Devon Energy (DVN) meets all 3 criteria and was added to the High Yield Portfolio today.
Devon's trailing P/E is only 7.2 and has a dividend yield of 7.1% based on the acquisition price of $40.65/share. Shares were added this morning at $40.65/share. The consensus one year price target is $53.40/share which provides a potential upside of 30% in capital appreciation and 37% when combined with the dividend.
The risk to future payouts is clearly the price of oil. Below is a link to Devon Q3 presentation that provide a sensitivity analysis of dividend payouts at various WTI levels.
Current Portfolio Performance Recap
The portfolio has a current yield of 8.0% (acquired yield of 9.1%), average P/E of 9.8. The potential capital appreciation upside is 23.6% based on the consensus 1 year price target. To date the portfolio has capital appreciation is 12.9% driven by the strong performance of OneMain Financial (OMF).
I will continue to post updates when positions are added or sold from the portfolio.
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