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Defensive Stocks on the Cheap

By Tim Melvin

 About this article:
 Yesterday I started searching for stocks for the defensive investor using the work of Ben Graham as a starting point and focusing on companies that were cheap on an earnings basis. Today I want to look at some stocks that fit the defensive criteria and are cheap on an asset basis. A defensive stock is one that pays a good dividend, has solid earnings and a decent balance sheet. To qualify for purchase, it has to be cheap enough to offer the prospect of a satisfactory return as well as offer a margin of safety. Today I set the screen to find stocks of larger companies that yielded at least 3% and had had dividend growth of 3% on average for the past five years. Instead of looking for low multiples of earnings, I substituted a low price-to-tangible book value. I set the cutoff at 1.3...

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