The Enterprising Investor is only concerned with the low current ratio. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.
As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $2.19 in 2014 to an estimated $4.51 for 2018. This level of demonstrated earnings growth outpaces the market's implied estimate of 6.24% annual earnings growth over the next seven to 10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.
At the time of valuation, further research into AbbVie Inc. revealed the company was trading above its Graham Number of $22.85. The company pays a dividend of $2.56 per share, for a yield of 2.7%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share - ModernGraham) was 20.97, which was below the industry average of 29.14, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-27.69.Â
Ameriprise Financial Inc. (AMP, Financial)
Ameriprise Financial Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the high price-book ratio. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.
As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $6.29 in 2014 to an estimated $10.48 for 2018. This level of demonstrated earnings growth outpaces the market's implied estimate of 3.33% annual earnings growth over the next seven to 10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham's formula, returns an estimate of intrinsic value above the price.
At the time of valuation, further research into Ameriprise Financial Inc. revealed the company was trading above its Graham Number of $114.12. The company pays a dividend of $3.24 per share, for a yield of 2% Its PEmg (price over earnings per share - ModernGraham) was 15.16, which was below the industry average of 25.5, which by some methods of valuation makes it one of the most undervalued stocks in its industry.Â
Bed Bath & Beyond Inc. (BBBY, Financial)
Bed Bath & Beyond Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio and poor dividend history. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.
As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $4.19 in 2014 to an estimated $4.19 for 2018. This level of demonstrated earnings growth outpaces the market's implied estimate of 1.57% annual earnings loss over the next seven to 10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns in an estimate of intrinsic value above the price.
At the time of valuation, further research into Bed Bath & Beyond Inc. revealed the company was trading below its Graham Number of $34.59. The company pays a dividend of 38 cents per share, for a yield of 1.7% Its PEmg (price over earnings per share - ModernGraham) was 5.36, which was below the industry average of 35.42, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-3.6.Â
Disclaimer
The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours. See my current holdings here. This article is not investment advice and all readers are encouraged to speak to a registered investment adviser prior to making any investing decisions. Please also read our full disclaimer.Â
