3 Good Yielding Stocks That Have Raised Payouts By At Least 9% A Year For The Last 5 Years

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Includes: HP, JNS, POT
by: Arie Goren

I have searched for profitable companies that pay rich dividends and that have raised their payouts at a very high rate for the last five years. Companies that regularly increase dividends are generally more stable. Increasing dividends is the assurance that dividend income retains its purchasing power over time.

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 3.0%.
  2. The payout ratio is less than 35%.
  3. The annual rate of dividend growth over the past five years is greater than 9%.
  4. Trailing P/E is less than 16.
  5. Forward P/E is less than 12.
  6. Average annual earnings growth estimates for the next five years is greater than 4%.
  7. Debt to equity ratio is less than 0.40.

After running this screen on July 07, 2013, I discovered the following three stocks:

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Helmerich & Payne, Inc. (NYSE:HP)

Helmerich & Payne, Inc. engages in the contract drilling of oil and gas wells.

Helmerich & Payne has a very low debt (total debt to equity is only 0.06) and it has a very low trailing P/E of 11.61 and a very low forward P/E of 11.67. The current ratio is quite high at 3.10, and the average annual earnings growth estimates for the next five years are at 4.20%. The forward annual dividend yield is quite high at 3.05%, and the payout ratio is only 8%. The annual rate of dividend growth over the past five years was quite high at 9.24%.

The HP stock price is 4.27% above its 20-day simple moving average, 5.10% above its 50-day simple moving average and 13.45% above its 200-day simple moving average. That indicates a short-term, mid-term and long-term uptrend.

HP will report its latest quarterly financial results on July 22. HP is expected to post a profit of $1.34 a share, a 2% decline 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 rich dividend, the fact that the company consistently has raised dividend payments, and the fact that the stock is in an uptrend are all factors that make HP stock quite attractive.

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Chart: finviz.com

Janus Capital Group, Inc. (NYSE:JNS)

Janus Capital Group, Inc. is a publicly owned asset management holding company with approximately $167.7 billion in assets under management.

Janus Capital has a low debt (total debt to equity is only 0.38) and it has a trailing P/E of 15.07 and a very low forward P/E of 11.72. The price to free cash flow for the trailing 12 months is very low at 10.85, and the average annual earnings growth estimates for the next five years are quite high at 10%. The forward annual dividend yield is quite high at 3.20%, and the payout ratio is only 31%. The annual rate of dividend growth over the past five years was extremely high at 41.88%.

The JNS stock price is 3.10% above its 20-day simple moving average and 1.55% above its 50-day simple moving average. That indicates a short-term and mid-term uptrend.

JNS will report its latest quarterly financial results on July 22. JNS is expected to post a profit of $0.16 a share, a 23% rise from the company's actual earnings for the same quarter a year ago.

The very low multiples, the rich dividend, the fact that the company consistently has raised dividend payments, and the fact that the stock is in an uptrend are all factors that make JNS stock quite attractive.

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Chart: finviz.com

Potash Corp. of Saskatchewan, Inc. (NYSE:POT)

Potash Corporation of Saskatchewan Inc., together with its subsidiaries, produces and sells fertilizers and related industrial and feed products primarily in the United States and Canada.

Potash has a low debt (total debt to equity is only 0.39) and it has a trailing P/E of 15.59 and a very low forward P/E of 11.82. The average annual earnings growth estimates for the next five years are at 7.68%. The forward annual dividend yield is quite high at 3.67%, and the payout ratio is only 34%. The annual rate of dividend growth over the past five years was extremely high at 43.10%.

POT will report its latest quarterly financial results in July. POT is expected to post a profit of $0.82 a share, a 12% decline from the company's actual earnings for the same quarter a year ago.

All these factors -- the low multiples, the rich dividend, and the fact the company consistently has raised dividend payments -- make POT stock quite attractive.

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Chart: finviz.com

Disclosure: I am long JNS, POT. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.