In this article, we discuss 16 growing dividend stocks with low P/E ratios. You can skip our detailed analysis of dividend stocks and their performance, and go directly to read 5 Growing Dividend Stocks with Low PE Ratios.
Despite facing several challenges like turbulence in the banking sector and ongoing uncertainties about the economy's condition, the U.S. stock market has managed to consistently rise during the first seven months of the year. The S&P 500 is up 16.7% year-to-date and the tech-heavy NASDAQ gained 31.3%. This recovery was unexpected by analysts, given the sharp decline in stock values in 2022. In addition to this, there have been shifts in investment patterns, with tech stocks grabbing the limelight.
That said, investors are also focusing on dividend stocks because the requirement for cash remains consistent, regardless of the ongoing economic circ*mstances. Analysts recommend that investors should keep adding dividend stocks to their portfolios, as these stocks are expected to show growth in the second half of the year. Ben Lofthouse, head of global equity income at Janus Henderson Investors, reviewed the first half of 2023 and presented a positive outlook on dividend stocks. He said that so far this year, dividends have been increasing, boosted by special dividends and share buybacks. Cash generation is still robust with many larger companies transferring the added expenses due to inflation to their customers. He further highlighted that the dividend outlook is strong. However, as the impact of increased interest rates affects both companies and consumers, it's important to diversify investments and prioritize companies with solid financial standings. To know more about companies with strong dividend growth streaks, read our article Dividend Growth Stocks: 25 Aristocrats.
When looking for dividend-paying companies, it is crucial to determine whether the dividend being paid is dependable and offers the chance for growth in the future, such as dividend coming from The Coca-Cola Company (NYSE:KO), The Procter & Gamble Company (NYSE:PG), and Exxon Mobil Corporation (NYSE:XOM). These companies have raised their dividends for decades and generated solid cash to increase their dividends in the future as well.
Also read: 11 Best Quality Dividend Stocks to Buy
Companies that consistently increased their dividends have demonstrated better performance compared to their counterparts in the past. We have previously reported the performance of dividend growers referring to data by Ned Davis Research and Hartford Funds, which highlighted that companies with dividend growth track records had a return of 9.62% from 1972 to December 31, 2018, whereas dividend cutters had a negative return of 0.79%. During this period, the S&P 500 had an average yearly return of 7.30%, which was lower than the performance of dividend-growing companies.
Image by Sergei Tokmakov Terms.Law from Pixabay
Our Methodology:
For this list, we screened for dividend companies with a 5-year annual average revenue growth rate of over 10%. From the resultant list, we shortlisted companies that have forward P/E ratios below 20, as of August 11. The stocks are ranked in ascending order of their average annual revenue growth rates over the past five years.
16. Cullen/Frost Bankers, Inc. (NYSE:CFR)
5-Year Average Annual Revenue Growth Rate: 10.57%
Forward P/E Ratio as of August 11: 11.29
Cullen/Frost Bankers, Inc. (NYSE:CFR) is a Texas-based commercial banking company that provides a wide range of financial services to individuals and businesses. The company reported strong earnings in the second quarter of 2023 with a revenue of over $512 million, which saw a 32.6% growth from the same period last year. Its net interest income for the quarter came also showed a 31.2% growth on a year-over-year basis at $408.6 million.
Cullen/Frost Bankers, Inc. (NYSE:CFR) currently pays a quarterly dividend of $0.87 per share and has a dividend yield of 3.51%, as of August 11. The company is one of the best dividend stocks on our list as it has raised its payouts for 29 consecutive years. It has a strong dividend growth track record like The Coca-Cola Company (NYSE:KO), The Procter & Gamble Company (NYSE:PG), and Exxon Mobil Corporation (NYSE:XOM).
As of the close of Q1 2023, 23 hedge funds tracked by Insider Monkey owned stakes in Cullen/Frost Bankers, Inc. (NYSE:CFR), worth over $176 million in total.
15. W. P. Carey Inc. (NYSE:WPC)
5-Year Average Annual Revenue Growth Rate: 11.76%
Forward P/E Ratio as of August 11: 18.69
W. P. Carey Inc. (NYSE:WPC) is an American real estate investment trust company that focuses on acquiring and managing a diverse portfolio of commercial properties and real estate assets. On July 28, the company declared a quarterly dividend of $1.069 per share, which was in line with its previous dividend. It has been raising its dividends consistently since 2011, which makes it one of the best dividend stocks on our list. The stock's dividend yield on August 11 came in at 5.99%.
In the past five years, W. P. Carey Inc. (NYSE:WPC) has raised its revenue at an annual average rate of 11.76%. In the second quarter of 2023, the company reported a 31.4% year-over-year growth at $452.6 million.
At the end of June 2023, 19 hedge funds in Insider Monkey's database reported having stakes in W. P. Carey Inc. (NYSE:WPC), up from 18 in the previous quarter. These stakes have a collective value of $88.7 million. Schonfeld Strategic Advisors was the company's leading stakeholder in Q1.
14. Chevron Corporation (NYSE:CVX)
5-Year Average Annual Revenue Growth Rate: 11.83%
Forward P/E Ratio as of August 11: 12.06
Chevron Corporation (NYSE:CVX) is an American energy company. The company saw growth in hedge fund positions at the end of Q1 2023 with 64 elite funds in Insider Monkey's database having stakes in them, up from 57 in the previous quarter. The overall value of these stakes is over $23.6 billion.
Chevron Corporation (NYSE:CVX), one of the best dividend stocks, has been raising its dividends consistently for the past 36 years. It currently pays a quarterly dividend of $1.51 per share for a dividend yield of 3.71%, as of August 11. The company's 5-year average revenue growth rate stands at 11.83% and has a forward P/E ratio of 12.06.
13. East West Bancorp, Inc. (NASDAQ:EWBC)
5-Year Average Annual Revenue Growth Rate: 11.86%
Forward P/E Ratio as of August 11: 7.11
East West Bancorp, Inc. (NASDAQ:EWBC) is a financial holding company that provides a range of banking and financial services to its consumers. In the second quarter of 2023, the company posted revenue of $645 million, up 17.1% from the same period last year. In the past five years, the company increased its revenue by 11.86% on average.
East West Bancorp, Inc. (NASDAQ:EWBC) currently pays a quarterly dividend of $0.48 per share, having raised it by 20% in January this year. With a dividend yield of 3.30% as of August 11, EWBC is one of the best dividend stocks on our list.
According to Insider Monkey's database of Q1 2023, 23 hedge funds owned stakes in East West Bancorp, Inc. (NASDAQ:EWBC), worth collectively over $362 million.
12. Southwest Gas Holdings, Inc. (NYSE:SWX)
Year-over-Year Revenue Growth Rate: 12.8%
Forward P/E Ratio as of August 11: 19.12
Southwest Gas Holdings, Inc. (NYSE:SWX) is a Nevada-based natural gas distribution company that provides natural gas services to its residential and commercial consumers. In the second quarter of 2023, the company generated revenue of nearly $1.3 billion, which showed a 12.8% growth from the same period last year. For FY23, the company expects its revenue between $2.8 billion to $3 billion.
Southwest Gas Holdings, Inc. (NYSE:SWX), one of the best dividend stocks on our list, currently pays a quarterly dividend of $0.62 per share. It has been paying regular dividends to shareholders since 1956 and also maintains a 15-year streak of consistent dividend growth. The stock's dividend yield on August 11 came in at 3.77%.
At the end of Q1 2023, 17 hedge funds in Insider Monkey's database owned stakes in Southwest Gas Holdings, Inc. (NYSE:SWX), worth collectively over $881.4 million. Among these hedge funds, Corvex Capital was the company's leading stakeholder in Q1.
11. Enterprise Products Partners L.P. (NYSE:EPD)
5-Year Average Annual Revenue Growth Rate: 14.75%
Forward P/E Ratio as of August 11: 10.39
An American midstream natural gas company, Enterprise Products Partners L.P. (NYSE:EPD)'s revenue has grown at an annual average rate of 14.75%. The company's cash flow remained strong in the second quarter of 2023, with an operating cash flow of $1.9 billion and its adjusted free cash flow for the quarter amounted to over $1.07 billion.
Enterprise Products Partners L.P. (NYSE:EPD) announced a 2% hike in its quarterly dividend on July 10 to $0.50 per share. Through this growth, the company took its dividend growth streak to 24 years, which makes it one of the best dividend stocks on our list. The stock has a dividend yield of 7.54%, as of August 11.
The number of hedge funds tracked by Insider Monkey owning stakes in Enterprise Products Partners L.P. (NYSE:EPD) grew to 26 in Q1 2023, from 24 in the previous quarter. The total value of these stakes is over $254 million.
10. Nucor Corporation (NYSE:NUE)
5-Year Average Annual Revenue Growth Rate: 15.4%
Forward P/E Ratio as of August 11: 9.75
Nucor Corporation (NYSE:NUE) is a North Carolina-based company that manufactures steel and related products. The company is one of the best dividend stocks on our list with a 50-year dividend growth streak under its belt. It currently pays a quarterly dividend of $0.51 per share and has a dividend yield of 1.23%, as recorded on August 11.
Out of 943 hedge funds tracked by Insider Monkey, 39 elite funds owned stakes in Nucor Corporation (NYSE:NUE) at the end of Q1 2023. The collective value of these stakes is over $440.2 million.
9. Peoples Bancorp Inc. (NASDAQ:PEBO)
5-Year Average Annual Revenue Growth Rate: 16.33%
Forward P/E Ratio as of August 11: 7.33
An American financial holding company, Peoples Bancorp Inc. (NASDAQ:PEBO) has grown its dividends for nine years running. It currently pays a quarterly dividend of $0.39 per share and has a dividend yield of 5.62%, as of August 11.
In the past five years, Peoples Bancorp Inc. (NASDAQ:PEBO) has raised its revenue at an annual average rate of 16.33%. In the second quarter of 2023, the company's revenue came in at $105.8 million, which saw a 31% growth from the same period last year. It ended the quarter with $148.8 million in cash and cash equivalents.
As of the close of Q1 2023, 15 hedge funds in Insider Monkey's database reported having stakes in Peoples Bancorp Inc. (NASDAQ:PEBO), up from 14 in the previous quarter. These stakes have a consolidated value of over $14.4 million.
8. Vistra Corp. (NYSE:VST)
5-Year Average Annual Revenue Growth Rate: 20.38%
Forward P/E Ratio as of August 11: 9.87
Vistra Corp. (NYSE:VST) is an American electricity and power generation company that provides related products and services to its consumers. On August 3, the company declared a quarterly dividend of $0.206 per share, having raised it by 1% from the previous dividend. This marked the company's seventh consecutive quarter of dividend growth, which makes it one of the best dividend stocks on our list. As of August 11, the stock offers a dividend yield of 2.73%.
In the second quarter of 2023, Vistra Corp. (NYSE:VST) reported revenue of $3.1 billion, up significantly by 100.6% from the same period last year. For six months that ended June 30, the company generated $3.02 billion in operating cash flow.
Vistra Corp. (NYSE:VST) was a part of 46 hedge fund portfolios at the end of Q1 2023, up from 41 in the previous quarter, according to Insider Monkey's database. The stakes held by these hedge funds have a total value of over $1.5 billion.
7. Devon Energy Corporation (NYSE:DVN)
5-Year Average Annual Revenue Growth Rate: 22.9%
Forward P/E Ratio as of August 11: 8.31
Devon Energy Corporation (NYSE:DVN) is an American energy company with a 5-year annual average annual revenue growth of 22.9%. On August 2, the company announced a steady quarterly dividend of $0.20 and an additional variable dividend of $0.29 per share. This makes the total quarterly dividend $0.49 per share, a change from the previous dividend structure of $0.20 fixed and $0.52 variable per share. With a dividend yield of 9.92% as of August 11, DVN is one of the best dividend stocks on our list. At the end of March 2023, 49 hedge funds owned investments in Devon Energy Corporation (NYSE:DVN), according to Insider Monkey's database. The consolidated value of these stakes is over $570.7 million.
6. The Cigna Group (NYSE:CI)
5-Year Average Annual Revenue Growth Rate: 33.5%
Forward P/E Ratio as of August 11: 11.81
The Cigna Group (NYSE:CI) is an American healthcare and insurance company that offers health insurance plans and related services to its consumers. The company's 5-year average annual revenue growth rate stands at 33.5%. It has also beaten revenue estimates 88% of the time in the past 2 years.
On July 26, The Cigna Group (NYSE:CI) declared a quarterly dividend of $1.23 per share, which was in line with its previous dividend. The stock has a dividend yield of 1.70%, as of August 11. The Coca-Cola Company (NYSE:KO), The Procter & Gamble Company (NYSE:PG), and Exxon Mobil Corporation (NYSE:XOM) are some other dividend stocks to consider.
With over $3 billion worth of stakes, 79 hedge funds in Insider Monkey's database owned positions in The Cigna Group (NYSE:CI) at the end of Q1 2023.
Click here to continue reading and see 5 Growing Dividend Stocks with Low PE Ratios.
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Disclosure. None. 16Growing Dividend Stocks with Low PE Ratiosis originally published on Insider Monkey.
As someone deeply immersed in the world of finance and investment, I bring a wealth of expertise to the discussion of growing dividend stocks with low P/E ratios. My understanding extends beyond the surface-level analysis, delving into the intricate details that define the success of such stocks. I've been actively following market trends, studying financial reports, and analyzing investment strategies to provide actionable insights.
Now, let's dissect the key concepts used in the provided article:
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Market Overview:
- The article starts by highlighting the unexpected recovery of the U.S. stock market during the first seven months of the year, despite challenges in the banking sector and economic uncertainties.
- The S&P 500 is up 16.7%, and the NASDAQ gained 31.3%, showcasing the resilience of the market.
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Importance of Dividend Stocks:
- Investors are turning their attention to dividend stocks due to the consistent need for cash, irrespective of economic conditions.
- Analysts recommend adding dividend stocks to portfolios, anticipating growth in the second half of the year.
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Expert Opinion (Ben Lofthouse):
- Ben Lofthouse, head of global equity income at Janus Henderson Investors, provides a positive outlook on dividend stocks. He notes that dividends have been increasing in the first half of the year, supported by special dividends and share buybacks.
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Diversification and Solid Financial Standings:
- As interest rates rise, the article emphasizes the importance of diversifying investments and prioritizing companies with solid financial standings.
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Methodology for Stock Selection:
- The article introduces a screening methodology for selecting dividend stocks:
- 5-year annual average revenue growth rate of over 10%.
- Forward P/E ratios below 20 as of August 11.
- The article introduces a screening methodology for selecting dividend stocks:
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List of Growing Dividend Stocks:
- The article then presents a list of 16 dividend stocks with low P/E ratios, highlighting five of them in more detail.
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Detailed Analysis of Selected Stocks:
- The selected stocks include companies like Cullen/Frost Bankers, W. P. Carey Inc., Chevron Corporation, East West Bancorp, Southwest Gas Holdings, Enterprise Products Partners L.P., Nucor Corporation, Peoples Bancorp Inc., Vistra Corp., Devon Energy Corporation, The Cigna Group, and more.
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Financial Metrics:
- Each stock is accompanied by key financial metrics, such as the 5-year average annual revenue growth rate, forward P/E ratio as of August 11, dividend yield, and relevant financial highlights.
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Hedge Fund Activity:
- The article also incorporates information on hedge fund ownership of the selected stocks, indicating the confidence of institutional investors in these companies.
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Dividend Growth Performance:
- Reference is made to the historical performance of companies with consistent dividend growth compared to dividend cutters, reinforcing the importance of dividend growth.
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Image Usage:
- The article includes an image from Pixabay for visual appeal, showcasing an understanding of multimedia content in financial reporting.
In conclusion, my comprehensive knowledge of financial markets and investment strategies enables me to provide a thorough analysis of the concepts presented in this article on growing dividend stocks with low P/E ratios.
