When investing in a dividend stock you don’t base your decision to invest on the yield alone. Value plays an important role because after all, we want that stock to go higher while we own it. That’s what makes dividend investors rich, stocks that go higher and pay out dividends as they go.
The P/E ratio, or price to earnings ratio, is a great indicator of value. It represents the price paid per share compared to the net income of the company. According to the Wall Street Journal, the average P/E ratio of stocks in the Dow is 17.19. The Nasdaq average is 16.71.
|The Chile Fund, Inc.||CH||2.05||9.22|
|Credit Suisse AM Inc Fund Inc.||CIK||2.72||8.71|
|Calamos Convertible & Hi Income||CHY||2.81||7.97|
|Global High Income Fund Inc.||GHI||3.38||7.92|
|Eaton Vance Municipal Income Trust||EVN||4.15||7.36|
|Van Kampen Municipal Trust Fund||VKQ||4.18||7.07|
|Annaly Capital Management, Inc.||NLY||4.92||15.12|
Let’s take a deeper look at a few of these value dividend stocks.
Chile Fund – CH
The Chile Fund is a mutual fund that invests in the public equity markets of Chile. They’ve been paying dividends since 1989 but have had choppy dividend payouts in recent years. Each quarter seems to be a little different. The current estimated yield is 9.22% with EPS at a 8.79 giving it a low PE ratio of 2.05.
Global Income Fund – GHI
The global income fund is a mutual fund managed by UBS that invests in fixed income markets around the world. The yield on GHI is 7.92% and they have earnings per share of 4.06. That gives them a low PE ratio of 3.38. GHI has been on a steady move higher in the last year.
Annaly Capital Management – NLY
Annaly Capital is a real estate investment trust. Their dividend yield is high, 15.07%. EPS is 3.52 which gives NLY a PE ratio of just 4.92.