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Picks and Performance

Top 10 Dividend Yields, Lowest P/S, and Lowest P/B Stocks in MFI

Dec 7, 2010
Every so often, MagicDiligence compiles a list of Magic Formula stocks sorted by their dividend yield, price-to-sales ratio, and price-to-book ratio for investors that like to use those metrics. The result is a list of attractive value stocks for additional research. Here are the top 10 in each of the three metrics listed above:

Dividend Yield

Dividend yield is a favorite metric for income investors, providing both steady, predictable returns and downside protection. With Magic Formula Investing, you are also buying dividend stocks that are both cheap against earnings and represent a company that efficiently invests capital. The Top 10 Magic Formula highest dividend yield stocks (forward yield) right now are:

1) 7.0% - EarthLink Inc (ELNK)
2) 6.4% - Altria Group Inc (MO)
3) 6.1% - Reynolds American Inc (RAI)
4) 5.9% - United Online Inc (UNTD)
5) 5.6% - Value Line Inc (VALU)
6) 5.5% - Lorillard Inc (LO)
7) 4.7% - Garmin Ltd (GRMN)
8) 4.6% - Block (H&R) Inc. (HRB)
9) 4.5% - Deluxe Corp (DLX)
10) 4.3% - Lockheed Martin Corp (LMT)

Price-to-Sales Ratio

Using the price-to-sales ratio was a tactic shown to be highly successful by such guru investors as Ken Fisher in Super Stocks and by James O'Shaughnessy in What Works on Wall Street. The Top 10 Magic Formula stocks with lowest price-to-sales ratios are:

1) 0.11 - AmerisourceBergen Corp (ABC)
2) 0.15 - McKesson Corp (MCK)
3) 0.16 - Eastman Kodak Co (EK)
4) 0.24 - Unisys Corp (UIS)
5) 0.26 - Providence Service Corp (The) (PRSC)
6) 0.29 - Oshkosh Corp (OSK)
7) 0.35 - GameStop Corp. (GME)
8) 0.36 - EMCOR Group Inc. (EME)
9) 0.46 - Dell, Inc. (DELL)
10) 0.49 - Amedisys Inc (AMED)

Price-to-Book Ratio

Finally, the price-to-book ratio is often considered the "classic" test of value investing: are you buying a company at or less than the net value of its assets? Price-to-book ratio was a favorite of the "father" of value investing, Ben Graham. The top 10 Magic Formula stocks with lowest price-to-book ratio are:

1) 0.51 - Jiangbo Pharmaceuticals Inc (JGBO)
2) 0.92 - Amedisys Inc (AMED)
3) 1.03 - Time Warner Inc (TWX)
4) 1.17 - GameStop Corp. (GME)
5) 1.21 - AOL Inc (AOL)
6) 1.25 - Comtech Telecommunications Corp. (CMTL)
7) 1.26 - Argan Inc (AGX)
8) 1.27 - EarthLink Inc (ELNK)
9) 1.29 - Motorcar Parts of America Inc (MPAA)
10) 1.31 - United Online Inc (UNTD)

Disclosure: Steve owns DELL

Joel Greenblatt and MagicFormulaInvesting.com are not associated in any way with this website. Neither Mr. Greenblatt or MagicFormulaInvesting.com endorse this website's investment opinions, strategy, or products. Investment recommendations on this website are not chosen by Mr. Greenblatt, nor are they based on Mr. Greenblatt's proprietary investment model, and are not chosen by MagicFormulaInvesting.com. Magic Formula® is a registered trademark of MagicFormulaInvesting.com, which has no connection to this website. The information on this website is for informational purposes only and solely represents the views and opinions of the author. No warranty is provided or implied as to the accuracy, completeness, or timeliness of this information. This information may not be construed as investment advice of any kind. The proprietor of this website is not responsible in any way for losses or damages resulting from the use of this information. Alexander Online Properties is not a registered investment advisor. All logos are trademarked properties of their respective companies.

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