5 Historically High Yielding Stocks – GuruFocus.com

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As market volatility continues due to a disappointing start to tech company earnings, rising interest rates and runaway inflation, many investors are looking for some stability in their portfolios.

One strategy they can use to protect their investments against inflation and other headwinds is to look for stocks that pay dividends when prices are falling. Although there is always a risk of dividend reduction, historically, dividend-paying companies have proven less erratic in volatile market conditions and continue to provide better overall returns than stocks that do not pay dividends to investors.

According to GuruFocus’ High Dividend Yield History Filter, a Premium feature, there are a number of companies that have long and consistent histories of paying dividends. Additionally, they currently have a dividend yield of over 4% and a payout ratio of less than 0.5.

As of Oct. 26, companies qualifying for the filter and owned by at least five gurus include Intel Corp. (INTC, Financial), AT&T Inc. (J, Financial), Walgreens Boots Alliance Inc. (WBA, Financial), T. Rowe Price Group Inc. (TRUE, Financial) and The Western Union Co. (Wu, Financial).

Intel

Offering a dividend yield of 5.27% and a payout ratio of 0.31, Intel (INTC, Financial) is owned by 20 gurus. The company has not cut its dividend for 30 years.

The Santa Clara, California-based semiconductor chipmaker has a market capitalization of $113.19 billion; its shares were trading around $27.69 on Wednesday with a price-to-earnings ratio of 5.91, a price-to-book ratio of 1.11 and a price-to-sales ratio of 1.54.

The GF value line suggests that the stock is currently significantly undervalued based on its historical ratios, past financial performance and analysts’ estimates of future earnings.

The GF score of 85 out of 100 implies that the company should have good outperformance potential, having received high marks for everything but its momentum rank.

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GuruFocus rated Intel’s financial strength at 7 out of 10, as it is supported by a comfortable level of interest coverage. The Altman Z-Score of 2.58, however, warns it’s under pressure. Return on invested capital also eclipses the weighted average cost of capital, meaning that value is created as the business grows.

The company’s profitability was rated 9 out of 10 due to operating margin expansion and strong returns on equity, assets and capital that outperform competitors. It also has a moderate Piotroski F-Score of 5 out of 9, meaning conditions are typical of a stable company. Intel’s predictability ranking of two out of five stars is under scrutiny due to a decline in per-share revenue growth over the past year. According to research by GuruFocus, companies in this ranking have an average return of 6% per year over a 10-year period.

Among the gurus invested in Intel,

PRIMECAP management (Trades, Portfolio) holds the largest stake with 1.18% of its shares outstanding.

Chris Davis (Businesses, Portfolio),

Al Gore (Businesses, Portfolio),

Seth Klarman (Businesses, Portfolio),

Michael Price (Businesses, Portfolio),

Ken Fisher (Businesses, Portfolio),

Jeremy Grantham (Businesses, Portfolio),

Ray Dalio (Businesses, Portfolio) Bridgewater Associates and

Tweedy Browne (Trades, Portfolio) also have significant holdings.

AT&T

At&T (J, Financial) is owned by 14 gurus. The company hasn’t cut distribution in 37 years.

The Dallas-headquartered telecommunications company has a market capitalization of $129.32 billion; its shares were trading around $18.16 on Wednesday with a price-to-earnings ratio of 6.73, a price-to-book ratio of 1.05 and a price-to-sales ratio of 0.97.

According to the GF Value Line, the stock is currently slightly overvalued.

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The GF score of 68 indicates that the company has low future performance potential. While its profitability ranking was high, it received medium ratings for value and momentum from GF and low ratings for growth and financial strength.

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AT&T’s financial strength has been rated 3 out of 10 by GuruFocus due to insufficient interest coverage and a low Altman Z-Score of 0.81 which warns it could be in danger of bankruptcy. WACC also eclipses ROIC, so it struggles to create value.

The company’s profitability fared better, earning a 7 out of 10 rating. In addition to the operating margin expansion, its returns exceed half of its industry peers. AT&T also has a moderate Piotroski F-Score of 6 and, despite declining earnings per share in recent years, a one-star predictability ranking. GuruFocus found companies with this rank yield, on average, 1.1% per year.

With 0.05% of the shares outstanding, Dalio’s Bridgewater holds the largest stake in AT&T. Other major investor gurus include Grantham, the

T Rowe Price Equity Income Fund (Businesses, Portfolio) and

Jim Simons (Businesses, Portfolio)’ Renaissance Technologies.

Walgreens Boot Alliance

With a dividend yield of 5.32% and a payout ratio of 0.38, 11 gurus have positions in Walgreens Boots Alliance (WBA, Financial). The company has not reduced its payment in 46 years.

The Deerfield, Illinois-based company, which operates two drugstore chains, has a market capitalization of $31.04 billion; its shares were trading around $35.79 on Wednesday with a price-to-earnings ratio of 7.17, a price-to-book ratio of 1.24 and a price-to-sales ratio of 0.23.

Based on the GF value line, the stock is currently slightly undervalued.

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The company is likely to have average performance in the future as it has a GF score of 77. It received high ratings for profitability and GF value, moderate ratings for growth and financial strength and a rank low for momentum.

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GuruFocus rated Walgreens’ financial strength at 5 out of 10. In addition to low interest coverage, the low Altman Z-Score of 2.45 warns that the company is under pressure as assets accumulate at a rapid pace. faster than incomes increase. Moreover, it struggles to create value since the WACC exceeds the ROIC.

The company’s profitability fared better with a score of 8 out of 10. Although the operating margin is down, its returns are higher than those of its competitors. Walgreens is also backed by a high Piotroski F-Score of 7, which means healthy conditions and a one-star predictability rating.

Simons’ company has the largest stake in Walgreens with 0.27% of its shares outstanding.

John Rogers (Trades, Portfolio), Grantham, Dalio’s firm,

Robert Olstein (Businesses, Portfolio),

Paul TudorJones (Businesses, Portfolio),

Mario Gabelli (Businesses, Portfolio),

Joel Greenblatt (Trades, Portfolio) and several others also have positions in the stock.

T. Rowe Prize Group

Generating a dividend yield of 4.28% and a payout ratio of 0.44, nine gurus own T. Rowe Price Group (TRUE, Financial). The company has not cut its dividend in 35 years.

The Baltimore-headquartered investment management firm has a market capitalization of $25.05 billion; its shares were trading around $110.66 on Wednesday with a price-to-earnings ratio of 10.71, a price-to-book ratio of 2.80 and a price-to-sales ratio of 3.48.

The GF value line suggests that the stock is currently significantly undervalued.

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With a GF score of 99, the company has strong outperformance potential, thanks to strong ratings in all five categories.

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T. Rowe Price’s financial strength was rated 8 out of 10 by GuruFocus, thanks to adequate interest coverage and a robust Z Altman score of 9.94, indicating that the company is in good standing. Assets, however, accumulate at a faster rate than income grows. ROIC also outperforms WACC, which creates value.

The company’s profitability scored 10 out of 10 thanks to an expanding operating margin and strong returns that outperform industry peers. T. Rowe Price is also backed by a moderate Piotroski F-Score of 6 and, despite slowing earnings per share growth over the past 12 months, a five-star predictability ranking. Data from GuruFocus shows that companies in this ranking have an average return of 12.1% per year.

Among the gurus invested in the business,

Tom Gayner (Trades, Portfolio) holds the largest stake with 0.14% of its shares outstanding. T. Rowe Price is also owned by

Baillie Gifford (Businesses, Portfolio),

Ron Baron (Trades, Portfolio), Greenblatt, Jones, Gabelli,

Marc Hillman (Jobs, Portfolio), Dalio’s firm,

Caxton Associates (Trades, Portfolio) and Fisher, among others.

Western Union

With a yield of 6.3% and a payout ratio of 0.42, Western Union (Wu, Financial) is owned by seven gurus. Over the past 16 years, the company has not reduced its dividend.

The Denver-based financial services company, which provides money transfer services both domestically and internationally, has a market capitalization of $5.39 billion; its shares were trading around $14 on Wednesday with a price-to-earnings ratio of 6.27, a price-to-book ratio of 12.02 and a price-to-sales ratio of 1.15.

According to the GF value line, the stock, although undervalued, is a possible value trap. Therefore, potential investors should do thorough research before making a decision.

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The GF score of 83, however, indicates that it has good outperformance potential. Although it received high ratings for profitability and GF value, the remaining categories received average ratings.

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GuruFocus rated Western Union’s financial strength at 5 out of 10. Although the company has adequate interest coverage, the Altman Z-Score of 1.36 warns that it could be at risk of bankruptcy. Value is also created since the ROIC exceeds the WACC.

The company’s profitability fared better with a score of 9 out of 10. In addition to expanding operating margin, it has strong returns that outperform the majority of its competitors. Western Union also has a high Piotroski F-Score of 8 and, despite slowing earnings per share growth, a one-star predictability ranking.

With a 0.41% stake, Grantham is the company’s biggest shareholder guru. Other Western Union Investor Gurus are Simons Company, Rogers, Hillman, Jones, Greenblatt, Dalio Company and

Jeff Auxier (Jobs, Portfolio).

Additional Choices

IGU Corp. (IGU, Financial), Franklin Resources Inc. (Well, Financial), Flushing Financial Corp. (FFIC, Financial), Lazard Ltd (LAZ, Financial) and HNI Corp. (HNI, Financial).

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