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I have searched for very profitable companies with very strong growth prospects that pay very rich dividends. I also looked for companies where the average analysts' recommendation is a buy or better. I have elaborated a screening method which shows stock candidates following these lines. Nonetheless, the screening method should only serve as a basis for further research.

The screen's formula requires all stocks to comply with all following demands:

  1. Earnings growth estimates for the next 5 years (per annum) is greater than 17%.
  2. Trailing P/E is less than 12.
  3. Forward P/E is less than 10.
  4. The PEG ratio is less than 0.70.
  5. Dividend yield is greater than 5.0%
  6. Average analyst recommendations are bullish (less than 2).

After running this screen on December 01, 2012, I obtained as results the 4 following stocks:

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Crown Crafts, Inc. (NASDAQ:CRWS)

Crown Crafts, Inc. provides infant and toddler products for consumer industry in the United States and internationally.

Crown Crafts has a very low trailing P/E of 11.19 and even a lower forward P/E of 9.09; the PEG ratio is very low at 0.62. The price to free cash flow for the trailing 12 months is very low at 7.63 and the average annual earnings growth estimates for the next 5 years is quite high at 18%. The forward annual dividend yield is very high at 5.50% and the payout ratio is 61.5%. Analysts recommend the stock, the two analysts covering the stock rate it as a strong buy and as a buy. On November 13, Crown Crafts reported its 2Q fiscal 2013 financial results (here). On that occasion, the company announced that, in recognition of the Company's strong balance sheet, its Board of Directors declared a special cash dividend of $0.50 per share, which is in addition to the declaration of the quarterly cash dividend of $0.08 per share. Both dividends will be paid on December 27, 2012 from cash on hand to stockholders of record on December 14, 2012. The very low multiples and the very high dividend yield make the CRWS stock quite attractive.

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Chart: finviz.com

Kohlberg Kravis Roberts & Co. (NYSE:KKR)

Kohlberg Kravis Roberts & Co. is a private equity investment firm specializing in acquisitions, leveraged buyouts, management buyouts, special situations, growth equity, mature, and middle market investments.

Kohlberg Kravis Roberts has a very low trailing P/E of 6.64 and even a lower forward P/E of 6.22; the PEG ratio is extremely low at 0.14. The price to free cash flow for the trailing 12 months is very low at 0.96. The average annual earnings growth for the past 5 years was very high at 21.91% and the average annual earnings growth estimates for the next 5 years is even much higher at 46.50%. The forward annual dividend yield is very high at 6.11% and the payout ratio is only 40.6%. Analysts recommend the stock, among the thirteen analysts covering the stock, four rate it as a strong buy, six rate it as a buy and three rate it as a hold. The company is trading 11% below its 52-week high and has 34% upside potential based on the consensus mean target price of $18.43. On October 26, Kohlberg Kravis Roberts reported its 3Q financial results (here). On that occasion, Henry R. Kravis and George R. Roberts, Co-Chairmen and Co-Chief Executive Officers of KKR said:

We are pleased with the firm's performance for the nine months through September 30. Our private equity funds appreciated by 20% and our balance sheet investments appreciated by 22%, outperforming the MSCI World Index by over 600 and 800 basis points, respectively.

The very low multiples and the strong growth prospects make the KKR stock quite attractive.

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Chart: finviz.com

PennyMac Mortgage Investment Trust (NYSE:PMT)

PennyMac Mortgage Investment Trust, a specialty finance company, through its subsidiaries, invests primarily in residential mortgage loans and mortgage-related assets.

PennyMac Mortgage Investment has no debt at all and it has a very low trailing P/E of 7.61 and even lower forward P/E of 7.40; the PEG ratio is extremely low at 0.30. The average annual earnings growth for the past 5 years was very high at 85.88% and the average annual earnings growth estimates for the next 5 years is also very high at 25%. The forward annual dividend yield is very high at 9.25% and the payout ratio is 70.4%. Analysts recommend the stock, among the six analysts covering the stock, three rate it as a strong buy, two rate it as a buy and only one rates it as a hold. On November 08, PennyMac Mortgage Investment reported its 3Q financial results (here). On that occasion, Chairman and Chief Executive Officer Stanford L. Kurland said:

During the third quarter, PMT efficiently deployed capital from its equity raise to grow earnings and achieve strong investment results. We increased earnings to $0.81 per share, grew mortgage investments by over $350 million, increased conventional correspondent loan purchase volume by 111% and realized solid returns in our distressed whole loan portfolio.

The very low multiples and the strong growth prospects make the PMT stock quite attractive.

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Chart: finviz.com

Wayside Technology Group, Inc. (NASDAQ:WSTG)

Wayside Technology Group, Inc., an information technology channel company, resells software and hardware, as well as provides technical services to software development and information technology professionals primarily in the United States and Canada.

Wayside Technology has no debt at all and it has a very low trailing P/E of 9.07 and even lower forward P/E of 8.51; the PEG ratio is extremely low at 0.41. The average annual earnings growth estimates for the next 5 years is very high at 22%. The forward annual dividend yield is very high at 5.74% and the payout ratio is 52%. Only one analyst is covering the stock rating it as a strong buy. The company is trading 33.84% below its 52-week high and has 124% upside potential based on the consensus mean target price of $25. The very low multiples and the very high dividend yield make the WSTG stock quite attractive.

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Chart: finviz.com

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Source: 4 High Yielding Dividend Growth Stocks Analysts Recommend