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, Portfolio123 (3,040 clicks)
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I have searched for profitable companies that pay very rich dividends, and that are in a short-term uptrend, in a mid-term uptrend and in a long-term uptrend. Stocks in an uptrend are performing well and are in a buying mode. Those stocks would also have to show a very low debt.

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 4.3%.
  2. The payout ratio is less than 90%.
  3. Long-term debt to equity is less than 0.20.
  4. Forward P/E is less than 18.
  5. Average annual earnings growth estimates for the next five years is greater than 5%.
  6. Stock price is above 20-day simple moving average (short-term uptrend).
  7. Stock price is above 50-day simple moving average (mid-term uptrend).
  8. Stock price is above 200-day simple moving average (long-term uptrend).

After running this screen on July 29, 2013, before the market open, I discovered the following four stocks:


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Ares Capital Corporation (NASDAQ:ARCC)

Ares Capital Corporation is a private equity firm specializing in acquisition, recapitalization, mezzanine debt, restructurings, rescue financing, and leveraged buyout transactions of middle market companies.

Ares Capital has no long-term debt at all, and it has a very low trailing P/E of 8.57 and a very low forward P/E of 10.61. The PEG ratio is quite low at 1.07, and the average annual earnings growth estimates for the next 5 years is quite high at 8%. The forward annual dividend yield is very high at 8.61%, and the payout ratio is at 73%. The annual rate of dividend growth over the past three years was at 0.68% and over the past five years was negative at -2.01%.

The ARCC stock price is 1.22% above its 20-day simple moving average, 2.94% above its 50-day simple moving average and 4.01% above its 200-day simple moving average. That indicates a short-term, mid-term and long-term uptrend.

Analysts like the stock. Among the 16 analysts covering the stock, six rate it as a strong buy, six rate it as a buy, and four rate it as a hold.

Ares Capital has recorded strong revenue and EPS growth during the last year, the last three years and the last five years, as shown in the table below.

Source: Portfolio123

ARCC will report its latest quarterly financial results on August 06. ARCC is expected to post a profit of $0.39 a share, a 2.5% 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 very rich dividend, and the fact that the stock is in an uptrend are all factors that make ARCC stock quite attractive.


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Chart: finviz.com

Bank of Montreal (NYSE:BMO)

Bank of Montreal, together with its subsidiaries, provides various retail banking, wealth management, and investment banking products and services in North America and internationally.

Bank of Montreal has a very low debt (total debt to equity is only 0.15), and it has a very low trailing P/E of 11.01 and a very low forward P/E of 10.33. The PEG ratio is quite low at 1.10, and the average annual earnings growth estimates for the next five years is quite high at 10%. The forward annual dividend yield is very high at 4.51%, and the payout ratio is at 49%. The annual rate of dividend growth over the past three years was at 4.78% and over the past five years was at 2.15%.

The BMO stock price is 5.76% above its 20-day simple moving average, 6.86% above its 50-day simple moving average and 5.98% above its 200-day simple moving average. That indicates a short-term, mid-term and long-term uptrend.

Bank of Montreal has recorded strong revenue and EPS growth during the last year, the last three years and the last five years, as shown in the table below.

Source: Portfolio123

BMO will report its latest quarterly financial results in August. BMO is expected to post a profit of $1.54 a share, a 3.4% 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, and the fact that the stock is in an uptrend -- make BMO stock quite attractive.


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Chart: finviz.com

Electro Rent Corporation (NASDAQ:ELRC)

Electro Rent Corporation engages in the rental, lease, and sale of new and used electronic test and measurement equipment primarily for use in the aerospace, defense, telecommunications, electronics, industrial, and semiconductor markets in the United States and internationally.

Electro Rent Corporation has a very low debt (total debt to equity is only 0.07), and it has a trailing P/E of 19.94 and a forward P/E of 17.33. 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 4.31%, and the payout ratio is at 85%. The annual rate of dividend growth over the past three years was quite high at 10.06% and over the past five years was also high at 12.20%.

The ELRC stock price is 1.31% above its 20-day simple moving average, 5.28% above its 50-day simple moving average and 16.34% above its 200-day simple moving average. That indicates a short-term, mid-term and long-term uptrend.

Electro Rent Corporation has recorded strong revenue, EPS and dividend growth during the last three years and the last five years, as shown in the table below.

Source: Portfolio123

ELRC will report its latest quarterly financial results on August 05. ELRC is expected to post a profit of $0.24 a share, a 8% decline from the company's actual earnings for the same quarter a year ago.

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


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Chart: finviz.com

Garmin Ltd. (NASDAQ:GRMN)

Garmin Ltd., designs, develops, manufactures, and markets hand-held, portable and fixed-mount global positioning system (NYSE:GPS).

Garmin has no debt at all, and it has a low trailing P/E of 13.30 and a forward P/E of 15.40. The current ratio is very high at 3.80, and the average annual earnings growth estimates for the next five years is at 5.43%. The forward annual dividend yield is very high at 4.89%, and the payout ratio is at 63%. The annual rate of dividend growth for the last three years was very high at 33.89%, and over the past five years was also very high at 19.14%.

The GRMN stock price is 1.65% above its 20-day simple moving average, 4.11% above its 50-day simple moving average and 1.70% above its 200-day simple moving average. That indicates a short-term, mid-term and long-term uptrend.

GRMN will report its latest quarterly financial results on July 31. GRMN is expected to post a profit of $0.65 a share, a 34% decline from the company's actual earnings for the same quarter a year ago.

All these factors -- 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 GRMN stock quite attractive.


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Chart: finviz.com

Disclosure: I am long ARCC. 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.

Source: 4 High-Yielding Stocks With Low Debt In An Uptrend