I have searched for very profitable companies that pay rich dividends with not too high payout ratio. I also looked for companies that are in short-term uptrend, in mid-term uptrend and in long-term uptrend. Stocks in an uptrend are performing well and are in a buying mode.
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:
- Dividend yield is greater than 5.0%.
- The payout ratio is less than 60%.
- Trailing P/E is less than 12.
- Forward P/E is less than 12
- Stock price is above 20-day simple moving average (short-term uptrend).
- Stock price is above 50-day simple moving average (mid-term uptrend).
- Stock price is above 200-day simple moving average (long-term uptrend)..
After running this screen on February 07, 2013, before the market open, I discovered the following three stocks:
Crown Crafts, Inc. (CRWS)
Crown Crafts, Inc. provides infant and toddler products for consumer industry in the United States and internationally.
Crown Crafts has no debt at all, and it has a very low trailing P/E of 10.15 and even a lower forward P/E of 8.00. The PEG ratio is very low at 0.56, and the price to sales ratio is also very low at 0.64. The price to free cash flow for the trailing 12 months is very low at 6.92, 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 6.06%, and the payout ratio is at 51.6%.
The stock price is 5.35% above its 20-day simple moving average, 3.65% above its 50-day simple moving average and 3.45% above its 200-day simple moving average, which indicates short-term, mid-term and long-term uptrend. Only one analyst is covering the stock rating it as a strong buy.
CRWS will report its latest quarterly financial results on February 13. The reported results will probably affect the stock price in the short term.
On November 13, 2012, Crown Crafts reported its 2Q fiscal 2013 financial results In the report, E. Randall Chestnut, Chairman, President and Chief Executive Officer said:
While we are not pleased with the results of the current quarter, we remain very confident in our position within the industry and with our major retailers, as well as in the strength of our products and brands, for several reasons. First, during the second quarter, we saw a 6.8% increase in sales of our own branded products. Second, our margins have improved as we continue to see the benefits of our quick response to increases in raw material prices in early fiscal 2012 when cotton prices were at all-time highs. Since that time, we have strategically reduced our dependence on cotton by successfully redesigning some of our product lines. We also selectively increased prices where appropriate, which positively impacted our bottom line. Lastly, despite the pressures on our top line, our earnings for the first half of fiscal 2013 are 3.4% higher than a year ago.
The compelling valuation metrics caught my eye; a company with no debt at all, with $0.65 cash per share (price to cash ratio is only 8.16), which has also strong growth prospects. This company pays a very rich dividend and it is in an uptrend. In my opinion, the CRWS stock is very attractive.
Data: Yahoo Finance
Citizens & Northern Corp. (CZNC)
Citizens & Northern Corporation operates as the bank holding company for Citizens & Northern Bank that provides various banking and mortgage services to individual and corporate customers in north central Pennsylvania and southern New York.
Citizens & Northern has a very low debt (total debt to equity is only 0.11), and it has a very low trailing P/E of 10.61 and a very low forward P/E of 11.61. The price to free cash flow for the trailing 12 months is very low at 13.84. The forward annual dividend yield is very high at 5.04%, and the payout ratio is at 53.5%.
The stock price is 2.69% above its 20-day simple moving average, 6.39% above its 50-day simple moving average and 8.11% above its 200-day simple moving average, which indicates short-term, mid-term and long-term uptrend. Only one analyst is covering the stock rating it as a buy.
I have noticed that since the beginning of 2010, CZNC has continuously raised its quarterly dividend payment from $0.08 to $0.25.
All these factors -- The cheap valuation, the analyst's recommendations, the very high dividend yield and the fact that the stock is in an uptrend -- make CZNC stock quite attractive.
Data: Yahoo Finance
International Shipholding Corp. (ISH)
International Shipholding Corporation, through its subsidiaries, provides maritime transportation services to commercial and governmental customers primarily under medium to long-term time charters or contracts of affreightment in the United States and internationally.
International Shipholding has a very low trailing P/E of 11.73 and even a lower forward P/E of 9.11. The price to sales ratio is very low at 0.58, and the price to book value is also very low at 0.57. The forward annual dividend yield is very high at 5.02%, and the payout ratio is at 58.8%.
The stock price is 6.64% above its 20-day simple moving average, 13.85% above its 50-day simple moving average and 14.21% above its 200-day simple moving average, which indicates short-term, mid-term and long-term uptrend. Analysts recommend the stock, the two analysts covering the stock rate it as a strong buy and as a buy.
On February 06, International Shipholding reported its results for the fourth quarter and full year of 2012.
Fourth Quarter 2012 Highlights
- Reported net income of $11.5 million for the three months ended December 31, 2012, which included a non-cash foreign currency exchange gain of $4.7 million and a gain of $12.2 million on the sale of a vessel
- Closed on the acquisition of U.S. United Ocean Services, LLC ("UOS") on November 30, 2012
- As previously announced, acquired a 1999-built Pure Car Truck Carrier which has been deployed on a long-term time charter
- Invested in four additional mini-bulkers as part of the 25% owned venture which now operates 14 mini-bulkers
- Declared a fourth quarter dividend of $0.25 per share payable on March 4, 2013, to stockholders of record as of February 19, 2013
The Company set a $1.00 dividend target for the 2013 fiscal year.
In the report, Mr. Niels M. Johnsen, Chairman and Chief Executive Officer, stated:
In 2012, we successfully executed our long-standing strategies in three important areas during a challenging environment for the shipping industry. First, we diversified and expanded our fleet to 50 vessels, including the recently closed acquisition of United Ocean Services in the fourth quarter. Second, we increased our fixed revenues by adding long-term contracts with creditworthy customers. Finally, through transactions involving our Pure Car Truck Carriers, we were able to add a modern vessel to our fleet and enhance our financial flexibility.
The compelling valuation metrics caught my eye; the ISH stock is trading way below its book value (price to book value ratio is only 0.57), it also pays a rich dividend and it is in an uptrend. In my opinion, the ISH stock is quite attractive.
Data: Yahoo Finance