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5 Dividend Stocks With High Yields and Low P/E's

Barchart - Wed May 25, 1:29PM CDT
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These five dividend stocks have higher than normal yields as well as P/E ratios that are below 10 to 11x earnings on a forward basis. That makes them very attractive to value investors. The five stocks are:

  • Verizon (VZ) – This telecom company has a 5.04% dividend yield and a forward P/E of just 9.1 times, with earnings forecast to rise in 2023.
  • JPMorgan Chase (JPM) - This bank has a 3.18% dividend yield and a low 9.8x forward 2023 P/E multiple. Earnings are forecast to rise 12.8% in 2023.
  • Goldman Sachs (GS) - This premier investment banking firm has a 2.56% yield and a low 7.7x forward P/E multiple. Earnings are forecast to rise 6.8% in 2023.
  • NRG Energy (NRG) - Texas power utility with 12% forecast earnings trading for 10.9x forward earnings and a 3.0% dividend yield.
  • Energy Transfer (ET) - This pipeline company has a 7.0% yield, with dividends paid for the last 15 years. It trades on a 7.1x forward P/E with a 5.9% growth forecast for 2023.
Photo by Jose Matute on Unsplash 

Verizon (VZ)

Verizon Communications is a major telecom stock with a very cheap valuation and a very good dividend yield. At 5.04%, its yield is one of the best on this list, especially given its low valuations and good earnings growth.

For example, at $50.81 as of May 25, VZ stock has a forward P/E multiple of just 9.1x. This is based on $5.58 earnings per share (EPS) forecast for 2023.

In addition, Verizon company is free cash flow (FCF) positive, having produced $1 billion in FCF in Q1. This helps pay for its large dividend payments to shareholders. It has raised dividends every year for the past 18 years. These factors make VZ stock one of the best dividend stocks on this list.

Photo by Matthew Foulds on Unsplash 

JPMorgan Chase (JPM)

JPMorgan Chase is a very cheap large money-center bank trading for just 9.8x forward P/E. This is based on an EPS forecast of $12.85 forecast for 2023,12.8% higher than 2022 EPS forecasts. So, at $125.91 as of May 25, JPM stock has a 2023 forecast P/E of just 9.8x. That is very cheap and equates to an earnings yield of 10.20%.

Moreover, JPM stock now has a dividend yield of 3.18% based on its annual $4.00 dividend rate. The company can clearly afford this dividend.

In addition, JPMorgan repurchased $2.45 billion of its shares in Q1, putting it on a buyback yield of 2.9%.

Goldman Sachs (GS)

Goldman Sachs is a premier investment banking and commercial bank. In 2022, analysts have an average earnings forecast of $37.76, putting Goldman on a forward P/E of just 8.25x. Moreover, analysts forecast that earnings will climb 6.8% in 2023 to $40.33. At $311.59 on May 25, the 2023 P/E multiple drops down to just 7.7x earnings. That is very cheap for an investment bank with such a stellar reputation.

Goldman Sachs pays an annual dividend of $8 per share, so its dividend yield is attractive at 2.56%. Moreover, Goldman has paid dividends in each of the past 22 years and raised them in each of the past 5 years. Goldman Sachs bought back $2 billion of its shares. At this rate, the stock has a buyback yield of 7.59% on top of its 2.56% yield.

Photo by Jason Richard on Unsplash 

NRG Energy (NRG)

NRG Energy is a Houston-based integrated power utility with a 3.0% yield with 9 years of growing dividends. It is one of the largest U.S. independent power producers with 7 million customers and 18 gigawatts of power generation capacity primarily in Texas.

Analysts forecast $3.80 in EPS this year and 11.8% higher at $4.25 next year. So, trading at $46.46 on May 25, NRG stock trades for 12.2 times earnings this year and just over 10.9 times 2023 earnings estimates.

Moreover, NRG generated enough cash flow from operations in the last 12 months to buy back $227 million of its shares. This gives it a 2.1% buyback yield, on top of the 3% dividend yield.

Photo by Mike Benna on Unsplash 

Energy Transfer (ET)

Energy Transfer is a natural gas pipeline and energy storage company (operating in Texas and Oklahoma). It pays out an ample dividend of 80 cents annually. That gives it a dividend yield of 7.0% based on its price of $11.40 as of May 25.

The company has consistently paid dividends over the past 15 years, according to Seeking Alpha. This gives investors a lot of assurance the company will pay their investors annually even over a recession or a period of high inflation.

Bargain-focused investors will take comfort in knowing that it trades at a low forward P/E of just 7.1 times for 2023 after a 5.9% forecast EPS growth rate.