Today, I want to take a look at several large cap stocks that currently have yields over 3% but also sport low PE Ratios of 10 or less. Looking at some stocks that fit these metrics will provide us with some good companies that would have potential for great additions in a long term buy and hold dividend growth portfolio.
I have chosen 3 company stocks that come from different sectors and industries so that will allow us some options of diversity if we do decide to purchase any of these.
So let’s take a look at what I found:
General Motors – (GM)
General Motors is one of the largest auto manufacturers in America.
They have made investments in startups like Cruise who are working on developing self driving vehicles. During the last round of funding the company was valued at $19B.
The auto industry as a whole received a boost lately when President Trump announced that he would have extended meetings with Chinese President Xi Jinping at the G-20 event in Tokyo.
GM recently found a partner in their venture in constructing thousands of electric vehicle charging stations located all over the country in large urban areas as well as highways.
As we all know the tariffs on China create a headwind for the company. They tried to apply for tariff relief with the US government but they were denied.
Market Cap: $52.09B
Dividend Yield: 4.12%
PE Ratio: 5.75
Sector: Consumer Goods
Industry: Auto Manufacturers – Major
MetLife – (MET)
Metlife is the largest issuer of life insurance policies.
Metlife generated $67B in revenue on strong sales growth during 2018 and are expected to grow that year over year during 2019.
The company generates roughly half of their income from retirement solutions for businesses. They have been working to expand their retirement savings solutions.
They are currently trading at around 8.5 times their 2019 earnings estimates.
Market Cap: $46.20B
Dividend Yield: 3.60%
PE Ratio: 9.51
Industry: Life Insurance
Walgreens Boots Alliance – (WBA)
With a price to sales ratio of .35, Walgreens is considered one of the cheapest large cap healthcare stocks.
Walgreens has a very low payout ratio as well at 32.3%
The stock price has taken a huge hit with the emergence of Amazon in the pharmaceutical industry. Because of this it doesn’t appear that Walgreens will be able to meet their guidance for 2019.
Market Cap: $48.25B
Dividend Yield: 3.36%
PE Ratio: 10.48
Industry: Drug Stores
Now that we have looked at 3 different large cap companies with high yields and low PE ratios, the question becomes which one would make the best investment.
General Motors future is uncertain with the difficulties that the trade war with China is creating. Metlife seems to be positioning themselves for growth in revenue for many years to come. Walgreens Boots Alliance future could be perceived as uncertain with the emergence of Amazon in the pharmaceutical industry. Despite a couple of these companies having some headwinds I do think that they will be fine over the long term.
While you could probably buy any of them and would get a decent return over the long term, if I were buying one for the More Dividends portfolio it would probably be Metlife. I base this decision on the following factors. I don’t currently hold any insurance companies in my portfolio and they seem to have the most tailwind behind them for future growth. Being an insurance company, Metlife is collecting premiums on policies that they may or may not have to pay out on in the future. If interest rates do continue to move upward they will be able to get an even larger return on their investments that they make with the money that the earn on the policies that they have issued.
Of the 3 companies that we discussed today, which 1 would you be most likely to invest in to add into your portfolio?
As always I look forward to reading all of your comments and questions, until then….. happy investing!
-Jason from MoreDividends.com
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