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, Portfolio123 (1,591 clicks)
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I have searched for highly profitable companies that pay solid dividends, and that have raised their payouts at an exceptionally high rate for the last five years.

I consider that besides dividend yield, the consistency and the rate of raising dividend payments are the most crucial factors for dividend-seeking investors. Of course, it is also essential that a company has enough earnings growth prospects to maintain increasing dividend payments.

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. All the data for this article were taken from Yahoo Finance and finviz.com.

The screen's formula requires all stocks to comply with all following demands:

  1. The forward dividend yield is greater than 2.20%.
  2. The dividends per share TTM are greater than the five years' dividends per share average.
  3. The payout ratio is less than 65%.
  4. The annual rate of dividend growth over the past five years is greater than 24%.
  5. Forward P/E is less than 13.
  6. Average annual earnings growth estimates for the next five years is greater than 6%.

After running this screen on May 03, 2013, before the market open, I discovered the following four stocks:

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Ensco plc (NYSE:ESV)

Ensco plc provides offshore contract drilling services to the oil and gas industry worldwide.

Ensco has a low debt (total debt to equity is only 0.41), and it has a very low trailing P/E of 11.12 and an extremely low forward P/E of 7.47. The PEG ratio is exceptionally low at 0.41, and the average annual earnings growth estimates for the next five years is very high at 27.1%. The forward annual dividend yield is quite high at 3.43%, and the payout ratio is only 29%. The annual rate of dividend growth over the past five years was extremely high at 82%.

The ESV stock price is 4.07% above its 20-day simple moving average, 1.03% above its 50-day simple moving average and 2.03% above its 200-day simple moving average. That indicates a short-term, mid-term and long-term uptrend.

On April 29, Ensco plc reported its first-quarter 2013 financial results, which beat EPS expectations by $0.07 and was in-line on revenues. Earnings per share from continuing operations were $1.36 in first-quarter 2013, compared to $1.20 per share in first-quarter 2012. Discontinued operations primarily related to rigs and other assets no longer on the company's balance sheet resulted in a loss of $0.05 per share a year ago. Diluted earnings per share increased 18% year to year to $1.36 from $1.15 in first quarter 2012.

In the report, Chairman, President and Chief Executive Officer Dan Rabun stated:

During the quarter, ENSCO 8506, the final rig in the ENSCO 8500 Series®, began work for Anadarko in the U.S. Gulf of Mexico. ENSCO DS-6, our fourth Samsung DP3 drillship, commenced drilling operations for BP in Angola. In both cases, these ultra-deepwater assets started multi-year programs for repeat customers reinforcing the advantages that fleet standardization provides for us and our customers.

The compelling valuation metrics, the fact that the stock is in an uptrend, the rich dividend and the fact that the company consistently has raised dividend payments are all factors that make ESV stock quite attractive.

ESV Dividend Chart

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Chart: finviz.com

Broadridge Financial Solutions, Inc. (NYSE:BR)

Broadridge Financial Solutions, Inc., together with its subsidiaries, provides technology solutions to the financial services industry in the United States, Canada, and the United Kingdom.

Broadridge has quite a low debt (total debt to equity is at 0.67), and it has a trailing P/E of 23.92 and a very low forward P/E of 12.55. The average annual earnings growth estimates for the next five years is quite high at 10.50%. The forward annual dividend yield is at 2.84%, and the payout ratio is at 62%. The annual rate of dividend growth over the past five years was very high at 24.57%.

The BR stock is trading 4.28% above its 20-day simple moving average, 6.25% above its 50-day simple moving average, and 10.51% above its 200-day simple moving average. That indicates a short-term, mid-term and long-term uptrend.

Broadridge will report its latest quarterly financial results on May 07. BR is expected to post a profit of $0.33 a share, an 18% 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 very low multiples, the solid dividend, the fact that the company consistently has raised dividend payments and the fact that the stock is in an uptrend -- make BR stock quite attractive.

BR Dividend Chart

BR Dividend data by YCharts

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Chart: finviz.com

The Western Union Company (NYSE:WU)

The Western Union Company provides money movement and payment services worldwide.

Western Union has a very low trailing P/E of 9.19 and a very low forward P/E of 9.77. The price to free cash flow for the trailing 12 months is very low at 13.10, and the average annual earnings growth estimates for the next five years is quite high at 10.71%. The forward annual dividend yield is quite high at 3.22%, and the payout ratio is only 25%. The annual rate of dividend growth over the past five years was very high at 24.23%.

The WU stock is trading 5.32% above its 20-day simple moving average, 6.89% above its 50-day simple moving average, and 2.65% above its 200-day simple moving average. That indicates a short-term, mid-term and long-term uptrend.

On April 30, Western Union reported its first quarter 2013 financial results. In the report, President and Chief Executive Officer Hikmet Ersek said:

The first quarter provided signs that we are making progress with our strategies to strengthen consumer money transfer, increase customers and usage in business-to-business, and generate and deploy strong cash flow for our shareholders. Our strategic pricing investments in consumer money transfer are working, electronic channels continue to expand at a robust pace, and Business Solutions delivered solid results. As we stated in February, we expect 2013 to be a transitional year as we implement key strategic actions, but we remain confident these actions will drive revenue and profit growth in 2014 and beyond.

All these factors -- the very low multiples, the solid dividend, the fact that the company consistently has raised dividend payments and the fact that the stock is in an uptrend -- make WU stock quite attractive.

WU Dividend Chart

WU Dividend data by YCharts

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Chart: finviz.com

Agrium Inc. (NYSE:AGU)

Agrium Inc. engages in the retail of agricultural products and services.

Agrium has quite a low debt (total debt to equity is at 0.57), and it has a very low trailing P/E of 9.37 and a very low forward P/E of 9.13. The price-to-sales ratio is very low at 0.80, and the average annual earnings growth estimates for the next five years is at 6.10%. The forward annual dividend yield is at 2.23%, and the payout ratio is only 10%. The annual rate of dividend growth over the past five years was very high at 35.61%.

The company is trading 22% below its 52-week high and has 28.2% upside potential based on the consensus mean target price of $114.78.

The compelling valuation metrics, the 28.2% upside potential based on the consensus mean target price of $114.78, the solid dividend and the fact that the company consistently has raised dividend payments are all factors that make AGU stock quite attractive.

AGU Dividend Chart

AGU Dividend data by YCharts

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Chart: finviz.com

Source: 4 Solid-Yielding Stocks That Have Hiked Payouts By At Least 24% A Year For The Last 5 Years