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, Portfolio123 (2,332 clicks)
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I have searched for profitable companies that pay very rich dividends and 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 4.4%.
  2. The payout ratio is less than 70%.
  3. The annual rate of dividend growth over the past five years is greater than 7%.
  4. Trailing P/E is less than 15.
  5. Forward P/E is less than 14.
  6. Average annual earnings growth estimates for the next five years is greater or equal 10%.

After running this screen on July 18, 2013, before the market open, I discovered the following three stocks:

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Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX)

Freeport-McMoRan Copper & Gold Inc. engages in the exploration of mineral resource properties.

Freeport-McMoRan has a low debt (total debt to equity is 0.55), and it has a very low trailing P/E of 9.16 and even lower forward P/E of 7.75. The PEG ratio is extremely low at 0.69, and the average annual earnings growth estimates for the next five years is quite high at 13.3%. The forward annual dividend yield is very high at 4.45%, and the payout ratio is only 41%. The annual rate of dividend growth over the past five years was at 7.40%.

FCX will report its latest quarterly financial results on July 22. FCX is expected to post a profit of $0.44 a share, a 45% 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 very low multiples, the very rich dividend, and the fact that the company consistently has raised dividend payments, are all factors that make FCX stock quite attractive.

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Chart: finviz.com

Lorillard, Inc. (NYSE:LO)

Lorillard, Inc. manufactures and sells cigarettes in the United States.

Lorillard has a low trailing P/E of 14.87 and a low forward P/E of 13.21. The average annual earnings growth estimates for the next five years is quite high at 10.75%. The forward annual dividend yield is very high at 4.76%, and the payout ratio is at 68%. The annual rate of dividend growth over the past five years was very high at 13.08%.

LO's stock price is 3.63% above its 20-day simple moving average, 5.78% above its 50-day simple moving average and 15.67% above its 200-day simple moving average. That indicates a short-term, mid-term and long-term uptrend.

LO will report its latest quarterly financial results on July 24. LO is expected to post a profit of $0.80 a share, a 10% rise 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 LO stock quite attractive.

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Chart: finviz.com

TAL International Group, Inc. (NYSE:TAL)

TAL International Group, Inc. engages in leasing intermodal containers and chassis worldwide.

TAL International has a very low trailing P/E of 10.61 and a very low forward P/E of 9.00. The PEG ratio is quite low at 1.06, and the average annual earnings growth estimates for the next five years is quite high at 10.0%. The forward annual dividend yield is very high at 6.22%, and the payout ratio is at 61%. The annual rate of dividend growth over the past five years was very high at 10.30%.

TAL's stock price is 0.03% above its 20-day simple moving average, 0.63% above its 50-day simple moving average and 9.56% above its 200-day simple moving average. That indicates a short-term, mid-term and long-term uptrend.

TAL will report its latest quarterly financial results on July 23. TAL is expected to post a profit of $1.07 a share, a 7% 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 TAL stock quite attractive.

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Chart: finviz.com

Source: 3 High-Yielding Stocks That Have Raised Payouts By At Least 7% A Year For The Last 5 Years