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 are 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 clothing retailers, The Buckle (NYSE: BKE) stacked up well against some competitors.

Company

Yield

5-Year Dividend Growth

Share Shrink

P/E

Buckle (NYSE: BKE)

3.1%

31.4%

0%

9.5

Kohl's (NYSE: KSS)

0%

0%

0%

13.6

J.C. Penney (NYSE: JCP)

3.6%

9.9%

0%

17.4

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

From the table above, Buckle fits Miller's criteria perfectly. It pays a 3.1% dividend that has been growing 31.4%, on average, for the past five years. The company also trades at 9.5 times earnings and produces plenty of cash flow to repurchase shares, which it's done from 2006 to 2009. Kohl's doesn't pay a dividend, so it doesn't fit with what we're looking for. J.C. Penney caught my eye, too, but its P/E ratio is a little too high for my tastes, given a tough disinflationary environment.

Foolish bottom line
Would Bill Miller consider investing in Buckle? It meets all the criteria above, and it could offer a nice 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, Buckle could be worth pursuing further.

Million Dollar Portfolio associate advisor David Meier does not own shares of any of the companies mentioned. The Motley Fool owns shares of ExxonMobil. The Fool's disclosure policy never goes out of style.