Even with Ireland in a recession, Seagate Technology (
STX
,
quote
) is up 44.44% for 2012. In recent trading, however, it has fallen;
off by 11.82% for the last month of market action. For emerging
market income, growth and value investors, that marks a buying
opportunity for this dividend paying stock.
[caption id="attachment_65465" align="alignright" width="240"
caption="Seagate: storing value for investors."]
[/caption]
Seagate, a data storage company based in Dublin, is
a very compelling dividend paying stock:
its yield is high and the payout ratio is low. The average yield
for a company on the Standard & Poor's 500 Index is around 2%.
Seagate has a high dividend yield of 4.30%, which is
not often associated with a high tech firm.
Buffering the high dividend yield of Seagate is its low payout
ratio, which is the amount of earnings that goes towards paying the
dividend. For a dividend paying stock, the average payout ratio is
usually about 50%. Seagate has a payout ratio of just 17.48%. That
means there is plenty of cash flow to increase the dividend or
initiate share repurchase programs. It also means the
company's operations are well financed.
That is reflected in the growth features of this dividend paying
stock. On a quarterly basis, both sales growth and
earnings-per-share growth are soaring. This is expected to continue
as growth in earnings-per-share is projected to be 30.10%. Another
bullish indicator for future growth is the price-to-earnings ratio
of just 0.22. A price-to-earnings growth ratio of 1 is considered
to be adequate: the lower the better.
Value investors should be pleased by the price-to-sales ratio of
only 0.74. That means that stock price is based on less the
three-quarters of the sales per share. Another attractive value
feature is the price-to-earnings ratio of 5.35. The forward
price-to-earnings ratio is expected to be even more appealing at
just 2.52.
The returns and margins are attractive too, for all investors.
The return-on-equity (ROE) is 63.89%. The average ROE for a stock
is around 15%. At over 30%, the return-on-investment is also very
appealing. Most important of all, Seagate makes money -- the profit
margin is 14.78%.
Now trading around $23.30, the mean analyst target price for
Seagate Technology over the next year is $33.27.
