Seeking Alpha
, Portfolio123 (1,577 clicks)
Long only, value, research analyst, dividend investing
Profile| Send Message|
( followers)  

I have searched for highly profitable financial companies that pay very rich dividends and that have raised their payouts at a high rate for the last five years. Those stocks would have to show also a low trailing and forward P/E ratio and good earnings growth prospects. I also looked for companies that are in a short-term, mid-term and long-term uptrend. Stocks in an uptrend are performing well and are in a buying mode.

I have created a screening method that shows stock candidates following this criteria. Nonetheless, the screening method should only serve as a basis for further research. All the data for this article was taken from Yahoo Finance and finviz.com. The screen's formula requires all stocks to comply with all of the following:

  1. The forward dividend yield is greater than 4.0%.
  2. The payout ratio is less than 90%.
  3. The annual rate of dividend growth over the past five years is greater than 9%.
  4. Trailing P/E is less than 15.
  5. Forward P/E is less than 16.
  6. Average annual earnings growth estimates for the next five years is greater or equal 5%.
  7. The stock price is above the 20-day simple moving average (short-term uptrend).
  8. The stock price is above the 50-day simple moving average (mid-term uptrend).
  9. The stock price is above the 200-day simple moving average (long-term uptrend).

After running this screen on July 15, 2013 before the market open, I discovered the following four stocks:

(click to enlarge)

(click to enlarge)

(click to enlarge)

(click to enlarge)

Main Street Capital Corporation (NYSE:MAIN)

Main Street Capital Corporation is a business development company specializing in equity, equity related, and debt investments in small and lower middle market companies.

Main Street Capital has a low debt (total debt to equity is 0.55), and it has a very low trailing P/E of 8.93 and a low forward P/E of 13.76. The average annual earnings growth estimates for the next five years is at 7.0%. The forward annual dividend yield is very high at 6.25%, and the payout ratio is at 53%. The annual rate of dividend growth for the last year was at 10.38%, for the last three years was at 5.37%, and over the past five years was at 9.22%.

MAIN's stock price is 7.09% above its 20-day simple moving average, 3.94% above its 50-day simple moving average and 0.84% above its 200-day simple moving average. That indicates a short-term, mid-term and long-term uptrend.

MAIN will report its latest quarterly financial results in July. MAIN is expected to post a profit of $0.50 a share, a 6.4% 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 very low multiples, the very 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 MAIN stock quite attractive.

(click to enlarge)

Chart: finviz.com

Safety Insurance Group Inc. (NASDAQ:SAFT)

Safety Insurance Group, Inc. provides private passenger automobile insurance products primarily in Massachusetts and New Hampshire.

Safety Insurance Group has no debt at all, and it has a low trailing P/E of 14.88 and a forward P/E of 15.90. The price to free cash flow for the trailing 12 months is very low at 14.04, and the average annual earnings growth estimates for the next five years is very high at 15%. The forward annual dividend yield is very high at 4.50%, and the payout ratio is at 64%. The annual rate of dividend growth for the last year was at 10.00%, for the last three years was at 11.20%, and over the past five years was at 11.10%.

SAFT's stock price is 5.95% above its 20-day simple moving average, 4.66% above its 50-day simple moving average and 13.19% above its 200-day simple moving average. That indicates a short-term, mid-term and long-term uptrend.

SAFT will report its latest quarterly financial results on July 29. SAFT is expected to post a profit of $0.81 a share, a 25% decline from the company's actual earnings for the same quarter a year ago.

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

(click to enlarge)

Chart: finviz.com

Triangle Capital Corporation (NYSE:TCAP)

Triangle Capital Corporation is a business development company specializing in private equity and mezzanine investments.

Triangle Capital Corporation has a very low trailing P/E of 11.79 and a very low forward P/E of 11.55. The forward annual dividend yield is very high at 7.60%, and the payout ratio is at 87%. The annual rate of dividend growth for the last year was at 14.12%, for the last three years was at 7.63%, and over the past five years was very high at 15.56%.

TCAP's stock price is 2.98% above its 20-day simple moving average, 1.67% above its 50-day simple moving average and 13.19% above its 200-day simple moving average. That indicates a short-term, mid-term and long-term uptrend.

TCAP will report its latest quarterly financial results in July. TCAP is expected to post a profit of $0.57 a share, a 12% rise from the company's actual earnings for the same quarter a year ago.

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

(click to enlarge)

Chart: finviz.com

Washington Banking Co. (NASDAQ:WBCO)

Washington Banking Company operates as the bank holding company for Whidbey Island Bank that provides commercial banking services.

Washington Banking has a very low debt (total debt to equity is only 0.14) and it has a low trailing P/E of 13.75 and a low forward P/E of 13.29. The price to free cash flow for the trailing 12 months is extremely low at 4.33, and the average annual earnings growth estimates for the next five years is at 8%. The forward annual dividend yield is quite high at 4.04%, and the payout ratio is only 49%. The annual rate of dividend growth for the last year was very high at 65%, for the last three years was also very high at 22.39%, and over the past five years was very high at 16.80%.

WBCO's stock price is 5.70% above its 20-day simple moving average, 7.37% above its 50-day simple moving average and 9.31% above its 200-day simple moving average. That indicates a short-term, mid-term and long-term uptrend.

WBCO will report its latest quarterly financial results on July 24. WBCO is expected to post a profit of $0.28 a share, a 56% rise from the company's actual earnings for the same quarter a year ago.

The compelling valuation metrics, the very 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 WBCO stock quite attractive.

(click to enlarge)

Chart: finviz.com

Source: 4 High-Yield Financial Stocks That Have Raised Payouts By 9% A Year For The Last 5 Years