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Are you looking for secure dividend income but don't know where to start your search? To help you along we created a list of profitable dividend stocks that are outperforming their industry peers.

We began with a universe of dividend stocks offering yields between 1-5%, allowing us to avoid unsustainable payouts.

Next, to make sure the dividend paying companies are well run, which serves as assurance payouts will continue, we screened for stocks outperforming their industry peers based on gross, operating and pre-tax margins.

As a testament to this outperformance, we then screened our stock list for names that have outperformed the market over the last quarter, with quarterly performance above 10%, and in all cases outperforming their industry average.

Finally, we analyzed the financials of the stocks on our list for strong sales trends, specifically comparing growth in revenue to growth in accounts receivable. Since accounts receivable is the portion of revenue not yet received, and there is no guarantee the money will ever be received, the smaller the portion of revenue made up of receivables, the healthier the company's revenue.

We selected only the names seeing faster growth in revenue than accounts receivable year-over-year, as well as accounts receivable comprising a smaller portion of current assets over the same time period.

The List

Our final list consisted of 3 stocks. Do you think these stocks pay sustainable dividend yields? Use this list as a starting point for your own analysis.

Interactive Chart: Press Play to compare changes in analyst changes over the last two years for the three stocks mentioned below.

1. Deluxe Corp. (DLX): Provides various personalized printed products, promotional products, and merchandising materials to small businesses and financial institutions in the United States, Canada, and Europe.

  • Market cap at $1.99B, most recent closing price at $39.30.
  • Revenue grew by 5.77% during the most recent quarter ($387.58M vs. $366.43M y/y). Accounts receivable grew by 1.98% during the same time period ($70.39M vs. $69.02M y/y). Receivables, as a percentage of current assets, decreased from 35.84% to 32.03% during the most recent quarter (comparing 3 months ending 2012-12-31 to 3 months ending 2011-12-31).
  • TTM gross margin at 69.9% vs. industry average at 42.82%. TTM operating margin at 20.68% vs. industry average at 13.92%. TTM pretax margin at 16.55% vs. industry average at 9.07%.
  • Dividend yield at 2.7%. Performance over last quarter at 18% vs service industry's average 7.48% quarterly performance.

2. Pinnacle West Capital Corporation (PNW): Provides retail and wholesale electric services primarily in the State of Arizona.

  • Market cap at $6.53B, most recent closing price at $59.93.
  • Revenue grew by 3.78% during the most recent quarter ($693.12M vs. $667.89M y/y). Accounts receivable grew by -3.69% during the same time period ($276.31M vs. $286.9M y/y). Receivables, as a percentage of current assets, decreased from 30.% to 27.47% during the most recent quarter (comparing 3 months ending 2012-12-31 to 3 months ending 2011-12-31).
  • TTM gross margin at 38.04% vs. industry average at 29.15%. TTM operating margin at 25.8% vs. industry average at 19.11%. TTM pretax margin at 19.88% vs. industry average at 13.2%.
  • Dividend yield at 3.7%. Performance over last quarter at 15%. vs utility industry's average 10.67% quarterly performance.

3. Southern Company (SO): Operates as a utility company that provides electric service in the southeastern United States.

  • Market cap at $42.25B, most recent closing price at $48.45.
  • Revenue grew by 0.19% during the most recent quarter ($3,703M vs. $3,696M y/y). Accounts receivable grew by -17.99% during the same time period ($1,208M vs. $1,473M y/y). Receivables, as a percentage of current assets, decreased from 23.49% to 19.6% during the most recent quarter (comparing 3 months ending 2012-12-31 to 3 months ending 2011-12-31).
  • TTM gross margin at 37.68% vs. industry average at 29.15%. TTM operating margin at 26.87% vs. industry average at 19.11%. TTM pretax margin at 22.67% vs. industry average at 13.2%.
  • Dividend yield at 4.1%. Performance over last quarter at 14% vs utility industry's average 10.67% quarterly performance.

Profitability data sourced from Fidelity, accounting data sourced from Google Finance, all other data sourced from Finviz.

Source: 3 Profitable, Outperforming Dividend Stocks With Strong Topline Growth