The S&P 500 is about as pricey as it ever gets. It’s also in freefall as I write.
This is good news for anyone looking for a future bargain. The plunge, however, is really bad news for most retirees who don’t read this column. They tend to own nothing except “America’s ticker” via the SPDR S&P 500 Trust ETF (SPY).
At 24-times earnings (P/E ratio), SPY is expensive. After all, who has 24 years to wait to get paid back?
But the actual payback period is even worse for SPY. Most of its firms don’t pay out all of their profits as dividends. Collectively they yield just 1.4%, which means anyone buying SPY today can confidently “cash out” their initial investment by 2093.
(I’m not sure about you, but my lifestyle is not designed to make it another 71 years. My organs believe every new year is a gift.)
Since you and I are in “pay us back soon” mode, we want our retirement portfolio in stocks that:
- Are inexpensive (low P/E ratios).
- Pay a lot (high dividend yields).
This is the secret to retiring on dividends. Buy right and sit tight while good stocks pay us serious yields.
Today we’re going to highlight 12 single-digit P/E stocks that yield between 4.2% and 25.6%. Yes, that’s no typo. These potential “retirement makers” are priced right, and their payouts provide us with serious cash flow.
12 Cheap Dividend Plays
You won’t be surprised to learn that most of these stocks run in packs—or at least pairs. In many cases, entire slivers of the market are trading on the cheap, and these dividend payers represent the most discount-priced among them.
The financial space is teeming with underappreciated dividends. OneMain Holdings (OMF, 14.2% yield), for instance, provides personal installment loans to more than 2 million Americans, and its dirt-cheap 6.1 forward P/E comes despite the fact that shares are actually positive over the past year. New York Community Bancorp (NYCB, 5.9%) is a more traditional banking name, but at a nearly 6% yield, it’s delivering roughly 4x what the broader financial sector is.
Insurers have been largely overlooked, too. Unum Group (UNM, 4.2%) and Old Republic International (ORI, 13.0%) are both trading under 10 times earnings estimates and boast large (and growing!) payouts.
4 Deeply Underloved Financials
Despite being 2022’s best market sector by a mile, energy is still a relative value in some cases…and a screaming value in others.
Devon Energy (DVN, 4.9%), which last year merged with WPX, is an onshore exploration-and-production play that produces oil, natural gas and nat-gas liquids. It’s an oddity in the space, too, featuring a “fixed-plus-variable” dividend that ensures a base payout every three months that’s topped off based on its quarterly performance.
Then there’s Phillips 66 Partners LP (PSXP, 8.3%)—the Phillips 66 (PSX) MLP spinoff that owns energy infrastructure such as crude oil and natural gas liquids pipelines and terminals. After years of quarterly raises, the payout has stagnated since the start of 2020, but PSXP still offers exceptional yield…as long as you’re OK filling out that K-1.
How Much Longer Will High-Yielding Energy Stocks Remain Cheap?
You can also find dirt-cheap dividends in some surprising places.
For example, 360 DigiTech (QFIN, 5.8% yield) is a digital platform that helps financial institutions offer an affordable, unsecured digital line of credit, though it also provides risk management service to institutional clients via software-as-a-service modules. And it does so in its home country of China.
Emerging Markets Aren’t Often Cheap, But…
But look at the fuller group of stocks that fall within our parameters. Does anything stand out to you?
* Includes a special dividend (only considered in cases where the stock regularly issues special dividends)
** Fixed-plus-variable dividend
Sky-High Dividends You Can Count on for DECADES
Most of the names on this list are cheap for a reason.
And that’s one of the most common problems among the market’s most mouth-watering payouts: They force you to make some sort of critical tradeoff—in most of these cases, you’re getting a great price, but questionable quality that means share-price losses could more than offset those big, fat yields.
But when it comes to my retirement account, I don’t plan on settling for second-rate.
You shouldn’t, either—and as it turns out, you don’t have to.
Not when each of the stocks in my “Perfect Income” portfolio are trading at the right price, have the right payout, and boast the right upside potential.
Most of my readers have told me that these stocks have doubled and even tripled the dividends they were earnings from their old income portfolios. (And in a couple of rare cases, readers reported a 4x jump in their regular checks!)
That alone is a massive upgrade to any set of retirement holdings. But more important is that my Perfect Income Portfolio delivers that level of cash while also…
- Paying those dividends consistently, predictably and reliably.
- Surviving, even thriving, in market crashes.
- Delivering double-digit returns across several safe investments.
- Gambling your hard-earned nest egg on flimsy day-trading strategies, options contracts or penny stocks.
Let me show you the stocks and funds you need to stabilize your retirement. But more importantly, let me teach you more about this incredible strategy itself and make you a better investor in the process!
Take control of your financial legacy today. Let me show you how to get 2x to 4x your current income with this simple, straightforward system. Click here to get a FREE copy of my Perfect Income Portfolio report, including tickers, dividend yields, full analyses of each pick … and a few other bonuses!