Looking forward, Deere & Company (NYSE:DE) expects to grow its equipment sales by around 6%, while the net income is estimated to come in at around $3.3 billion. Because of global population growth, the global food demand expects to double by 2050, creating a good growth opportunity for Deere. I am personally bullish about Deere & Company (NYSE:DE) in the long run, due to its market-leading position, with a 60% market share of the farm equipment market in North America.
A value stock in a fast-growing technology industry
Apple Inc. (NASDAQ:AAPL), the tech giant, has moved from the growth category to value category after the loss of its founder, Steve Jobs. Many investors expect its growth would decline, along with the lower operating margin. At $425 per share, Apple Inc. (NASDAQ:AAPL) is worth around $399 billion on the market. The market values Apple at 9.8 times its forward earnings. At the current trading price, income investors could get a decent dividend yield at 2.9%, with the payout ratio of only 19%.
With the huge cash pile of around $145.5 billion, Apple Inc. (NASDAQ:AAPL) has been returning cash to its shareholders. Recently, the company has taken advantage of low-cost financing, issuing $17 billion in bonds with the rate equivalent to the highest rated triple A firms, in the range of 0.511% to 3.883%. The company intends to distribute as much as $100 billion in cash to shareholders in a combination of share buybacks and dividends. The share-repurchase amount has been boosted by as much as $50 billion-$60 billion. At the current trading price, a $60 billion share buyback represents more than a 15% yield to investors. Including a 2.9% dividend yield, the total yield could reach nearly 18%.
Apple Inc. (NASDAQ:AAPL) has been trying to renovate itself with a lot of initiatives, including the iPhone 5S, a low-cost iPhone, smart watch, and television. It also made a good move when it hired Paul Deneve, the former CEO of Yves Saint Laurent for “special projects” reporting directly to Apple CEO Tim Cook. Deneve could fit well in future fashionable projects, including wearable electronics. With a lot of resources and cash on hand to invest in R&D and innovation, I think Apple is in a good position to deliver shareholders a good return in the fast-changing technology environment.
My Foolish take
All of those three businesses seem to be good stocks for investors now due to their single-digit forward earnings valuations, decent dividend yield and the potential future growth. Among the three, I like Apple Inc. (NASDAQ:AAPL) the most with its potential cash return to shareholders in both forms of dividends and share buybacks. Moreover, with strong cash reserves and a new manager from the fashion industry, Apple could have an edge to move head with more exciting consumer-technology products
The article 3 Cheap Stocks With Good Dividend Yields originally appeared on Fool.com and is written by Anh Hoang.
Anh HOANG owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Anh is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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