Price/Earnings to Growth and Dividend Yield Ratio
Whether you’re looking at the market for next-generation growth or reliable dividend streams, understanding how to measure value is important. By analyzing metrics such as Price/Earnings to Growth and Dividend Yield (PEGY), investors can look beyond basic ratios and identify sectors that have long-term growth opportunities.
In today’s landscape, where valuation, growth, and income all compete for attention, taking a data-driven approach is crucial for making informed investment decisions.
What is Price/Earnings to Growth and Dividend Yield (PEGY)?
Price/Earnings to Growth and Dividend Yield or PEGY is a financial metric used to evaluate a stock by incorporating its P/E ratio, projected earnings growth rate, and dividend yield. The PEGY ratio improves on the traditional P/E ratio by factoring in both potential future growth and dividend payments, allowing investors to better assess whether a stock is undervalued.
PEGY = P/E Ratio/Earnings Growth Rate+ Dividend Yield
A PEGY ratio below 1.0 generally suggests that a stock may be undervalued, considering both growth and dividend income, indicating a potentially attractive investment opportunity.
A financial ratio that indicates the annual dividends paid by a company in relation to its current share price is called Dividend Yield. It is the percentage return an investor can expect solely from dividend payments, ignoring capital gains
The Dividend Yield formula is:
Dividend Yield = Dividend Per Share/Market Price Per Share x 100%
A very high yield may indicate a declining stock price or potential financial trouble. High dividend yields often occur in mature companies or industries like utilities. It fluctuates as stock prices change.
Insights from Price/Earnings to Growth and Dividend Yield
This section provides an overview of Price/Earnings to Growth and Dividend Yield across a broad spectrum of industries and sectors. By compiling this data, we aim to provide readers with a clear and comparative perspective on how different industries are currently valued in relation to their growth prospects and dividend income potential.
These insights are a valuable foundation for investors seeking to balance growth and income considerations when evaluating investment opportunities.
This analysis examines P/E-to-Growth ratios and dividend yields across 11 major sectors and over 100 industries, revealing distinct investment characteristics and market dynamics that can guide portfolio construction and sector allocation strategies.
| Sector | Industry | AVERAGE of P/E to Growth | AVERAGE of Dividend Yield (%) |
|---|---|---|---|
| Basic Materials | Agricultural Inputs | 2.27 | 2.99% |
| Aluminum | 0.55 | 2.88% | |
| Building Materials | 2.73 | 3.13% | |
| Chemicals | 2.43 | 7.88% | |
| Coking Coal | 3.89 | 4.16% | |
| Copper | 1.64 | 0.78% | |
| Gold | 2.11 | 2.34% | |
| Lumber & Wood Production | 5.09 | 1.00% | |
| Other Industrial Metals & Mining | 2.93 | 3.30% | |
| Other Precious Metals & Mining | 0.65 | 0.59% | |
| Paper & Paper Products | 2.63 | 3.65% | |
| Silver | 2.05 | 0.64% | |
| Specialty Chemicals | 2.32 | 3.06% | |
| Steel | 1.79 | 4.80% | |
| Communication Services | Advertising Agencies | 2.63 | 19.78% |
| Broadcasting | 0.32 | 5.40% | |
| Electronic Gaming & Multimedia | 1.72 | 2.60% | |
| Entertainment | 1.80 | 2.73% | |
| Internet Content & Information | 0.94 | 1.83% | |
| Publishing | 2.35 | 1.99% | |
| Telecom Services | 2.52 | 5.18% | |
| Consumer Cyclical | Apparel Manufacturing | 1.54 | 2.69% |
| Apparel Retail | 1.48 | 3.58% | |
| Auto & Truck Dealerships | 2.29 | 1.88% | |
| Auto Manufacturers | 1.41 | 4.35% | |
| Auto Parts | 0.83 | 3.28% | |
| Department Stores | 2.04 | 3.55% | |
| Footwear & Accessories | 2.10 | 1.88% | |
| Furnishings, Fixtures & Appliances | 1.30 | 3.18% | |
| Gambling | 2.88 | 4.00% | |
| Home Improvement Retail | 6.02 | 4.68% | |
| Internet Retail | 1.08 | 0.68% | |
| Leisure | 2.41 | 2.88% | |
| Lodging | 2.71 | 1.94% | |
| Luxury Goods | 3.54 | 3.07% | |
| Packaging & Containers | 2.57 | 3.09% | |
| Personal Services | 1.86 | 3.70% | |
| Recreational Vehicles | 1.34 | 3.08% | |
| Residential Construction | 1.33 | 1.05% | |
| Resorts & Casinos | 3.26 | 2.76% | |
| Restaurants | 2.07 | 2.23% | |
| Specialty Retail | 2.10 | 2.66% | |
| Textile Manufacturing | 2.64 | 1.27% | |
| Travel Services | 1.09 | 7.60% | |
| Consumer Defensive | Beverages—Brewers | 3.45 | 2.81% |
| Beverages—Non-Alcoholic | 2.22 | 3.58% | |
| Beverages—Wineries & Distilleries | 3.05 | 2.22% | |
| Confectioners | 3.57 | 2.85% | |
| Discount Stores | 2.79 | 1.90% | |
| Education & Training Services | 0.92 | 1.98% | |
| Farm Products | 1.54 | 2.68% | |
| Food Distribution | 2.38 | 2.87% | |
| Grocery Stores | 1.84 | 3.49% | |
| Household & Personal Products | 2.54 | 3.24% | |
| Packaged Foods | 3.51 | 3.10% | |
| Tobacco | 3.71 | 4.26% | |
| Energy | Oil & Gas Drilling | 0.29 | 4.06% |
| Oil & Gas E&P | 2.22 | 4.42% | |
| Oil & Gas Equipment & Services | 1.12 | 2.69% | |
| Oil & Gas Integrated | 1.73 | 4.58% | |
| Oil & Gas Midstream | 2.98 | 8.17% | |
| Oil & Gas Refining & Marketing | 1.45 | 7.30% | |
| Thermal Coal | 0.35 | 14.15% | |
| Uranium | 2.48 | 0.22% | |
| Financial Services | Asset Management | 1.75 | 6.44% |
| Banks—Diversified | 2.52 | 4.39% | |
| Banks—Regional | 2.12 | 3.45% | |
| Capital Markets | 2.03 | 1.46% | |
| Credit Services | 1.32 | 4.96% | |
| Financial Conglomerates | 1.03 | 2.14% | |
| Financial Data & Stock Exchanges | 3.38 | 1.38% | |
| Insurance Brokers | 2.36 | 1.58% | |
| Insurance—Diversified | 1.41 | 5.43% | |
| Insurance—Life | 1.73 | 2.77% | |
| Insurance—Property & Casualty | 1.90 | 2.30% | |
| Insurance—Reinsurance | 1.32 | 3.54% | |
| Insurance—Specialty | 2.83 | 2.41% | |
| Mortgage Finance | 1.30 | 5.62% | |
| Healthcare | Biotechnology | 2.24 | 1.47% |
| Diagnostics & Research | 3.71 | 0.78% | |
| Drug Manufacturers—General | 1.91 | 3.58% | |
| Drug Manufacturers—Specialty & Generic | 3.63 | 3.69% | |
| Health Information Services | 2.18 | 10.94% | |
| Healthcare Plans | 1.34 | 1.56% | |
| Medical Care Facilities | 2.78 | 1.88% | |
| Medical Devices | 2.35 | 2.07% | |
| Medical Distribution | 1.34 | 0.74% | |
| Medical Instruments & Supplies | 4.02 | 1.46% | |
| Industrials | Aerospace & Defense | 2.23 | 1.40% |
| Airlines | 1.30 | 3.15% | |
| Airports & Air Services | 3.94 | 3.98% | |
| Building Products & Equipment | 2.68 | 1.76% | |
| Business Equipment & Supplies | 1.71 | 4.71% | |
| Conglomerates | 1.50 | 3.89% | |
| Consulting Services | 2.40 | 1.92% | |
| Electrical Equipment & Parts | 2.19 | 1.12% | |
| Engineering & Construction | 3.12 | 1.68% | |
| Farm & Heavy Construction Machinery | 2.36 | 1.94% | |
| Industrial Distribution | 3.92 | 2.03% | |
| Infrastructure Operations | 5.39 | 4.96% | |
| Integrated Freight & Logistics | 3.82 | 2.78% | |
| Marine Shipping | 0.60 | 5.05% | |
| Metal Fabrication | 1.36 | 0.92% | |
| Pollution & Treatment Controls | 2.68 | 0.59% | |
| Railroads | 2.52 | 1.64% | |
| Rental & Leasing Services | 2.04 | 1.28% | |
| Security & Protection Services | 2.59 | 5.15% | |
| Specialty Business Services | 2.37 | 1.37% | |
| Specialty Industrial Machinery | 2.51 | 1.55% | |
| Staffing & Employment Services | 1.77 | 3.09% | |
| Tools & Accessories | 2.61 | 2.70% | |
| Trucking | 3.39 | 0.92% | |
| Waste Management | 2.34 | 1.88% | |
| Real Estate | Real Estate Services | 2.28 | 2.22% |
| Real Estate—Development | 2.75 | 2.94% | |
| Real Estate—Diversified | 2.39 | 4.28% | |
| REIT—Diversified | 6.24 | 6.05% | |
| REIT—Healthcare Facilities | 1.91 | 5.24% | |
| REIT—Hotel & Motel | 1.59 | 6.54% | |
| REIT—Industrial | 3.98 | 3.81% | |
| REIT—Mortgage | 1.96 | 12.52% | |
| REIT—Office | 1.81 | 4.29% | |
| REIT—Residential | 5.35 | 2.98% | |
| REIT—Retail | 2.87 | 4.58% | |
| REIT—Specialty | 4.25 | 5.75% | |
| Technology | Communication Equipment | 2.79 | 3.14% |
| Computer Hardware | 1.51 | 2.43% | |
| Consumer Electronics | 2.53 | 0.57% | |
| Electronic Components | 1.68 | 1.59% | |
| Electronics & Computer Distribution | 1.72 | 1.24% | |
| Information Technology Services | 2.45 | 2.96% | |
| Scientific & Technical Instruments | 1.99 | 1.40% | |
| Semiconductor Equipment & Materials | 2.03 | 1.52% | |
| Semiconductors | 1.79 | 1.73% | |
| Software—Application | 2.28 | 1.49% | |
| Software—Infrastructure | 2.36 | 1.51% | |
| Solar | 0.79 | 6.96% | |
| Utilities | Utilities—Diversified | 2.96 | 4.55% |
| Utilities—Independent Power Producers | 1.70 | 2.68% | |
| Utilities—Regulated Electric | 2.68 | 3.88% | |
| Utilities—Regulated Gas | 3.27 | 4.53% | |
| Utilities—Regulated Water | 3.28 | 2.70% | |
| Utilities—Renewable | 2.27 | 2.45% |
Investment Insights
Understanding how to use metrics like the Price/Earnings to Growth and Dividend Yield (PEGY) and Dividend Yield across sectors can help you identify promising areas for long-term investment. Here’s how you can approach this analysis:
| Sector | Typical PEFY Range | Typical Dividend yield | Implications for long term Investment |
|---|---|---|---|
| Basic Materials | 0.55-5.09 | 0.59-14.15% | Includes some undervalued, high-yield industries, but with cyclical risk. |
| Energy | 0.29-2.98 | 2.69-14.15% | Low PEGY and high yields can be attractive, but consider commodity volatility. |
| Financial services | 1.03-3.38 | 1.38-6.44% | Generally stable dividends, moderate PEGY—solid long-term income sector. |
| Industries | 0.60-5.39 | 0.59-5.15% | Select industries with low PEGY and moderate yields for balance. |
| Real Estate | 1.59-6.24 | 2.22-12.52% | REITs offer income, but check for sustainability of high yields. |
| Technology | 0.79-2.79 | 0.57-6.96% | Growth focus, low dividends—best for long-term capital appreciation. |
| Utilities | 1.70-3.28 | 2.45-4.55% | Reliable dividends, moderate PEGY—classic for conservative investors. |
Low PEGY Ratio (<1.0): Indicates sectors or industries where stocks are potentially undervalued relative to their projected earnings growth and dividend yield. These may present strong value opportunities, particularly when coupled with sector stability.
Examples: Aluminum (0.55 PEG, 2.88% yield), Oil & Gas Drilling (0.29 PEG, 4.06% yield), Broadcasting (0.32 PEG, 5.40% yield), Marine Shipping (0.60 PEG, 5.05% yield).
High PEGY (>3): Typically suggests that stocks in the sector might be priced for aggressive growth expectations or could be overvalued. For long-term investors, these sectors require careful scrutiny and belief in sustained growth. High PEG ratios suggest pricing for high future growth. Investors should be cautious of potential overvaluation—examples include Home Improvement Retail and REIT Diversified.
Moderate PEGY (1–3): Sectors here might offer a balanced mix of value and growth at a reasonable price. Sectors with high dividend yields but moderate PEGs (1-3) may provide steady income with some growth: Utilities, Financial Services (Asset Management), REITs (hotel, healthcare).
High Dividend Yield (4–7%+): Very high dividend yields and/or very low PEG ratios can indicate underlying challenges — due diligence is required, e.g., in sectors such as Thermal Coal and Advertising Agencies. However, Sectors with consistently high yields can provide reliable income streams, which are attractive for compounding returns via reinvestment.
Extremely high yields (10%+): often warrant extra due diligence, as they can signal potential distress or unsustainable payouts.
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