AFLAC Incorporated (AFL), Apple Inc. (AAPL), HollyFrontier Corp (HFC): Five Hits From a Stock Screen

The latest issue of the T. Rowe Price Report includes an interview with David Giroux, manager of Price’s Capital Appreciation Fund, who wraps up the article with some advice: “Focus on companies with 2% to 3% dividend yields that have high-quality business models and trade for no more than 15 times earnings.”

That sounds like the makings of a stock screen. The Motley Fool’s CAPS Screener found 136 stocks that meet the dividend and P/E ratio criteria. Unfortunately, there’s no “high-quality business model” parameter, so I thinned the results to stocks with a four- or five-star rating from our CAPS community. That cut the field to 79 names from the seven sectors shown below.

The table below lists five of the stocks — one from each of the five sectors with the most hits.

Source: Motley Fool CAPS Screener. TTM = trailing 12 months.

HollyFrontier Corp (NYSE:HFC) is an oil refiner. The trailing P/E looks like deep-value territory, but analyst estimates going forward bump the ratio up to nine — still not expensive. With a payout ratio of only 37%, Holly has some cushion to maintain and grow the dividend. The company has increased the dividend five times since 2011 and authorized two $350 million share buybacks last year.

Apple Inc. (NASDAQ:AAPL) wouldn’t have made this list a year ago. A new dividend started last year, and a recent dividend hike and a stock price retreat over the past several months have put Apple Inc. (NASDAQ:AAPL) squarely into the yield and valuation range recommended by Giroux. In addition to the dividend hike, Apple Inc. (NASDAQ:AAPL) increased its share buyback authorization from $10 billion to $60 billion in April. As for a high-quality business model, I suspect a high percentage of the folks reading this — perhaps even both of you — are doing so on an Apple Inc. (NASDAQ:AAPL) device.