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In this article, I will be screening for companies that have large portions of outstanding shares of stock owned by insiders, institutions, and pay a dividend. In my screen, I will include other fundamental criteria as well, which I will use to refine my list of stocks to include only the strongest ones. The reason for screening for companies with large insider ownership is that management can execute the strategy they feel is best for the company and shareholders, without other parties like activist shareholders trying to force their hand. The reason for screening for companies with large institutional ownership is that institutions could provide a floor under the stock price. There is the risk that a institutional shareholders could dump shares and the selling would be greater than a stock with lower institutional ownership. Because of that risk, adding high insider ownership, and fundamental criteria I believe lowers the risk of the stock having a significant sell-off. Below I will detail my screening criteria I used in my search, using the FinViz.com stock screener.

Screener Criteria:

Base Screen Criteria:

Market Cap: Over $50 Million

Industry: Stock Only (Ex-Funds)

Insider Ownership: >10%

Institutional Ownership: >30%

Dividend Yield: Positive

After entering the above four criteria in the screener, I found 200 stocks met the criteria. To refine my list of 200 stocks down to something more manageable I wanted to add criteria about current insider buying, institutional buying, and short selling.

Criteria Round 2:

Insider Transactions: Positive

Institutional Transactions: Positive

Float Short: Under 5%

After I added the three above criteria to my original criteria, my list of stocks that met all the criteria was down to 29 stocks. Definitely more manageable, but I wanted to go further, and only include companies that were growing earning now and projected to grow earnings in the future. I also wanted companies that have shown they were able to grow earnings and sales in the last five years when markets have been down, and then back up.

Criteria Round 3:

EPS Growth This Year: Positive

EPS Growth Next Year: Positive

EPS Growth Past 5 Years: Positive

Sales Growth Past 5 Years: Positive

After the final round of screening, four stocks met all the criteria, so I will focus on those four below. I will provide a short business description for each, as well as a view of the fundamentals and growth prospects for each company, and a dividend history for each stock. Data for fundamental statistics is from the Finviz.com screener, and dividend history will be from each stocks page on Dividend Channel.com

Screen Results

Las Vegas Sands Corp (LVS)

Company Description:

"Las Vegas Sands Corp. is a hotel, gaming, and retail mall company headquartered in Las Vegas, Nevada. The company owns The Venetian Resort Hotel Casino, the Sands Expo and Convention Center, Venetian Interactive, an internet based venture, and Venetian Macao Limited, a developer of multiple casino hotel-resort properties in The People's Republic of China's Special Administrative Region of Macao." [Zacks LVS Overview]

Fundamental View:

Las Vegas Sands forward PE is greater than its projected growth rate for next year, therefore I believe shares of Las Vegas Sands are overstretched at current levels. However, Las Vegas Sands could be considered once a market pullback occurs because of the strong underlying fundamentals of the company. Unlike the other companies in my screen Las Vegas Sands is the only company that has a dividend payout ratio higher than 50%, so compared to the other stocks from the screen, Las Vegas Sands has less room to raise its dividend.

Insider Ownership

25.31%

Institutional Ownership

39.02%

Projected EPS Growth next year

15.67%

Forward PE

17.25

Dividend Payout Ratio

75.67%

Dividend History:

Las Vegas Sands just in the last year started paying a dividend of $0.25/share during the 1st quarter of 2012. At the end of 2012, Las Vegas Sands paid a $2.75/share special dividend to return cash to shareholder before the fiscal cliff to take advantage of lower tax rates on dividends. Then for the first quarter of 2013, Las Vegas Sands announced it was increasing its dividend from $0.25/share to $0.35/share. Current Yield: 2.62%

BlackRock, Inc. (BLK)

Company Description:

"BlackRock, Inc. is one of the largest investment management firms in the United States. The company offers a variety of investment products to institutional and individual investors in the U.S. and internationally." [Zacks BLK Overview]

Fundamental View:

Blackrock is in a similar situation to Las Vegas Sands, because the forward PE of Blackrock is above its projected growth rate for next year. Therefore, I would wait for a market pullback to occur before considering purchasing shares. The dividend payout ratio is just under 43% so Blackrock has plenty of room to continue increasing its dividend as they have done in the past.

Insider Ownership

22.79%

Institutional Ownership

88.73%

Projected EPS Growth next year

12.72%

Forward PE

14.54

Dividend Payout Ratio

43.18%

Dividend History:

Blackrock has an extremely strong history of raising the dividend over the last decade. Since 2003, when Blackrock paid a dividend of $0.20/share, they have increased the dividend to a current level of $1.68/share. The increase from 2003 to its current level is a 740% increase in the dividend in a decade, along with no dividend cuts during the financial crisis, which is impressive for a financial stock. Current Yield: 2.62%

CECO Environmental Corp. (CECE)

Company Description:

"CECO ENVIRONMENTAL CORP. manufactures and sells, primarily in the United States, of fiber bed mist eliminators to the chemical, printing, plating, power generation, food processing, waste incineration, and textile industries." [Zacks CECE Overview]

Fundamental View:

Ceco Environmental has a forward PE that is less than its projected growth rate for next year, which suggests the stock, could have some value going forward. Along with being undervalued based on future growth prospects, Ceco Environmental has the lowest dividend payout ratio of the four companies in my screen, and has the highest insider ownership, so I Ceco should continue raising the dividend over time.

Insider Ownership

45.18%

Institutional Ownership

49.19%

Projected EPS Growth next year

18.39%

Forward PE

12.7

Dividend Payout Ratio

19.33%

Dividend History:

Ceco Environmental has only a two-year history of paying dividends but it is a good history of paying dividends. Starting in 2011, Ceco Environmental paid a dividend of $0.025/share, and has now increased its dividend at the start of this year to $0.05/share, which is a doubling of the dividend in a two-year period. Current Yield: 1.53%

MicroFinancial Incorporated (MFI)

Company Description:

"Micro Financial Incorporated is a specialized commercial finance company that leases and rents microticket equipment and provides other financing services. MicroFinancial Inc. formerly Boyle Leasing Technologies, through subsidiary TimePayment, provides leasing and financing services through vendors to small businesses." [Zacks MFI Overview]

Fundamental View:

Micro Financial according to my ratio of projected EPS growth to forward PE is the most undervalued. The forward PE is almost half of the projected growth rate for next year, which suggests shares could have plenty of upside in the future. Micro Financial has a low dividend payout ratio and can easily support raising the dividend.

Insider Ownership

33.32%

Institutional Ownership

41.71%

Projected EPS Growth next year

18.67%

Forward PE

9.76

Dividend Payout Ratio

36.82%

Dividend History:

Mirco Financial has had an extremely stable dividend over the last five years. They have raised the dividend from $.05/share in 2007 to a current level $.06/share, not a large increase but still an increase and they maintained and did not cut the dividend during the financial crisis. Current Yield: 3.03%

Closing Thoughts

Each of the companies I found using my screen criteria have shown they are consistent dividend paying companies that have the support of insiders and institutions. Three of the four stocks I found from my screen have a dividend yield that is higher than a ten-year treasury bond, and that is desirable in the current low rate environment. Because of these factors, I believe all four of the companies are worthy of a further look.

Disclaimer

Source: 4 Companies That Have The Support Of Insiders And Institutions