29 Underrated US Stocks With Potential To Yield Tremendous Profits In 2017 – Part 1

Due to the uncertainty of dividend stocks this year, some trade pundits have been advising investors to act more cautiously. In their opinion, investors should choose to invest in stocks from companies that have the potential to considerably increase dividends in the near future, instead of concentrating on dividend stocks that are currently having high yields.

Trade experts Jeff Reeves and Bob Philips, after exploring the working principle of Spectrum Management Group, have made certain recommendations and interestingly, some of them overlap.

According to Philips, given the present market conditions, the safest approach is to invest in stocks that can yield huge dividends over a period of time. In this sense, it will be a wise decision to invest in companies that have a good free cash flow (cash remaining after subtracting the company’s expenditures). In his opinion, such companies have a plenty of head-room to pay great dividends.

Trade analysts also warn that investors should be careful and should not overpay for stocks that are currently good and are boasting a tall order. In an attempt to further justify their opinions, experts have had a deep analysis of the S&P 1500 Composite Index.

They have studied 11 different market segments and have listed up to three companies in each segment that have forward price to earnings ratio (predicted P/E ratio for 2017) which could be lower than their cumulative.

Selected companies also have a history of paying more than 3% in dividend yields with good free cash flow rate and headroom to pay huge dividends in the near future. Analysts expect that these companies are capable of increasing their sales by at least 1% by 2017.

Free cash flow yields of the recommended companies were calculated by dividing free cash flow per share in the last 12 months by their respective closing prices as of 30 September.

Trade analysts predict that the stock dividends of the following 29 companies (divided into 11 sectors) are having a great potential to generate high dividend yields in 2017:

Consumer Discretionary Sector

  1. Ford Motor (NYSE: F) is expected to payout a dividend yield of 4.97% in 2017. Its free cash flow for the past 12 months has been calculated to 28.01% with headroom of 23.04%. The company’s estimated sales growth for 2017 is expected to be at 1% accompanied by a consensus earnings per share estimate of 6.8
  2. Buckle (NYSE: BKE) is expected to payout a dividend yield of 4.16% in 2017. Its free cash flow for the past 12 months has been calculated to 12.29% with headroom of 8.13%. The company’s estimated sales growth for 2017 is expected to be at 1% accompanied by a consensus earnings per share estimate of 10.2
  3. Kohl’s Corp. (NYSE: KSS) is expected to payout a dividend yield of 4.57% in 2017. Its free cash flow for the past 12 months has been calculated to 16.59% with headroom of 12.02%. The company’s estimated sales growth for 2017 is expected to be at 1% accompanied by a consensus earnings per share estimate of 10.6

Analysts estimate that consumer discretionary earnings estimates will increase by 17.1 fold by 2017.

Consumer Staples Sector

  1. Flower Foods (NYSE: FLO) is expected to payout a dividend yield of 4.23% in 2017. Its free cash flow for the past 12 months has been calculated to 6.65% with headroom of 2.42%. The company’s estimated sales growth for 2017 is expected to be at 1% accompanied by a consensus earnings per share estimate of 15.8
  2. General Mills (NYSE: GIS) is expected to payout a dividend yield of 3.01% in 2017. Its free cash flow for the past 12 months has been calculated to 4.48% with headroom of 1.47%. The company’s estimated sales growth for 2017 is expected to be at 1% accompanied by a consensus earnings per share estimate of 18.7

Analysts estimate that consumer staples earnings estimates will increase by 19.4 fold by 2017.

Energy Sector

  1. Valero Energy (NYSE: VLO) is expected to payout a dividend yield of 4.53% in 2017. Its free cash flow for the past 12 months has been calculated to 13.68% with headroom of 19.15%. The company’s estimated sales growth for 2017 is expected to be at 20% accompanied by a consensus earnings per share estimate of 10.4
  2. Marathon Petroleum (NYSE: MPC) is expected to payout a dividend yield of 3.55% in 2017. Its free cash flow for the past 12 months has been calculated to 8.36% with headroom of 4.81%. The company’s estimated sales growth for 2017 is expected to be at 15% accompanied by a consensus earnings per share estimate of 11.8
  3. Western Refining  (NYSE:WNR) is expected to payout a dividend yield of 5.74% in 2017. Its free cash flow for the past 12 months has been calculated to 13.83% with headroom of 8.09%. The company’s estimated sales growth for 2017 is expected to be at 21% accompanied by a consensus earnings per share estimate of 15.4

Analysts estimate that energy sector estimated earnings will increase by 34.6 fold by 2017.

Financial Sector

  1. Maiden Holdings (NASDAQ: MHLD) is expected to payout a dividend yield of 4.41% in 2017. Its free cash flow for the past 12 months has been calculated to 38.66% with headroom of 34.25%. The company’s estimated sales growth for 2017 is expected to be at 4% accompanied by a consensus earnings per share estimate of 6.8
  2. HCI Group (NYSE: HCI) is expected to payout a dividend yield of 3.95% in 2017. Its free cash flow for the past 12 months has been calculated to 11.17% with headroom of 7.22%. The company’s estimated sales growth for 2017 is expected to be at 6% accompanied by a consensus earnings per share estimate of 7.5
  3. MetLife (NYSE: MET) is expected to payout a dividend yield of 3.60% in 2017. Its free cash flow for the past 12 months has been calculated to 27.39% with headroom of 23.79%. The company’s estimated sales growth for the year 2017 is expected to be at 3% accompanied by a consensus earnings per share estimate of 7.8

Analysts estimate that financial sector estimated earnings will increase by 12 fold by 2017.

Health Care Sector

  1. AbbVie (NYSE: ABBV) is expected to payout a dividend yield of 3.62% in 2017. Its free cash flow for the past 12 months has been calculated to 7.42% with headroom of 3.81%. The company’s estimated sales growth for 2017 is expected to be at 10% accompanied by a consensus earnings per share estimate of 11.2
  2. Pfizer (NYSE: PFE) is expected to payout a dividend yield of 3.54% in 2017. Its free cash flow for the past 12 months has been calculated to 6.43% with headroom of 2.89%. The company’s estimated sales growth for 2017 is expected to be at 4% accompanied by a consensus earnings per share estimate of 12.7

Analysts estimate that health care sector estimated earnings will increase by 15.1 fold by 2017.

Continued in Part 2…

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