Published Thu, 16 May 2019 05:52:36 -0400 on Seeking Alpha
This is the first new name I have added to my portfolio of income stocks this year. My motivation is strictly to move some more money into income from a high-yielding dividend stock. I always hope for capital appreciation, and I am always nervous about stock price deterioration, but when I find a stock with a low P/E and a high yield, I look further.
Robust 6.7% dividend yield Price/Earnings ratio less than 7 Strategic moves to take on headwinds Call Option support Stocks are cheap for a reason, and Macy's (M) has every reason to be cheap. Macy's, symbol M, is in the retail sector. All the oxygen in this space is being consumed by Amazon (AMZN). Macy's has the scale needed to compete in its narrow range of retail. The company has good cash management, suggesting it will continue to pay the dividend. Macy's is very near the 52-week low, with a very low Price/Earnings ratio known as P/E ratio.
Macy's Dividend Machine Fundamentals
The table below presents the criteria I use to pick dividend stocks. Earnings must exceed dividends paid out; dividend must beat any U.S. Treasury, dividend should grow, and D/E (debt/equity ratio) should be 1 or less or within industry standard.
5/15/2019 M E.P.S. Dividend Yield 3-Yr. Div Growth D/E Ratio $21.94 $3.56 $1.51 6.88% 0.00% 0.74
Macy's fails on recent dividend growth but meets all the other hurdles. If you go back five years, the dividend has increased 20.45%, or 4.13% per year. We do not know the direction the dividend will... Read more