Investor Bill Miller seems befuddled. In his July 2010 commentary, he wonders why investors keep purchasing 10-year Treasuries yielding about 3%, when companies like ExxonMobil offer much higher potential returns.

His formula for Exxon is straightforward: "A sum of the dividend yield, growth rate and share shrink could represent an attractive annual return even if the valuation stays the same, and the valuation is among the lowest the company has traded at in years." When you add up the components, Exxon could offer 16.4% returns per year in a low-return environment.

I'm no less baffled than Miller by investors' preference for bonds, but I do think he's on to something. To see whether more Miller-like opportunities like Exxon were out there, I looked for companies with:

  • A dividend yield greater than the 3% 10-year Treasury yield
  • A five-year track record of dividend growth
  • A history of repurchasing shares
  • A P/E less than 25

Among auto-parts retailers, Genuine Parts (NYSE: GPC) fit the bill and stacked up well against some competitors.



5-Year Dividend Growth

Share Shrink


Genuine Parts





Advance Auto Parts (NYSE: AAP)





AutoZone (NYSE: AZO)





Source: Capital IQ, a division of Standard & Poor's.

From the table above, Genuine Parts fits Miller's criteria perfectly. It pays a 3.7% dividend that has been growing 5.7%, on average, for the past five years. The company also trades at 16.2 times earnings and produces plenty of cash flow to repurchase shares. Competitors Advance Auto Parts and AutoZone do not meet all of the criteria.

Foolish bottom line
Would Bill Miller consider investing in Genuine Parts? It meets all the criteria above, and it could offer a 10% return over time -- although it will be hard for the company to maintain such a dividend growth rate. In today's low-return environment, that's pretty attractive. I don't know why the market is offering up this opportunity, but as long as it is, Genuine Parts could be worth pursuing further.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.