6 S&P 500 Dividend Stocks Undervalued By The Graham Number
Looking for dividend stocks trading at attractive prices? Here are some ideas to get you started on your search. [Related List: 4 Oil And Gas Stocks Undervalued To The Graham Number]
To create the stock list below we began by screening the S&P 500 for dividend stocks: Those paying dividend yields above 2% and sustainable payout ratios below 50%.
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Then we screened that universe for those that appear undervalued relative to the Graham Number. The Graham Number is a measure of maximum fair value created by the "godfather of value investing," Benjamin Graham.
It is based off of a stock's EPS and book value per share (BVPS).
Graham Number = SQRT(22.5 x TTM EPS x MRQ BVPS)
The equation assumes that P/E should not be higher than 15 and P/BV should not be higher than 1.5. Stocks trading well below their Graham Number may be undervalued.
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Do you think these stocks pay sustainable dividend yields? Use this list as a starting point for your own analysis.