Price earnings ratios are calculated on accounting principals. A better figure to evaluate the real financial power of a company is the Free Cash Flow.
Attached, I've compiled the 20 cheapest Dividend Contenders by P/FCF Ratio.
What does this ratio mean? For example, if the stock price for two companies is $25 per share and one company has a cash flow of $5 per share (25/5=5) and the other company has a cash flow of $10 per share (25/10=2.5), then if all else is equal, the company with the higher cash flow (lower ratio, P/CF=2.5) has the better value. Also like a P/E ratio, the lower the number, the better. Currently, the average Priceto Cash Flow (P/CF) for the stocks in the S&P 500 is 14.05. But just like the P/Eratio, a value of less than 15 to 20 is generally considered good.
What is the difference between cash flow and free cash flow? Cash flow refers to a stream of revenue or expense that alters a cash account over a specified time frame. Free cash flow (FCF) is a measure of a business's financial performance. It is calculated as the difference between cash flow and capital expenditures.
Here are the results:
| Ticker | Company | P/E | Fwd P/E | P/S | P/B | P/FCF |
| AEL | American Equity Investment Life | 12.69 | 8.11 | 0.68 | 0.93 | 1.39 |
| PRU | Prudential Financial, Inc. | 9.27 | 8.12 | 0.74 | 0.82 | 3.65 |
| PFG | Principal Financial Group, Inc. | 10.37 | 9.9 | 1.24 | 1.37 | 5.04 |
| RNR | RenaissanceRe Holdings Ltd. | - | 12.53 | 2.62 | 1.34 | 5.48 |
| DGICA | Donegal Group Inc. | 61.9 | 12.4 | 0.59 | 0.95 | 6.64 |
| TCP | TC PipeLines, LP | 9.94 | 10.06 | 5.21 | 2.35 | 6.76 |
| TMK | Torchmark Corporation | 4.27 | 12.99 | 2.31 | 1.56 | 7.17 |
| EBMT | Eagle Bancorp Montana, Inc. | 17.83 | 11.51 | 4.08 | 1.22 | 7.5 |
| AFG | American Financial Group, Inc. | 17.8 | 13.2 | 1.43 | 1.83 | 7.77 |
| THG | The Hanover Insurance Group, Inc. | 22.5 | 13.59 | 0.97 | 1.67 | 8.43 |
| CMCSA | Comcast Corporation | 15.75 | 12.08 | 1.82 | 2.24 | 9.17 |
| EVR | Evercore Inc. | 15.53 | 12.85 | 2.47 | 7.63 | 9.94 |
| LAZ | Lazard Ltd | 9.71 | 11.73 | 2.56 | 5.27 | 10.69 |
| OHI | Omega Healthcare Investors, Inc. | 56.41 | 16.45 | 5.65 | 1.44 | 10.95 |
| HI | Hillenbrand, Inc. | 18.07 | 17.97 | 1.82 | 3.95 | 12.06 |
| TRV | The Travelers Companies, Inc. | 17.51 | 12 | 1.28 | 1.57 | 12.46 |
| VSEC | VSE Corporation | 19.05 | - | 0.72 | 1.85 | 12.52 |
| MCK | McKesson Corporation | 6.87 | 10.65 | 0.14 | 2.52 | 12.65 |
| VZ | Verizon Communications Inc. | 14.65 | 10.25 | 1.55 | 4.52 | 12.77 |
| EAT | Brinker International, Inc. | 13.58 | 10.3 | 0.56 | - | 13.56 |
This is only a small part of the full Dividend Yield Investor Fact Book Package. The full package contains excel sheets of essential financial ratios from all 113 Dividend Champions (over 25 years of constant dividend growth) and 204 Dividend Contenders (10 to 24 years of consecutive dividend growth). It's an open version, so you can work with it very easily.
The idea to create Factbooks and Fact Excel Sheets was born when I were looking for free aggregated information on the web. As a student of economics, I had not much money to buy the expensive S&P Stock and Bond Guides by McGraw-Hill to educate myself. I must put all my efforts into research and web search. Finally I needed to put all information into one Word and Excel file.
The Dividend Yield Factbooks and Excel Sheets inform students and other persons with a great desire for big data of stock fundamentals and worldwide yields from corporations.
A small donation from you can help me to develop this books and improve the quality of the work. Together we can make the world a better and smarter place. A place with no information advantage between poor and rich persons who have enough budget to buy the expensive data from Reuters and Bloomberg.
As a gift, you will get the Dividend Yield Investor Fact Book Package each month. This compilation contains the following books and one Excel Sheet with financial ratios form all Dividend Champions and Dividend Contenders. Here is what you get for your donation:
- Foreign Yield Fact Book (updated weekly)
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