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4 stocks with low PEG ratios and high dividends

By Robbie Citrino for Kapitall.

The PEG value is important as it takes into account the projected earnings growth of companies, a key metric when valuing stocks that the price to earnings (P/E) ratio leaves out.

It is calculated by taking the price of the stock divided by the earnings per share (the P/E ratio) and then dividing that by the projected earnings growth in the coming year.

In an equation: PEG = (Price / Earnings) / Projected Growth Rate

When using this ratio a stock appears undervalued when its PEG is less than 1, meaning its earnings growth potential could outweigh its current valuation.

Each of the following large cap stocks has a PEG under one, in addition to giving out dividends over 4%.

This means that future earnings growth could outweigh its current price; and, while waiting for this growth to hit the bottom line, investors can get a steady return greater than 4%.

Do you use the PEG ratio when evaluating stocks? Use the list below to begin your analysis.

Click on the interactive chart to view dividends over time.

1. Transocean Ltd. ( RIG , Earnings , Analysts , Financials ): Provides offshore contract drilling services for oil and gas wells worldwide. Market cap at $14.71B, most recent closing price at $40.44.

PEG: .89

2. The Blackstone Group ( BX , Earnings , Analysts , Financials ): Provides alternative asset management and financial advisory services worldwide. Market cap at $19.38B, most recent closing price at $32.87.

PEG: .56

3. SeaDrill Limited ( SDRL , Earnings , Analysts , Financials ): Provides offshore drilling services to the oil and gas industries worldwide. Market cap at $17.67B, most recent closing price at $37.68.

PEG: .18

4. Orange ( ORAN , Earnings , Analysts , Financials ): Provides a range of fixed telephony and mobile telecommunications. Market cap at $34.5B, most recent closing price at $13.13.

(List compiled by Robbie Citrino, dividends sourced from Zacks Investment Research, all other data sourced from Finviz.)

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.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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