Some people conservatively calculate book value as Assets less Intangibles less Liabilities. I prefer this calculation since it excludes goodwill and other intangibles which might be difficult to recover in a liquidation, and that is what I will use in the calculations below.
Similar to yield, when P/B is at an extreme you have to question why it is there. If you determine an abnormally low P/B is the result of an irrational market movement, a purchase could result in both a higher yield and significant future capital appreciation.
A low P/B ratio could indicate a stock is undervalued or distressed. Since GAAP accounting is mostly based on historical cost, a viable growing company will normally be worth more than its book value. However, there are times when good companies will be punished along with the bad. It is our job as investors to separate the good companies from those that have fundamental problems.
This week, I screened my dividend growth stocks database for stocks with a P/B of 1.6 or lower, 15 or more years of dividend increases and with a dividend yield at or above 4.0%. Selected results are presented below:
Mercury General Corp. (MCY), operating primarily in California, writes a full line of automobile coverage for all classifications of risk.
Yield: 4.1% | Years of Growth: 32 | P/B: 1.85
Southern Company (SO) is an Atlanta-based energy holding company and is one of the largest producers of electricity in the U.S.
Yield: 4.1% | Years of Growth: 20 | P/B: 2.49
Consolidated Edison, Inc. (ED) is an electric and gas utility holding company serves parts of New York, New Jersey and Pennsylvania.
Yield: 4.2% | Years of Growth: 48 | P/B: 1.46
Realty Income Corporation (O) is an equity real estate investment trust that owns, develops and manages retail real estate, primarily single tenant buildings throughout most of the U.S. The trust is also among a handful of REITS that pay monthly dividends. Yield: 4.3% | Years of Growth: 26 | P/B: 2.54
Chevron Corporation (CVX) is a global integrated oil company (formerly ChevronTexaco) has interests in exploration, production, refining and marketing, and petrochemicals Yield: 4.9% | Years of Growth: 33 | P/B: 1.59
As with past screens, the data presented above is in its raw form. Some of the companies would be disqualified for poor dividend fundamentals. However some of the others may be worth additional due diligence.
My database, D4L-Data, is a spreadsheet containing more than 20 columns of information on the 150+ companies that I track. The data is sortable and has built-in buttons and macros to make it easy to use. Companies included in the list are those that have had a history of dividend growth. The D4L-Data spreadsheet is a part of D4L-Premium Services and is updated each Saturday for subscribers.
Full Disclosure: Long MCY, SO, ED, O, CVX,
Related Articles
Tags: MCY, SO, ED, O, CVX,
Yield: 4.1% | Years of Growth: 32 | P/B: 1.85
Southern Company (SO) is an Atlanta-based energy holding company and is one of the largest producers of electricity in the U.S.
Yield: 4.1% | Years of Growth: 20 | P/B: 2.49
Consolidated Edison, Inc. (ED) is an electric and gas utility holding company serves parts of New York, New Jersey and Pennsylvania.
Yield: 4.2% | Years of Growth: 48 | P/B: 1.46
Realty Income Corporation (O) is an equity real estate investment trust that owns, develops and manages retail real estate, primarily single tenant buildings throughout most of the U.S. The trust is also among a handful of REITS that pay monthly dividends. Yield: 4.3% | Years of Growth: 26 | P/B: 2.54
Chevron Corporation (CVX) is a global integrated oil company (formerly ChevronTexaco) has interests in exploration, production, refining and marketing, and petrochemicals Yield: 4.9% | Years of Growth: 33 | P/B: 1.59
As with past screens, the data presented above is in its raw form. Some of the companies would be disqualified for poor dividend fundamentals. However some of the others may be worth additional due diligence.
My database, D4L-Data, is a spreadsheet containing more than 20 columns of information on the 150+ companies that I track. The data is sortable and has built-in buttons and macros to make it easy to use. Companies included in the list are those that have had a history of dividend growth. The D4L-Data spreadsheet is a part of D4L-Premium Services and is updated each Saturday for subscribers.
Full Disclosure: Long MCY, SO, ED, O, CVX,
Related Articles
Tags: MCY, SO, ED, O, CVX,
