When buying shares for long-term income, I like to find undervalued businesses, with solid fundamentals and good dividends. As such, I will buy shares that compare favourably with the market on metrics like price-to-earnings (P/E), dividend yield, payout ratio, and expected growth.
The following ASX shares are currently screening as undervalued according to the above 4 metrics.
Nick Scali Limited (ASX: NCK)
Nick Scali is a well-established furniture retailer with over 50 years of history in Australia. Since 2017, Nick Scali also expanded internationally opening its first shop in New Zealand.
At the current share price of $7.05, you could buy shares in the prominent furniture retailer for a P/E of about 13.5. That is not all, Nick Scali also sports a dividend yield of 6.4%, fully franked at 9.08%.
Earnings are set to decrease for the next couple of years. However, with a low payout ratio of 48%, the Nick Scali dividend is set to remain stable or get reduced only slightly.
Qantas Airways Limited (ASX: QAN)
Qantas has been in operation since 1920 when it was founded in Queensland. Thanks to its two flagship airlines, Qantas and Jetstar, it operates the largest airline business in Australia. Qantas also has a large cargo handling segment through its 22 dedicated terminals around the world.
At a current share price of $7.32, Qantas shares can be snapped up for a P/E 13.4, significantly lower than the market P/E of 18.4.
Not only that, Qantas comes with a dividend yield of 3.4%, fully franked at 4.87%, and a low payout ratio of 45%. For the next two years, the company is further set to grow its earnings at a rate of 8.2%.
Computershare Limited (ASX: CPU)
Computershare is the world largest provider of share market services. Not only that, Computershare provides services in the business segment, register maintenance, employee share plans, and mortgage broking services. It is a top ASX 100 company, with a market cap of over $9.2 billion.
It is hard to believe that such a quality business could be purchased today for $17.04 per share, implying a P/E of 15.6.
Due to a low 40% payout ratio, the dividend is starting at a lower 2.58%, partially franked at 2.91%. For the next 2 years, Computershare is set to grow earnings at 7.4% and dividends at 4.5% per annum.
Brickworks Limited (ASX: BKW)
Brickworks is one of the world largest manufacturers of building materials. Brickworks is expanding aggressively in North America, where it has recently purchased a couple of large brick makers. It further owns a stake in Washington H. Soul Pattinson and Co. Limited (ASX: SOL) worth a cool $2.1 billion.
Brickworks is trading a P/E 13.4, which is significantly lower than the broader market.
What I like most about Brickworks is its proud dividend history. It has increased its dividends for the past 43 consecutive years and has a current yield of 2.98% fully franked at 4.26%.
Although earnings are forecasted to decrease in the near term, I believe the long-term prospects for Brickworks to be intact.
