(0:30) - Finding Strong Value Stocks That Pay Dividends
(5:30) - Tracey’s Top Stock Picks
(20:40) - Episode Roundup: MAN, SCS, WHR, ETD, GES
Welcome to Episode #345 of the Value Investor Podcast.
Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.
Stocks have pulled back in Sep 2023 which means there may be some deals available. Why not get a value stock even cheaper if you can?
And while you’re looking for cheap stocks, many are also paying dividends. The yields on some value stocks have become even more attractive in 2023.
Screening for Cheap Stocks with Big Dividend Yields
It’s pretty easy to screen for cheap stocks. This screen looked for companies with a forward P/E under 15 and a P/S ratio under 1.0. A P/S ratio under 1.0 indicates a company is on sale as investors are paying less for each sale. For instance, a P/S ratio of 0.2 means investors are paying $0.20 for each $1 of sales.
To get the income portion, you can add a dividend over 3%. It’s not as high as many money markets are paying right now, which are 5% and above, but it’s still an attractive yield.
Additionally, an added bonus would be to add the Zacks Ranks of #1 (Strong Buy) and #2 (Buy). Hopefully, the addition of the Rank will produce companies with rising earnings estimates.
This screen returned 29 stocks.
5 Value Stocks that Pay Out Real Cash
1. ManpowerGroup (MAN)
ManpowerGroup is a global staffing company with operations and clients in 75 countries. Shares of ManpowerGroup are down 12.4% year-to-date.
ManpowerGroup is cheap. It has a forward P/E of just 12.4. It also has a dividend yielding 4.1%.
Should ManpowerGroup be on your short list?
2. Steelcase (SCS)
Steelcase is a global design leader in the world of work. It makes furniture for working, including desks and chairs.
Steelcase recently reported second quarter 2024 earnings and beat on the Zacks Consensus by $0.14. Earnings are expected to rise 32% in fiscal 2024.
As a result of the good news, the stock jumped and is up 60% year-to-date, adding 33% in the last month. Steelcase is still attractively priced, however, with a P/S ratio of 0.4. It pays a dividend yielding 3.6%.
Should Steelcase be on your short list?
3. Whirlpool Corp. (WHR)
Whirlpool was a pandemic winner as home sales took off and builders needed new appliances. But over the last 2 years, that has reversed course. Shares of Whirlpool are down 5.9% year-to-date.
Whirlpool is dirt cheap, with a forward P/E of just 7.9. It also pays an attractive dividend, currently yielding 5.4%.
Should investors be adding Whirlpool to their watch lists?
4. Ethan Allen Interiors Inc. (ETD)
Ethan Allen is a furniture manufacturer and retailer. It was a big pandemic winner as consumers were stuck at home and buying new couches and desks to work and attend school. Home was key.
Shares are up 14.5% year-to-date but have fallen about 1% over the past month.
Ethan Allen has always been shareholder friendly. It pays a dividend yielding 5%. Shares are still cheap with a P/S ratio of just 0.9.
Should Ethan Allen be on your short list?
5. Guess?, Inc. (GES)
Guess? is a lifestyle retailer which designs and markets apparel and accessories in over 1,000 retail stores in the Americas, Europe and Asia. On Aug 23, 2023, Guess? reported earnings and raised its full year 2024 guidance.
Shares of Guess?, however, are up just 2% year-to-date and are actually down 6.1% over the last month. On a 2-year stack, they haven’t gone anywhere either, as they are down 2.3% during that time.
Guess? is cheap. It trades with a forward P/E of just 7. It’s dividend is also generous. Guess? pays a yield of 5.7%.
Should apparel retailers like Guess? be on your value stock short list?
What Else Do You Need to Know About Value Stocks That Pay You Cash?
Tune into this week’s podcast to find out.
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