Published on 21 Nov 2023 on Insider Monkey via Yahoo Finance
14 Low PE High Dividend Stocks to Buy Now
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.