Looking for stocks whose earnings returns are more than double the monthly spot rate of 20-year high-quality market corporate bonds could provide more opportunities to discover high-return investments. The investment-grade bonds represent corporate loans issued by triple-A, double-A and single-A rated companies.
Since these bonds are offering a monthly spot rate of 4.79% as of the time of writing, the following stocks could be of interest to investors since their earnings returns are more than 9.58% and their price-earnings ratios are below 10.44. They also hold high ratings from Wall Street analysts.
Energy Transfer LP
As of Sept. 23, Energy Transfer LP (ET, Financial), a Dallas, Texas-based oil and gas midstream operator in the U.S., offered an earnings yield of 11.86% and had a price-earnings ratio of 8.43.
Energy Transfer LP’s shares traded at $10.54 apiece, giving the stock a market cap of approximately $32.54 billion. The stock has risen 9.45% over the past year for a 52-week range of $7.96 to $12.49.
Energy Transfer LP's diluted earnings per share from continuing operations were $1.27 for the 12 months ended June 2022, representing a slight decline of 6.6% from diluted earnings per share of $1.36 for the same period ended June 2021.
On Aug. 19, the company paid a quarterly dividend of 23 cents per common share, which translates to a payout ratio of about 54%. The distribution results in a trailing 12-month dividend yield of 7.19% and a forward dividend yield of 8.73% as of this writing.
GuruFocus has given the company a rating of 4 out of 10 for financial strength and 7 out of 10 for profitability.
Wall Street issued a median recommendation rating of buy with an average target price of $15.75 per share for the stock.
Blackstone Inc. is the company's top fund holder with 6.05% of shares outstanding. Goldman Sachs Group Inc. is the second-largest shareholder at 3.01%, while Alerian MLP ETF follows in third place with 2.07%.
ConocoPhillips
As of Sept. 23, ConocoPhillips (COP, Financial), a Houston, Texas-based fossil fuel miner from deposits in North America and overseas, offered an earnings yield of 12.03% and had a price-earnings ratio of around 8.31.
The shares of ConocoPhillips traded at around $100.59 each, giving the stock a market cap of approximately $128.05 billion. The stock price has risen 50.79% over the past year for a 52-week range of $63.54 to $124.08.
ConocoPhillips' diluted earnings per share from continuing operations for the 12 months ended June 2022 was $12.08, a nearly eight-fold jump from diluted earnings per share of $1.53 for the same period through June 2021.
On Oct. 14, the company will pay shareholders a variable cash return (VROC) of $1.40 per share for the fourth quarter of 2022. To benefit, shareholders must be on the company's books by Sept. 29 at the latest.
On Sept. 1, the company paid a quarterly dividend of 46 cents per common share, which translates to a payout ratio of about 25%. The stock grants a trailing 12-month dividend yield of 1.91% and a forward dividend yield of 1.91%, as of this writing.
GuruFocus has given the company a rating of 7 out of 10 for financial strength and 4 out of 10 for profitability.
Wall Street issued a median recommendation rating of buy for the stock with an average target price of approximately $126.44 per share.
Vanguard Group Inc. is the company's largest fund holder with 8.86% of outstanding shares. BlackRock Inc. is the second largest shareholder with 8%, while State Street Corp. is third with 5%.
Truist Financial Corp
As of Sept. 23, Truist Financial Corp. (TFC, Financial), a Charlotte, North Carolina-based regional bank for individuals and various organizations in the Southeastern and the Mid-Atlantic United States, offered an earnings yield of 9.95% and had a price-earnings ratio of 10.05.
Shares of Truist Financial Corp. traded at around $44.34 each at close on Sept. 23, giving the stock a market cap of approximately $58.81 billion. The stock price has fallen 26.8% over the past year for a 52-week range of $43.54 to $68.95.
Truist Financial Corp.’s diluted earnings per share from continuing operations for the 12 months ended June 2022 was $4.41, representing an increase of 15.14% from diluted earnings per share of $3.83 for the same period through June 2021.
On Sept. 1, the company paid a quarterly dividend of 52 cents per common share, resulting in a payout ratio of approximately 44%. The trailing 12-month dividend yield was 4.42% and the forward dividend yield was 4.69% at the time of writing.
GuruFocus has given the company a rating of 3 out of 10 for financial strength and 6 out of 10 for profitability.
Wall Street issued a median recommendation rating of overweight with an average target price of $55.73 per share for the stock.
Vanguard Group Inc. is the company's largest fund holder with 9.03% of the outstanding shares. BlackRock Inc. is the second largest shareholder with 7.28%, while JPMorgan Chase & Co is third with 4.66%.
