It's uncommon to find companies in the basic materials sector that offer attractive dividends; that is, dividends that approach the annual yield of a utility or even some of the better consumer staples stocks. But they're out there. And a few of them offer those yields despite strong showings in the last year - not merely as a function of the current general pullback in equities. As you'll see, that has also made a number of them popular among the institutional set. Below, we present them with some key valuation readings.
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RPM International (NYSE: RPM) produces a broad range of branded chemical products for consumers including paints, sealants, adhesives and protective coatings. The company's shares trade with a multiple of 14.9 times last year's earnings and pay investors a 4.5% annual dividend. (Learn more, see: Dividend Yield For The Downturn.)
For the year, the shares are up over 30%, nearly doubling the performance of the broad market, represented by the SPDR S&P 500 ETF (NYSE: SPY), which has gained just 17% over the same time frame.
RPM shares trade at a fraction of last year's sales. Price-to-sales ratio on RPM stock is 0.72. That has attracted a great deal of professional interest, as nearly 70% of the float is institutionally owned.
Hunting For Value
Shares of Huntsman Corp. (NYSE: HUN) trade with a P/E of 10.1 and offer an annual yield of 4.41%. Shares change hands at 1.3 times book value and just 0.27% last year's sales. Almost 65% of HUN stock is in the hands of professional investors.
Huntsman has a market capitalization in excess of $2 billion.
Before the pullback that began in late April, Deswell Industries (Nasdaq: DSWL) was up well over 25% year-to-date. It has since fallen back to sit 7% under water year to date. Compared to the broad basic materials sector, as represented by the iShares Dow Jones US Basic Materials ETF (NYSE: IYM), the company has lagged only slightly. IYM has fallen just 4.2% YTD.
Deswell is a manufacturer of molded plastic and metallic parts and electronic components. The shares carry a large 10.6% dividend and trade with a P/E of 19.8. Price-to-book ratio on the shares is a lowly 0.49, and price to sales is just 0.66.
Just over 13% of Deswell's float is owned by institutional investors.
These three basic materials stocks provide the basic value readings that every fundamentally oriented stock investor is looking for: quality yields and a good discount to book value, to name just two. But when strong capital gains are thrown into the mix, what's there to argue about?
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