High Yield, Single Digit PE Dividend Stocks

As a dividend income investor I am always on the lookout for new dividend opportunities to consider adding to my current stock portfolio. Of course, this is easier said than done as the market has been on a magnificent bull run which has inflated the PEs of many stable dividend stocks. However, with the recent market slide the past couple weeks many dividend investors are starting to consider adding these formerly high PE stocks now that share prices have come down a bit.

 

With the focus of every dividend investor being yield and valuation I thought it would be interesting to highlight some of the stocks that currently trade at single digit PEs while at the same time offer high current yield. I think the list created below is interesting. I have eliminated any stock with a market cap below $1 billion and any REIT, ETF or MLP.

 

Of course, yield and PE alone do not an investment decision make, but I think that by focusing on these two primary factors you can at least create a good starting point for finding some interesting current high yielding dividend stocks that you may not ordinarily consider. And that’s what blogging about dividend growth investing is all about. Sharing new and different ideas for others to consider. That being said, let’s begin by highlighting some of the best high yielding, single digit PE dividend stocks.

 

First up is Noble Corp. (NE). NE is an offshore drilling contractor for the oil and gas industry with operations all over the world including operations in the United States, Gulf of Mexico and Alaska, Mexico, Brazil, the North Sea, the Mediterranean, West Africa, the Middle East, India, Malaysia, and Australia. NE currently yields a lofty 4.40% with a moderate payout ratio of 44.6% ensuring a safe dividend based on current cash flow. On the valuation side of things, NE has a current PE of 7.76 putting it well below the S&P and its peers. This low current PE is well below the five year average of 13.5 making NE a relatively cheap, high yielding stock. Or course, a four star rating from Morningstar doesn’t hurt either.

 

Sticking with the oil and gas industry is another high yielding low PE stock, CNOOC Ltd. (CEO). Currently, yielding 4.10% with a moderately low payout ratio of 35.7% CEO, explores develops, produces, and sells crude oil, natural gas, and other petroleum products primarily from locations near offshore China but also owns assets in Africa, North America, South America, Oceania, and Europe. The PE of CEO is currently at 9.14 placing it well below its peers and the S&P. Another interesting point for CEO is the healthy ten year annualized dividend growth rate of 16.54%. This may be an interesting stock to watch as CEO offers both current high yield and a healthy dividend growth rate as well.

 

Moving down the list of high yielding low PE stocks two insurance companies have popped on the radar. The first, OneBeacon Insurance Group, Ltd. (OB) which currently yields a very high 5.50% with a moderately high payout ratio of 74.3%. OB provides specialty property and casualty insurance and services such as air cargo coverage and various marine insurance products. Think of those large container ships with millions in cargo. OB covers any loss or damage arising the loading and unloading of cargo, ship repairs, collision and other issues that may arise in the transport of cargo. The current PE of OB is 9.6 putting it slightly below its peers and well below the S&P.

 

The second insurance company to make the list is Old Republic International Corporation (ORI). ORI currently yields 4.30% with a moderately high payout ratio of 81.1%. The company offers automobile extended warranties, aviation, commercial automobile, home warranty, travel accident, and workers’ compensation insurance products. The current PE of ORI is 7.05 putting it well below its peers and the S&P. ORI has a very long dividend history as well and has proven to be very shareholder friendly in that respect.

 

Our next high yield low PE stock is Sibanye Gold Limited (SBGL). As the name suggests, Sibanye Gold Limited is a gold mining company that owns and operates various gold operations in South Africa. The stock currently yields a healthy 4.60% with a very low payout ratio of only 11.9%. Based on current cash flow you can expect this high yield stock to continue paying these generous dividends. On the valuation side SBGL currently has a PE of 7.64 making this stock cheap relative to the market in general. One thing to be aware of is the decline in overall revenue the past couple of years but I suspect it has more to do with the drop in the price of gold more so than production limits. Still, as a high yielding stock this may be one to keep for a limited time as many dividend growth investors are looking to jump start their current income and then move into lower yielding, higher quality and higher dividend growth stocks.

 

Finally, Fortress Investment Group LLC (FIG), an asset management company yields 4.20% with a moderate payout ratio of about 60%. FIG has a current PE of 9.21 placing it well below its peers and the S&P. Another four star rated stock by Morningstar, FIG can be considered another high yield, income producer, jump start stock.

 

I found it interesting that of the six stocks mentioned above two are in the oil and gas industry and three are in the financial sector with two insurance companies and one asset management company. This theme has been playing out in the market for several months as I have found that most of the relative bargains in the market have been in the financial sector and energy. Stocks such as USB, WFC, AFL, CB, TD, RY, BNS, CM and BMO all trade at relatively low PEs to the market just like many of the energy names such as BP, TOT, XOM, CVXCOP and PSX to name a few. What exactly is Mr. Market trying to tell us as we seek relative value in this still expensive market? I know that many of these names highlighted in the blog post would also be considered by DGI investors looking to jump start their current income with these lofty yields.

 

What do you think about these high yield, low PE names above? Are any in your portfolio or watch list? Please let me know below.

 

Disclosure: Long WFC, AFL

26 thoughts on “High Yield, Single Digit PE Dividend Stocks

    • Hi LAH,

      While it is true that several of the names listed might not have a rosy dividend future, companies such as ORI and CEO are very dividend friendly. ORI has a dividend policy that goes back several decades and CEO operates in the very lucrative energy sector. I’ll admit, the stocks mentioned in the article may only present good jump start yield for DGI investors starting out, but they still are worthy of consideration. Thanks for commenting.

  1. Energy sectors are definitely a great addition to any portfolio. What are your thoughts of the energy sector on the TSX.
    Many of the ones I consider to be great companies in Canada seem to have PE of of +20. I eventually want to enter into the America market but i still am waiting for our dollar to go up some more. the ones im currently watching are.

    Fortis, Canadian utilities, Suncor, and Enbridge. Heck i may even add more to my current holdings of interpipline.

    Cheers

    Ace

    • Hi Ace,

      In general I’m a fan of many of the energy companies mentioned in the blog post and others not mentioned. To be fair, I do not want to give an opinion on any companies in the energy sector on the TSX as I am not fully familiar with the names listed there. For now it seems you can find better value in many American names such as XOM, CVX, COP and PSX to name a few. BP and TOT are other low PE, high yield foreign plays to consider. I’d start looking at those instead of some of the more expensive Canadian energy plays. The Canadian utilities look pretty strong from what you mentioned. I need to do more homework before I can give a better assessment. Thanks for commenting.

  2. Noble has been on my watchlist for a very long time. It’s now getting to be a very interesting share. Also could consider Sibanye as a defensive play in light of middle East and Ukraine crises, always think oil and gold could be good

    • Hi M,

      NE is an interesting play in the energy space for sure. The yield is definitely nice in case you have to hold the stock for a long time. As you know, it’s a crazy world and sometimes oil and sometimes gold can be good hedges in uncertain times. At the very least, you’ll be generating a nice income from the high yield while you wait. Thanks for stopping by.

    • Hi Charles,

      Thanks for sharing your purchases and sales of FIG. It’s always nice when you can buy and sell at a profit and enjoy capital appreciation and dividend income as well. I don’t think it’s a surprise that energy and financial stocks popped up on the high yield low PE screen. Thank you for commenting.

    • Hi DD,

      Thanks for sharing your stock information with us. Canada is full of many great energy companies. I’m not well versed in them as of yet. For now, I am focusing on adding some Canadian banks. Thanks for commenting. Saw your email too by the way… I’ll respond soon.

    • Hi IS,

      Hope you found this list interesting. It’s always good news when an insider starts buying up shares. NE seems to have a very nice yield and is in an industry that will be around for a long while.

      Happy to be a fellow AFL shareholder with you as well. I have been buying it up too and it’s a stock with great dividend growth. The article I wrote focused on high current yield at 4%+. I appreciate your comment.

    • I’m really surprised more American and Canadian investors don’t buy UK stocks. We have plenty of sub PE15 stocks with good yields. I know there are currency issues, but as far as I see it, having foreign stocks just diversifies one’s portfolio more. Here in the UK, we buy a fair few American stocks, and Canadian ones are getting more and more popular all the time. My broker has just added Canadian markets to my international section.
      M recently posted…Control Your Grocery BudgetMy Profile

      • Hi M,

        To tell you the truth, most UK companies are hidden from U.S. investors. They don’t get the attention or headlines that many of the American companies receive so they are largely unknown. The largest UK companies that seems to get the most play is BP and UL I’d say. You are correct that a disservice is being made to the American public by not making more prominent UK stocks easier to buy or known for that matter. I guess many of the Americans seek international exposure via American companies such as YUM, MDLZ or PM (I know not a U.S. based company), for example, that generate a lot of their revenue from overseas rather than the U.S. I’m looking for Canadian banking exposure these days. I do realize that there is a world beyond the U.S. borders. Thank you for commenting.

    • Hi DD,

      This was a fun one to put together. The high yield made this group of seemingly cheap stocks and interesting bunch. ORI seems to be most popular from the stocks mentioned as I know it is in the portfolio of many dividend bloggers. I have been looking at it myself as that yield seems very tempting and ORI has a very long dividend history as well. Thank you for stopping by.

  3. Interesting criteria for a list of unique stocks 🙂 I don’t have any of those names in my portfolio but I have other companies within the same industries such as the mega cap Chevron Corp 😀 Which has a forward P/E of 11.4x so it’s more expensive relative to Noble or CNOOC but I hold it in my hedge fund for hedging purposes. Speaking of CNOOC, they came into Canada a couple years ago and bought our oil and gas company Nexen for a record $15.1 billion. It was great for Nexen shareholders, but CNOOC received a lot of negative sentiment from Canadians because it’s a State Owned Enterprise, which gives it an unfair market advantage over other energy companies because it’s financially and politically backed by one of the richest countries in the world.
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    • Hi Liquid,

      I thought it would be interesting to see what high yield, single digit PE stocks would come up on the radar. Anytime you can find a stock that yields 4% to over 5%, it raises interest. Thanks for giving a first hand account about the presence of CEO in Canada. I can guess that the deal was not met with utmost enthusiasm by many Canadians. I’m surprised the government let this deal go through. I know the Chinese have nixed a few American companies from buying up local Chinese corporations. KO comes to mind when it was looking to purchase a large Chinese juice company. At least China has a foot in the door of a very resource rich country like Canada. We’ll see how that plays out in the coming decades.

    • Hi AFFJ,

      Glad you enjoyed the article. ORI seems to be in quite a few dividend blogger portfolios from what I have seen. Of course, the stocks you mention are all solid too. I have been adding to my AFL for a few months already but what I found interesting from this article is the high yield that many of these low PE stocks offer. Thanks for commenting.

    • Hi DM,

      True enough. Most of the stocks mentioned in the article might be good short term holdings where you can capture some pretty nice high yield. ORI, though seems to be a bit of a standout from the bunch. I know ORI is already in many DGI portfolios and has a very long and generous dividend history. Thanks for stopping by.

  4. I don’t have any of these in our portfolio and none of them are on the watch list. I may look into these companies that you named and do more investigation. What jumped out to me is that all of the stocks listed have high yield. Might be OK for short term holding but then they might be more volatile too.
    Tawcan recently posted…3 key questions to ask before investingMy Profile

    • Hi Tawcan,

      Well, one of the reasons for compiling a list like this is exactly as you mention… a short term cheap holding that pays a very high current yield. ORI is one example though of a good longer term investment. It is already in the portfolios of many dividend growth bloggers and has a very long dividend history too. Thanks for commenting.

    • Hi J,

      Thanks for sharing your recent purchases with us. CVX is a great stock for the long haul. RIG needs a little more watching as a long term investment. What I liked about NE was the low PE and high yield. Thank you for stopping by.

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