Which characteristic is associated with value stocks?

Value stocks are typically characterized by their potential to be undervalued compared to their intrinsic worth. This is often reflected in lower price-to-earnings (P/E) ratios and higher dividend yields.

A low P/E ratio indicates that the stock is trading at a price that is low relative to its earnings, making it attractive to investors who believe the stock is undervalued and due for price appreciation. This characteristic helps distinguish value stocks from growth stocks, which usually have high P/E ratios due to their expected growth rate.

Additionally, value stocks often offer a higher dividend yield. A high dividend yield signals that the stock provides a good return in the form of dividends relative to its share price, further appealing to income-focused investors.

Therefore, combining the characteristics of both low P/E ratios and high dividend yields accurately reflects the nature of value stocks, confirming that the correct answer includes both elements.