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, Portfolio123 (2,335 clicks)
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I have searched for very profitable companies that pay very rich dividends and have a very low debt. 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:

  1. Dividend yield is greater or equal 6.0%.
  2. The payout ratio is less than 90%.
  3. Trailing P/E is less than 15.
  4. Forward P/E is less than 14.
  5. Debt to equity is less than 0.30.
  6. Stock price is above 20-day simple moving average (short-term uptrend).
  7. Stock price is above 50-day simple moving average (mid-term uptrend).
  8. Stock price is above 200-day simple moving average (long-term uptrend)..

After running this screen on February 19, 2013, before the market open, I discovered the following four stocks:

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Home Loan Servicing Solutions, Ltd. (NASDAQ:HLSS)

Home Loan Servicing Solutions, Ltd., together with its subsidiaries, engages in acquiring mortgage servicing assets, primarily subprime and Alt-A mortgage servicing rights and associated servicing advances. The company was founded in 2010 and is based in George Town, Cayman Islands.

Home Loan Servicing Solutions has no debt at all, and it has a low trailing P/E of 14.75 and a lower forward P/E of 12.63. The price to free cash flow for the trailing 12 months is very low at 14.86, and the price-to-book value is at 1.46. The forward annual dividend yield is very high at 6.26%, and the payout ratio is at 66%.

The stock price is 7.44% above its 20-day simple moving average, 15.33% above its 50-day simple moving average and 41.16% above its 200-day simple moving average, which indicates short-term, mid-term and long-term uptrend. Analysts recommend the stock -- among the nine analysts covering the stock, four rate it as a strong buy, four rate it as a buy and only one rates it as a hold.

On February 07, Home Loan Servicing Solutions reported its 4Q 2012 financial results.

Fourth-quarter business performance highlights:

  • Earned $14.3 million, or $0.44 per ordinary share.
  • Declared October dividend of $0.11 per ordinary share and November and December dividends of $0.12 per ordinary share totaling $13.7 million for the quarter.
  • Completed in October the issuance of $250 million one-year and $450 million three-year term notes secured by servicing advance receivables at a weighted average interest spread over LIBOR of 1.55%. The proceeds were used to repay $600 million in term notes and to reduce borrowing on variable funding notes with a weighted average interest spread of 2.93%.

In the report, William Erbey, chairmen of the company said:

Reflecting on our first year of operations, I believe that we have delivered on our plan to provide our shareholders with earnings and dividends that are particularly attractive given the stability and low risk of our assets which the ABS markets are starting to reward. I am pleased with the continued support of our equity and debt investors and look forward to further growth in 2013.

Also in the report, John Van Vlack, president of the company said:

Our results in the fourth quarter exceeded our revised guidance as lower than expected prepayments reduced amortization expense. We are pleased that the variations from our guidance in 2012 have all been positive. Additionally, strong executions in the ABS term note market are continuing to reduce our borrowing costs relative to our expectations.

The compelling valuation metrics, the very rich dividend, and fact that the stock is in an uptrend are all factors that make HLSS stock quite attractive.

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Chart: finviz.com

Solar Capital Ltd. (NASDAQ:SLRC)

Solar Capital Ltd. is a business development company specializing in investments in leveraged middle market companies.

Solar Capital has a very low debt (total debt to equity is only 0.28), and it has a very low trailing P/E of 6.49 and a very low forward P/E of 9.93. The PEG ratio is at 1.30, and the price-to-book value is also very low at 1.13. The forward annual dividend yield is very high at 9.40%, and the payout ratio is at 61%.

The stock price is 2.24% above its 20-day simple moving average, 5.80% above its 50-day simple moving average and 15.42% above its 200-day simple moving average, which indicates short-term, mid-term and long-term uptrend.

SLRC will report its latest quarterly financial results on February 24. SLRC is expected to post a profit of $0.59 a share, a 3.5% rise from the company's actual earnings for the same quarter a year ago. The reported results will probably affect the stock price in the short term.

All these factors -- The cheap valuation, the very high dividend yield and the fact that the stock is in an uptrend -- make SLRC stock quite attractive.

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Chart: finviz.com

Sasol Ltd. (NYSE:SSL)

Sasol Limited operates as an integrated energy and petrochemicals company worldwide. The company was founded in 1950 and its headquarters is in Johannesburg, South Africa.

Sasol has a very low debt (total debt to equity is only 0.13), and it has a very low trailing P/E of 10.12 and a very low forward P/E of 8.85. The forward annual dividend yield is very high at 6.0%, and the payout ratio is only 41%.

The stock price is 3.62% above its 20-day simple moving average, 4.43% above its 50-day simple moving average and 5.73% above its 200-day simple moving average, which indicates short-term, mid-term and long-term uptrend.

On February 08, Sasol Limited announced:

Shareholders are advised that Sasol's headline earnings per share for the six months ended 31 December 2012 are expected to increase by between 0% and 5%, and earnings per share for the six months ended 31 December 2012 are expected to decrease by between 10% and 20%, compared to the prior comparable period. The decline in the earnings per share is due to the impairment of our share of the investment in Arya Sasol Polymers Company, which is detailed further below.

Despite the expected EPS decrease by between 10% and 20% for the six months ended December 31, 2012, the compelling valuation metrics, the very rich dividend, and fact that the stock is in an uptrend are all factors that make SSL stock quite attractive.

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Chart: finviz.com

Solar Senior Capital Ltd. (NASDAQ:SUNS)

Solar Senior Capital Ltd. is a business development company specializing in investments in leveraged, middle-market companies in the United States.

Solar Senior Capital has no debt at all, and it has a very low trailing P/E of 10.42 and a low forward P/E of 13.20. The forward annual dividend yield is very high at 7.42%, and the payout ratio is at 88%.

The stock price is 1.48% above its 20-day simple moving average, 2.45% above its 50-day simple moving average and 10.80% above its 200-day simple moving average, which indicates short-term, mid-term and long-term uptrend.

SUNS will report its latest quarterly financial results on February 24. SUNS is expected to post a profit of $0.35 a share, a 6.1% rise from the company's actual earnings for the same quarter a year ago. The reported results will probably affect the stock price in the short term.

The compelling valuation metrics, the very rich dividend, and fact that the stock is in an uptrend are all factors that make SUNS stock quite attractive.

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Chart: finviz.com

Source: 4 High-Yielding Dividend Stocks With A Low Debt That Are In Uptrend