In this article, we discuss 14 low PE high-dividend stocks to buy now. You can skip our detailed analysis of value dividend stocks and their previous performance, and go directly to read 5 Low PE High Dividend Stocks to Buy Now.
A low price-to-earnings (P/E) ratio suggests that the stock is undervalued relative to its earnings. Investors might see this as an opportunity to buy into a company at a lower price compared to its earnings potential. Stocks with low P/E and high dividends often draw attention from investors seeking a balance between value and income. Another rationale behind the effectiveness of these strategies is their proven track record of success over extended periods. These approaches, based on seeking undervalued stocks or prioritizing dividend-paying ones, have consistently demonstrated their ability to deliver positive results over time. Heartland Advisors cited a study that looked at U.S. stock returns from 1802 to 2002. According to this study, dividends and the actual growth in dividends made up 5.8% of the total annualized return of 7.9% over the 200-year span. In a global context, a study by researchers at the London Business School analyzed the subject. Between 1900 and 2005, they discovered that the average real return across 17 countries was around 5%. Meanwhile, the average dividend yield of these countries during that period stood at 4.5%. These discoveries hold significant appeal for investors focused on long-term investment strategies.
Like dividend stocks, low P/E stocks also boast a robust historical performance. The same report from Heartland Advisors emphasized that historically, stocks with low P/E ratios have surpassed the overall market performance. Moreover, these stocks have offered investors reduced downside risk compared to other equity investment strategies. In one of our articles, we discussed a report from Oakmark Funds stressing the significance of undervalued stocks over extended periods. The article referenced research conducted by Eugene Fama, a distinguished professor at the University of Chicago, and Kenneth French, a notable professor at Dartmouth College. Their study showcased how stocks with lower price-to-book ratios outperformed the S&P 500 index from 1963 to 1990. This emphasized the potential of undervalued stocks to deliver better returns compared to the broader market index during that timeframe.
Investors frequently prioritize high dividend yields, assuming that higher is always better. However, Wellington Management conducted a study that shed light on potential flaws in this approach. Their research revealed that while stocks with the highest dividend payouts and yields did perform well over time, they didn’t outperform as strongly as stocks with high, though not the absolute highest, levels of dividend payouts and yields. This study suggests that an excessively high yield might not always correlate with the best performance, highlighting the importance of a nuanced approach rather than solely focusing on the highest yield. According to analysts, dividend yields between 3% to 6% are considered healthy.
That said, there are some stocks with higher-than-average dividend yields that not only offer attractive yields but also showcase robust histories of consistently increasing their dividends over time. For example, Leggett & Platt, Incorporated (NYSE:LEG), Altria Group, Inc. (NYSE:MO), and Enterprise Products Partners L.P. (NYSE:EPD) boast dividend yields surpassing 7%, a notably high figure, while impressively maintaining decades-long streaks of consistently growing their dividends. This combination of high current yield and a strong track record of increasing dividends showcases their commitment to rewarding shareholders and their ability to sustainably generate income for investors. In this article, we will take a look at some other best dividend stocks with low P/E ratios and high dividend yields.
Photo by Viacheslav Bublyk on Unsplash
Our Methodology:
To compile this list, we filtered for dividend stocks with a P/E ratio below 15 and dividend yields exceeding 7% as of November 21. From that group, we chose companies with a proven track record of consistently paying dividends to their shareholders. The ranking of these stocks is based on their P/E ratios, arranged from the highest to the lowest.
14. Innovative Industrial Properties, Inc. (NYSE:IIPR)
P/E Ratio as of November 21: 13.94
Dividend Yield as of November 21: 8.94%
Innovative Industrial Properties, Inc. (NYSE:IIPR) is an American real estate investment trust company that focuses on the acquisition, ownership, and management of specialized properties leased to state-licensed operators for their regulated medical-use cannabis facilities. On September 15, the company announced a quarterly dividend of $1.80 per share, which was in line with its previous dividend. It has raised its dividends every year since 2017, which makes IIPR one of the best dividend stocks on our list. The stock has a dividend yield of 8.94%, as of November 21.
In addition to IIPR, Leggett & Platt, Incorporated (NYSE:LEG), Altria Group, Inc. (NYSE:MO), and Enterprise Products Partners L.P. (NYSE:EPD) are some other dividend stocks with high dividend yields.
At the end of Q2 2023, 16 hedge funds tracked by Insider Monkey owned stakes in Innovative Industrial Properties, Inc. (NYSE:IIPR), up from 15 in the previous quarter. The overall value of these stakes is over $122.3 million.
13. Energy Transfer LP (NYSE:ET)
P/E Ratio as of November 21: 12.79
Dividend Yield as of November 21: 9.22%
Energy Transfer LP (NYSE:ET) is a Texas-based company operating in the midstream energy sector. The company is primarily involved in the transportation, storage, and distribution of various energy commodities. It was a part of 34 hedge fund portfolios at the end of Q2 2023, compared with 35 in the preceding quarter, as per Insider Monkey’s database. The collective value of stakes owned by these hedge funds is over $606.3 million.
Energy Transfer LP (NYSE:ET), one of the best dividend stocks on our list, currently offers a quarterly dividend of $0.3125 per share, growing it by 0.8% in September this year. Through this increase, the company stretched its dividend growth streak to eight years. The stock’s dividend yield on November 21 came in at 9.22%.
12. Barings BDC, Inc. (NYSE:BBDC)
P/E Ratio as of November 21: 9.94
Dividend Yield as of November 21: 11.62%
An American business development company, Barings BDC, Inc. (NYSE:BBDC) is next on our list of the best dividend stocks with low pe ratios and high yields. The company has always remained committed to its shareholder obligation as it returned $81.3 million to shareholders through dividends in the first nine months of the year. In addition to this, it has been raising its dividends consistently since 2018. The company offers a quarterly dividend of $0.26 per share and has a dividend yield of 11.62%.
As of the end of Q2 2023, 12 hedge funds tracked by Insider Monkey owned stakes in Barings BDC, Inc. (NYSE:BBDC), worth collectively over $38.6 million. In comparison, 11 hedge funds owned stakes in the company in the preceding quarter.
11. Alexander’s, Inc. (NYSE:ALX)
P/E Ratio as of November 21: 9.82
Dividend Yield as of November 21: 9.46%
Alexander’s, Inc. (NYSE:ALX) is a New Jersey-based real estate investment trust company that primarily owns and manages high-quality properties in the retail and office space sectors. The company’s primary focus is on owning and managing properties in the greater New York City metropolitan area.
On October 25, Alexander’s, Inc. (NYSE:ALX) declared a quarterly dividend of $4.50 per share, which was consistent with its previous dividend. The company has been making regular dividend payments to shareholders since 2010, which makes ALX one of the best dividend stocks on our list. As of November 21, the stock has a dividend yield of 9.46%.
At the end of June 2023, 5 hedge funds in Insider Monkey’s database owned stakes in Alexander’s, Inc. (NYSE:ALX), compared with 6 in the previous quarter. These stakes are collectively valued at over $33.4 million. Among these hedge funds, Taconic Capital was the company’s leading stakeholder in Q2.
10. Ladder Capital Corp (NYSE:LADR)
P/E Ratio as of November 21: 9.81
Dividend Yield as of November 21: 8.30%
Ladder Capital Corp (NYSE:LADR) operates as a real estate investment trust and is primarily engaged in commercial real estate finance. The company offers a quarterly dividend of $0.23 per share for a dividend yield of 8.30%, as of November 21. It raised its payouts twice last year and has been paying regular dividends to shareholders since 2015, which places LADR on our list of the best dividend stocks.
Insider Monkey’s database of Q2 2023 showed that 11 hedge funds owned stakes in Ladder Capital Corp (NYSE:LADR), down from 12 in the previous quarter. The consolidated value of these stakes is more than $38.7 million.
9. Ares Capital Corporation (NASDAQ:ARCC)
P/E Ratio as of November 21: 8.54
Dividend Yield as of November 21: 9.73%
Ares Capital Corporation (NASDAQ:ARCC) is an American specialty finance company operating as a business development company. It primarily focuses on providing financing solutions to middle-market companies across various industries. The company has a three-year run of raising its dividends and it currently offers a quarterly dividend of $0.48 per share. As of November 21, the stock has a dividend yield of 9.73%.
Ares Capital Corporation (NASDAQ:ARCC) was a part of 18 hedge fund portfolios at the end of Q2 2023, as per Insider Monkey’s database. The total value of stakes owned by these hedge funds is roughly $128 million. With over 2.6 million shares, Two Sigma Advisors was the company’s leading stakeholder in Q2.
8. Altria Group, Inc. (NYSE:MO)
P/E Ratio as of November 21: 8.33
Dividend Yield as of November 21: 9.60%
An American multinational tobacco company, Altria Group, Inc. (NYSE:MO) operates through various subsidiaries and has diversified its portfolio beyond traditional tobacco products. The company is a Dividend King with 54-year consecutive years of dividend growth under its belt. It currently offers a quarterly dividend of $0.98 per share and has a dividend yield of 9.60%, as of November 21.
Of the 910 hedge funds tracked by Insider Monkey at the end of Q2 2023, 43 funds owned investments in Altria Group, Inc. (NYSE:MO), down from 49 in the previous quarter. These stakes have a value of $446.2 million in total.
7. Green Plains Partners LP (NASDAQ:GPP)
P/E Ratio as of November 21: 7.98
Dividend Yield as of November 21: 14.09%
Green Plains Partners LP (NASDAQ:GPP) is a master limited partnership (MLP) that was formed by Green Plains Inc. It primarily focuses on the storage, transportation, and logistics of ethanol and fuel-related products. On October 20, the company announced a quarterly dividend of $0.455 per share, which fell in line with its previous dividend. It has been making regular dividend payments to shareholders since 2015. With a dividend yield of 14.09% as of November 21, GPP is one of the best dividend stocks on our list.
At the end of Q2 2023, Jeff Osher’s No Street Capital was the only stakeholder of Green Plains Partners LP (NASDAQ:GPP), owning 2 million shares in the company.
6. Nordic American Tankers Limited (NYSE:NAT)
P/E Ratio as of November 21: 7.55
Dividend Yield as of November 21: 10.96%
Nordic American Tankers Limited (NYSE:NAT) is a shipping company that operates in the tanker vessel segment of the maritime industry, specifically focusing on crude oil transportation. The company has been paying uninterrupted dividends to shareholders for the past 28 years and currently offers a quarterly dividend of $0.15 per share. The stock’s dividend yield on November 21 came in at 10.96%.
Leggett & Platt, Incorporated (NYSE:LEG), Altria Group, Inc. (NYSE:MO), and Enterprise Products Partners L.P. (NYSE:EPD) are some other high dividend stocks to consider because of their solid dividend growth streaks.
As of the close of Q2 2023, 16 hedge funds in Insider Monkey’s database reported having stakes in Nordic American Tankers Limited (NYSE:NAT), compared with 23 a quarter earlier. These stakes are worth collectively over $50.7 million.
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Disclosure. None. 14 Low PE High Dividend Stocks to Buy Now is originally published on Insider Monkey.