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, Portfolio123 (2,290 clicks)
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I have searched for very profitable companies that pay rich dividends and have raised their payouts at a 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 3.20%.
  2. The payout ratio is less than 90%.
  3. The annual rate of dividend growth over the past five years is greater than 5%.
  4. The annual rate of EPS growth over the past five years is greater than 9%.
  5. The annual rate of revenue growth over the past five years is greater than 2%.
  6. Trailing P/E is less than 18.

After running this screen on August 08, 2013, before the market open, I discovered the following three stocks:


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CA Technologies (CA, Inc.), (NASDAQ:CA)

CA Technologies, together with its subsidiaries, provides enterprise information technology management software and solutions that help customers manage and secure IT environments in the United States and internationally.

CA Technologies has a very low debt (total debt to equity is only 0.23), and it has a very low trailing P/E of 13.30 and a very low forward P/E of 12.03. The price to free cash flow for the trailing 12 months is at 23.62, and the average annual earnings growth estimates for the next five years is quite high at 12.50%. The forward annual dividend yield is quite high at 3.27%, and the payout ratio is only 43%. The annual rate of dividend growth over the past three years was very high at 84.20% and over five years was also very high at 44.27%.

CA Technologies has recorded strong EPS and dividend growth during the last year, the last three years and the last five years, as shown in the table below.

Source: Portfolio123

The CA stock price is 2.56% above its 20-day simple moving average, 6.32% above its 50-day simple moving average and 21.72% above its 200-day simple moving average. That indicates a short-term, mid-term and long-term uptrend.

On July 24, CA Technologies reported its first-quarter fiscal year 2014 results, which beat EPS expectations by $0.04 and beat on revenues.

First-Quarter Highlights

  • GAAP EPS Grows 47 Percent in Constant Currency and 43 Percent as Reported
  • Non-GAAP EPS Grows 25 Percent in Constant Currency and 24 Percent as Reported
  • Revenue Decreases 1 Percent in Constant Currency and as Reported
  • Cash Flow From Operations Decreases 83 Percent in Constant Currency and 94 Percent as Reported
  • Reaffirms FY 2014 Outlook

In the report, CA Technologies Chief Executive Officer Mike Gregoire said:

I am pleased with our performance in the first quarter and the start we made to fiscal year 2014. We did better than expected on the revenue line and were able to capitalize on organizational efficiencies, expense management and a tax benefit to drive earnings growth. Our cash flow from operations was down, but that was expected and we are confident in meeting our full year outlook in all areas.

The compelling valuation metrics, the rich dividend, the good first-quarter results, 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 CA stock quite attractive.


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Chart: finviz.com

Plains All American Pipeline, L.P. (NYSE:PAA)

Plains All American Pipeline, L.P., through its subsidiaries, engages in the transportation, storage, terminaling, and marketing of crude oil and refined products in the United States and Canada.

Plains All American Pipeline has a trailing P/E of 17.32 and a forward P/E of 18.88. The price-to-sales ratio is very low at 0.38, and the average annual earnings growth estimates for the next five years is at 5.10%. The forward annual dividend yield is high at 4.29%, and the payout ratio is at 68%. The annual rate of dividend growth over the past five years was at 5.15%.

Plains All American Pipeline recorded strong revenue, EPS and dividend growth during the last year, the last three years and the last five years, as shown in the table below.

Source: Portfolio123

On August 05, Plains All American Pipeline reported its second-quarter results, which beat EPS expectations by $0.03 and beat on revenues. In the report, Greg L. Armstrong, Chairman and CEO of Plains All American said:

PAA delivered solid second-quarter results, exceeding the high-end of our guidance and in line with our updated outlook provided in late May. These results include an approximate $25 million adverse impact associated with certain operational issues that occurred during the second quarter of 2013. This performance was driven by continued strong fundamentals and favorable market conditions, albeit less favorable than experienced during the first quarter of 2013 or the second quarter of 2012. We have increased the midpoint of our 2013 adjusted EBITDA guidance by $30 million to $2.19 billion, incorporating our strong performance to date and an assumed return to baseline performance levels in our Supply and Logistics segment in the second half of the year.

The rich dividend, the good second-quarter results, and the fact that the company consistently has raised dividend payments, are all factors that make PAA stock quite attractive.


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Chart: finviz.com

Terra Nitrogen Company, L.P. (NYSE:TNH)

Terra Nitrogen Company, L.P. engages in the production and sale of nitrogen fertilizer products.

Terra Nitrogen Company has no debt at all, and it has a very low trailing P/E of 12.02. The forward annual dividend yield is very high at 8.53%, and the payout ratio is at 87%. The annual rate of dividend growth over the past five years was very high at 17.15%.

The TNH stock price is 0.32% above its 20-day simple moving average, 2.73% above its 50-day simple moving average and 2.25% above its 200-day simple moving average. That indicates a short-term, mid-term and long-term uptrend.

Terra Nitrogen recorded strong revenue, EPS and dividend growth during the last year, the last three years and the last five years, as shown in the table below.

Source: Portfolio123

On August 06, Terra Nitrogen reported its second-quarter results. The company reported net earnings of $149.3 million on sales of $215.4 million for the quarter ended June 30, 2013. This compares to net earnings of $154.8 million on sales of $195.6 million for the 2012 second quarter. Net income allocable to common units was $84.0 million ($4.54 per common unit) and $86.5 million ($4.67 per common unit) for the 2013 and 2012 second quarters, respectively.

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 TNH stock quite attractive.


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Chart: finviz.com

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