5 undervalued dividend stocks trading below their Graham number

By James Dennin for Kapitall.

The logical assumption about geopolitical strife is that it's probably not good for your portfolio. When total war could break out at any moment, investors get skittish and returns suffer. 

Turns out that assumption is usually wrong

A review of S&P returns over 16 geopolitical crises since 1960 has concluded that no, heightened tensions do not have much of an effect on the stock market. 

Investing during the year of the Bay of Pigs or when the USSR invaded Afganistan or even when the US entered Iraq would have yielded returns in excess of 30% the following year. 

And yet this assumption still prevails, with 86% of investors responding that geopolitical woes present the greatest investment risk at the moment. Go figure. 

In case problems in the Ukraine and the Middle East are putting undue pressure on the markets, we decided to run a screen for undervalued stocks. To do that, we built a list of companies with a dividend of 2% or higher, and with a rating of "buy" or higher as compiled by finviz. 

To look for value stocks, we then narrowed the screen using the Graham number. Invented by the granddaddy of value investing, Benjamin Graham, the number tries to assign a "fair value" to a stock based on earnings per share and book value. 

When a stock trades below its Graham number, it might be said to be undervalued. The above screen left us with only five stocks on our list. Are you adding to your portfolio despite the situations abroad? Use the list below to begin your analysis, and let us know what you think in the comments. 

Click on the interactive chart to view dividend yields over time. 

1. MicroFinancial Inc. ( MFI): Operates as a specialized commercial finance company that provides microticket equipment leasing and rental, and other financing services in the United States. Market cap at $114.8M, most recent closing price at $7.95.  

Dividend: 3.52%

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