Do you prefer stocks that pay steady dividend income? We ran a screen with dividend sustainability in mind.
We began by screening for highly liquid dividend stocks: those paying dividend yields above 1%, sustainable payout ratios below 50%, and those with current ratios above 3. The current ratio is current assets/current liabilities, so ratios above 3 indicate the company has at least 3 times the liquid assets to cover short-term liabilities.
We then screened for stocks with bullish sentiment from institutional investors, with significant net institutional purchases over the last quarter representing at least 5% of share float. This indicates that institutional investors such as hedge fund managers and mutual fund managers expect these names to outperform in the future.
For an interactive version of this chart, click on the image below. Analyst ratings sourced from Zacks Investment Research.
Do you think these stocks will continue to pay strong dividends? Use this list as a starting point for your own analysis.
1. ASML Holding NV (ASML): Engages in designing, manufacturing, marketing, and servicing semiconductor processing equipment used in the fabrication of integrated circuits. Market cap at $27.04B, most recent closing price at $64.40. Net institutional purchases in the current quarter at 16.0M shares, which represents about 5.03% of the company's float of 317.93M shares. Dividend yield at 1.23%, payout ratio at 15%, and Current ratio at 3.91. The top 2 holders of the stock are Capital World Investors, and FMR, LLC.
2. CBOE Holdings, Inc. (CBOE): Intends to operate as the holding company for Chicago Board Options Exchange , which operates as an organized marketplace for the trade of standardized, listed options on equity securities. Market cap at $2.79B, most recent closing price at $31.96. Net institutional purchases in the current quarter at 4.4M shares, which represents about 5.12% of the company's float of 85.97M shares. Dividend yield at 1.88, payout ratio at 31%, and current ratio at 3.38. The top 2 holders of the stock are T. Rowe Price, and Horizon Kinetics.
3. NewMarket Corp. (NEU): Engages in the petroleum additives and real estate development businesses. Market cap at $3.66B, most recent closing price at $272.43. Net institutional purchases in the current quarter at 549.6K shares, which represents about 5.94% of the company's float of 9.26M shares. Dividend yield at 1.1%, payout ratio at 18.27%, and current ratio at 3.38. The top 2 holders of the stock are London Company of Virginia, and The Vanguard Group.
*Institutional data sourced from Fidelity, all other data sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.