Even with Ireland in a recession, Seagate Technology (STX, quote) is up 44.44% for 2012. In recent trading, however, it has fallen; off by 11.82% for the last month of market action. For emerging market income, growth and value investors, that marks a buying opportunity for this dividend paying stock.
Seagate, a data storage company based in Dublin, is a very compelling dividend paying stock: its yield is high and the payout ratio is low. The average yield for a company on the Standard & Poor’s 500 Index is around 2%. Seagate has a high dividend yield of 4.30%, which is not often associated with a high tech firm.
Buffering the high dividend yield of Seagate is its low payout ratio, which is the amount of earnings that goes towards paying the dividend. For a dividend paying stock, the average payout ratio is usually about 50%. Seagate has a payout ratio of just 17.48%. That means there is plenty of cash flow to increase the dividend or initiate share repurchase programs. It also means the company’s operations are well financed.
That is reflected in the growth features of this dividend paying stock. On a quarterly basis, both sales growth and earnings-per-share growth are soaring. This is expected to continue as growth in earnings-per-share is projected to be 30.10%. Another bullish indicator for future growth is the price-to-earnings ratio of just 0.22. A price-to-earnings growth ratio of 1 is considered to be adequate: the lower the better.
Value investors should be pleased by the price-to-sales ratio of only 0.74. That means that stock price is based on less the three-quarters of the sales per share. Another attractive value feature is the price-to-earnings ratio of 5.35. The forward price-to-earnings ratio is expected to be even more appealing at just 2.52.
The returns and margins are attractive too, for all investors. The return-on-equity (ROE) is 63.89%. The average ROE for a stock is around 15%. At over 30%, the return-on-investment is also very appealing. Most important of all, Seagate makes money — the profit margin is 14.78%.
Now trading around $23.30, the mean analyst target price for Seagate Technology over the next year is $33.27.