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Seven high yielding blue chip stocks for an uncertain world

By: Kapitall
Posted: 6/12/2014 12:52:00 PM
Referenced Stocks:

By James Dennin for Kapitall.

It's not very often that a single congressmen's primary loss can move the market.

But with many political websites and magazines calling House Majority Leader Eric Cantor's loss an "earthquake," it makes sense that the market is moving on the news.

Stocks fell for a second straight day on Tuesday . That's because Cantor's loss is a tremendous upset by a Tea Party candidate who was outspent almost 5-1, and it represents a major blow to the Republican Party's establishment wing. 

This surprising result has already translated to concerns about the economy and the debt ceiling. Some worry that what little compromise was possible in Congress could soon become a fond memory. 

If you're bracing for new political turmoil, it couldn't hurt to pick up some extra income. So we decided to screen for dividend stocks within mid to large-cap blue chips. So we started with a universe of companies with a market cap above $4 billion and a dividend above 2%.

We then narrowed that screen further by looking for companies trading at least 15% below their Graham number, which is a commonly used approximate "fair value" for the stock based on its earnings and book. 

This left us with 7 stocks on our list. Do you think they're trading at a discount? Use the list below to begin your analysis. 

Click on the interactive chart to view data over time. 

1. JPMorgan Chase & Co. ( JPM , Earnings , Analysts , Financials ): Provides various financial services worldwide. Market cap at $215.61B, most recent closing price at $56.97.  

Dividend: 2.76

Diluted TTM earnings per share at 4.04, and a MRQ book value per share value at 54.06, implies a Graham Number fair value = sqrt(22.5*4.04*54.06) = $70.10.

Based on the stock's price at $55.57, this implies a potential upside of 26.15% from current levels.  

2. MetLife, Inc. ( MET , Earnings , Analysts , Financials ): Provides insurance, annuities, and employee benefit programs primarily in the United States, Japan, Latin America, the Asia Pacific, Europe, and the Middle East. Market cap at $61.68B, most recent closing price at $54.80.  

Dividend: 2.54%

Diluted TTM earnings per share at 3.19, and a MRQ book value per share value at 58.46, implies a Graham Number fair value = sqrt(22.5*3.19*58.46) = $64.78.

Based on the stock's price at $50.93, this implies a potential upside of 27.19% from current levels.  

3. MeadWestvaco Corporation ( MWV , Earnings , Analysts , Financials ): Provides packaging solutions to the healthcare, personal care and beauty, food, beverage, home and garden, tobacco, and commercial print industries worldwide. Market cap at $7.39B, most recent closing price at $44.01.  

Dividend: 2.27%

Diluted TTM earnings per share at 4.79, and a MRQ book value per share value at 20.86, implies a Graham Number fair value = sqrt(22.5*4.79*20.86) = $47.42.

Based on the stock's price at $40.58, this implies a potential upside of 16.84% from current levels.

4. Spectra Energy Partners, LP ( SEP , Earnings , Analysts , Financials ): Operates as an investment arm of Spectra Energy Corp. Market cap at $15.5B, most recent closing price at $53.28.  

Dividend: 4.19%

Diluted TTM earnings per share at 5.56, and a MRQ book value per share value at 34.69, implies a Graham Number fair value = sqrt(22.5*5.56*34.69) = $65.88.

Based on the stock's price at $52.45, this implies a potential upside of 25.6% from current levels.  

5. Staples, Inc. ( SPLS , Earnings , Analysts , Financials ): Operates as an office products company. Market cap at $7.26B, most recent closing price at $11.23.  

Dividend: 4.31%

Diluted TTM earnings per share at 0.83, and a MRQ book value per share value at 9.53, implies a Graham Number fair value = sqrt(22.5*0.83*9.53) = $13.34.

Based on the stock's price at $11.25, this implies a potential upside of 18.58% from current levels.  

6. Telephone & Data Systems Inc. ( TDS , Earnings , Analysts , Financials ): Provides wireless and wireline telecommunications services in the United States. Market cap at $2.88B, most recent closing price at $26.46.  

Dividend: 2.05%

Diluted TTM earnings per share at 1.44, and a MRQ book value per share value at 37.93, implies a Graham Number fair value = sqrt(22.5*1.44*37.93) = $35.06.

Based on the stock's price at $27.71, this implies a potential upside of 26.51% from current levels.  

7. The Travelers Companies, Inc. ( TRV , Earnings , Analysts , Financials ): Provides various commercial and personal property and casualty insurance products and services to businesses, government units, associations, and individuals primarily in the United States. Market cap at $32.79B, most recent closing price at $94.36.  

Dividend: 2.31%

Diluted TTM earnings per share at 10.35, and a MRQ book value per share value at 73.06, implies a Graham Number fair value = sqrt(22.5*10.35*73.06) = $130.44.

Based on the stock's price at $93.45, this implies a potential upside of 39.58% from current levels. 

Kapitall Wire is a division of New Kapitall Holdings, LLC. Kapitall Generation, LLC is a wholly owned subsidiary of New Kapitall Holdings, LLC. Kapitall Wire offers free investing ideas, intended for educational information purposes only. It should not be construed as an offer to buy or sell securities, or any other product or service provided by New Kapitall Holdings, LLC, and its affiliate companies.