The Western Union Company (WU), SLM Corp (SLM): 4 Dividend Stocks with Low Earnings Multiples

The long-term EPS expansion will be driven by higher organic growth, a result of increased future healthcare spending driven by wider health insurance coverage, mergers and acquisitions, and share buybacks that will total $1.5 billion this year (weighted towards the second half of the year). Since 2007, the robust share repurchase activity has nearly halved the number of shares outstanding. The pace of share repurchases is decelerating, but their effect on EPS growth this year is significant.

Aside from attractive valuation and robust share repurchase activities; WellPoint is a solid dividend growth play. Its payout ratio is only 19%, yet the company raised its dividend by 30.4% for this year. Given the expected robust EPS expansion in the long term, this stock could deliver more sizable dividend increases in the future. Its current yield is 2.0%. The company is also revamping its business, creating two units out of the existing four Commercial and Specialty Business Division (combining commercial health insurance and specialty businesses) and Government Business Division (intended for its government-financed programs Medicaid and Medicare).

Final thoughts

There are hundreds of dividend-paying stocks out there, and just like most investors, the purpose of this list is to parse down the data. In this particular case, we’ve found four fairly large income-yielding companies that also sport low P/E multiples. Three of the four lie in the financial sector. WellPoint, Sallie Mae and The Western Union Company (NYSE:WU) are all worth watching, while chemical company Huntsman is worth putting on your radar as well. For readers searching for a repeatable, market-beating strategy, continue reading here.

Disclosure: none