A Suggested Basis of Maximum Appraisal for Investment.

Stay away from purchases of all these high dividend stocks yielding over 6% and a P/E ratio above 20 listed in the table below.  The following excerpt is straight out of Security Analysis 2^nd Ed. Pg 537-538.  Please read this 71 year old wisdom and then examine the table of high dividend stocks that you should avoid for investment right now.

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The investor in common stocks, equally with the speculator, is dependent on future rather than past earnings.  His fundamental basis of appraisal must be an intelligent and conservative estimate of the future earning power.  But his measure of future earnings can be conservative only if it is limited by actual performance oer a period of time.  We have suggested, however, that the profits of the most recent year, taken singly, might be accepted as the gage of future earnings, if (1) general business conditions in that year were not exceptionally good, (2) the company has shown an upward trend of earnings for some years past and (3) the investor’s study of the industry gives him confidence in its continued growth.  In a very exceptional case, the investor may be justified in counting on higher earnings in the future than at any time in the past.  This might follow from developments involving a patent or the discovery of new ore in a mine or some similar specific and significant occurrence.  But in most instances he will derive the investment value of a common stock from the average earnings of a period between five and ten years.  This does not mean that all common stocks with the same average earnings should have the same value.  The common stock investor (i.e., the conservative buyer) will properly accord a more liberal valuation to those issues which have current earnings above the average or which may reasonably be considered to possess better than average prospects or an inherently stable earning power.  But it is the essence of our viewpoint that some moderate upper limit must in every case be placed on the multiplier in order to stay within the bounds of conservative valuation.  We would suggest that about 20 times average earnings is as high a price as can be paid in an investment purchase of common stock.

Although this rule is of necessity arbitrary in its nature, it is not entirely so.  Investment presupposes demonstrable value, and the typical common stock’s value can be demonstrated only by means of an established, i.e., an average, earning power.  But it is difficult to see how average earnings of less than 5% upon the market price could ever be considered as vindicating that price.  Clearly such a price-earnings ratio could not provide that margin of safety which we have associated with the investor’s position.  It might be accepted by a purchaser in the expectation that future earnings will be larger than in the past.  But in the original and most useful sense of the term such a basis of valuation is speculative.  It falls outside the purview of common-stock investment.

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The list below only considers stocks with a current P/E of 20 and above.  Determining average earnings over a five year period require a lot of work.  But stay away from purchases of all these high dividend stocks yielding over 6% and a P/E ratio above 20:

Company name	Symbol	Market cap	P/E ratio	Div yield (%)	52w price change (%)
Alon Holdings Blue Square Israel Ltd	BSI	446.92M	25.49	37.14	-20.40
Teekay Tankers Ltd.	TNK	504.27M	26.27	12.81	-14.49
ING Global Equity Divid.&Premium Opp-ETF	IGD	1.02B	24.71	11.19	-14.17
Cheniere Energy Partners, LP	CQP	2.86B	27.11	9.88	14.21
Fifth Street Finance Corp.	FSC	710.26M	21.60	9.79	8.65
Frontier Communications Corp	FTR	7.90B	24.87	9.53	4.93
Vector Group Ltd.	VGR	1.22B	23.86	9.36	15.32
Apollo Investment Corp.	AINV	2.18B	40.07	9.29	-3.68
Calumet Specialty Products Partners, LP	CLMT	714.42M	43.75	9.09	-2.04
Encore Energy Partners LP	ENP	1.02B	31.91	9.02	8.73
DHT Holdings Inc	DHT	223.08M	35.04	8.93	7.95
Otelco, Inc. (USA)	OTT	244.07M	362.03	8.83	18.24
StoneMor Partners LP	STON	466.96M	22.41	8.73	23.72
H&Q Life Sciences Investors	HQL	246.16M	23.07	8.73	12.35
America First Tax Exempt Investors, LP	ATAX	171.40M	67.39	8.68	-1.87
Gladstone Commercial Corporation	GOOD	172.48M	188.29	8.27	25.55
Hercules Technology Growth Capital Inc	HTGC	454.86M	97.56	8.18	4.98
BreitBurn Energy Partners LP	BBEP	1.21B	33.89	8.01	35.73
Martin Midstream Partners LP	MMLP	792.46M	60.84	7.77	24.03
CommonWealth REIT	CWH	1.76B	56.21	7.74	-14.81
Baltic Trading Ltd	BALT	197.35M	23.34	7.58	-36.74
Penn Virginia Resource Partners LP	PVR	1.33B	30.80	7.51	4.55
Monmouth RE Inv. Corp.	MNR	276.32M	23.55	7.43	2.15
Enerplus Corp (USA)	ERF	5.35B	41.16	7.24	30.42
Vanguard Natural Resources, LLC	VNR	934.10M	25.01	7.24	27.48
Medical Properties Trust, Inc.	MPW	1.21B	97.43	6.97	3.80
Legacy Reserves LP	LGCY	1.31B	42.30	6.91	33.96
Agree Realty Corporation	ADC	224.46M	23.55