3 High-Yielding Stocks With A Low Payout Ratio Currently In An Uptrend

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 |  Includes: FDUS, MAIN, TCAP
by: Arie Goren

I have searched for very profitable stocks that pay very rich dividends with a low payout ratio that are currently in an uptrend. Those stocks would also have to show a low debt, and a low forward P/E ratio.

I used the Portfolio123's powerful screener to perform the search. The screen's formula requires all stocks to comply with all following demands:

  1. The stock does not trade over-the-counter (OTC).
  2. Market cap is greater than $100 million.
  3. Price is greater than 1.00.
  4. Dividend yield is greater than 5.0%.
  5. The payout ratio is less than 100%.
  6. Total debt to equity is less than 1.
  7. Forward P/E is less than 20.
  8. 20-Day Simple Moving Average - Price above SMA20
  9. 50-Day Simple Moving Average - Price above SMA50
  10. 200-Day Simple Moving Average - Price above SMA200

As a result, 12 stocks came out, as shown in the chart below (the number of stocks left after each demand can be seen in the chart). In this article, I describe the three stocks with the lowest payout ratio among the twelve stocks. In my opinion, these stocks can reward an investor a capital gain along with a gratifying income. I recommend readers use this list of stocks as a basis for further research. All the data for this article was taken from Portfolio123 and finviz.com, on October 15, before the market open.

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Fidus Investment (NASDAQ:FDUS)

Fidus Investment operates as an externally managed, closed-end, and non-diversified management investment company.

Fidus Investment has a very low trailing P/E of 14.03 and a very low forward P/E of 11.00. The price to book value is at 1.23, and the average annual earnings growth estimates for the next five years is at 7.0%. The forward annual dividend yield is very high at 7.68%, and the payout ratio is at 60%.

The FDUS stock price is 2.70% above its 20-day simple moving average, 4.02% above its 50-day simple moving average and 10.46% above its 200-day simple moving average. That indicates a short-term, mid-term and long-term uptrend.

Analysts recommend the stock. All four analysts covering the stock rate it as a strong buy.

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

Source: Portfolio123

Fidus Investment will report its latest quarterly financial results in November. FDUS is expected to post a profit of $0.38 a share, a $0.02 decline from the company's actual earnings for the same quarter a year ago.

Fidus Investment has recorded strong revenue and EPS growth, and considering its compelling valuation metrics, and the fact that the stock is in an uptrend, FDUS stock still has room to go up. Furthermore, the very rich dividend represents a gratifying income.

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Chart: finviz.com

Main Street Capital (NYSE:MAIN)

Main Street Capital 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 very low trailing P/E of 9.63 and a low forward P/E of 13.66. The average annual earnings growth estimates for the next five years is at 7.0%. The forward annual dividend yield is very high at 6.35%, and the payout ratio is at 57.6%. 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%.

The MAIN stock price is 0.94% above its 20-day simple moving average, 1.90% above its 50-day simple moving average and 2.45% above its 200-day simple moving average. That indicates a short-term, mid-term and long-term uptrend.

Main Street Capital 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

Main Street Capital will report its latest quarterly financial results in November. MAIN is expected to post a profit of $0.51 a share, a 4% rise from the company's actual earnings for the same quarter a year ago.

On August 8, Main Street Capital reported its second-quarter financial results, which beat EPS expectations by $0.05.

Second-Quarter 2013 Highlights

  • Total investment income of $27.8 million, representing a 33% increase from the second quarter of 2012
  • Net investment income of $17.8 million (or $0.51 per share), representing a 39% increase from the second quarter of 2012
  • Distributable net investment income of $18.4 million (or $0.53 per share), representing a 38% increase from the second quarter of 2012
  • Net Asset Value of $18.72 per share at June 30, 2013, which represents an increase of $0.48 per share, or 3%, after excluding the effect of the $0.35 per share special dividend paid in January 2013, compared to $18.59 per share at December 31, 2012
  • Paid regular monthly dividends of $0.465 per share, or $0.155 per share for each of April, May and June 2013, representing an 11% increase compared to the second quarter of 2012 regular monthly dividends
  • Declared regular monthly dividends of $0.465 per share, or $0.155 per share for each of July, August and September 2013, representing a 7% increase compared to the third quarter of 2012
  • Declared semi-annual supplemental cash dividend of $0.20 per share payable in July 2013

Main Street Capital has recorded strong revenue, EPS and dividend growth during the last three years and the last five years; the annual rate of revenue growth over the past five years was at 48.64%, the EPS growth was at 63.73, and the dividend growth was at 9.22%

Since MAIN valuation metrics are very low, and the company growth prospects are solid, a capital gain can be expected along the very rich dividend.

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Chart: finviz.com

Triangle Capital (NYSE:TCAP)

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

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Source: company presentation

Triangle Capital has a very low trailing P/E of 11.28 and a very low forward P/E of 12.34. The average annual earnings growth estimates for the next five years is at 5%. The forward annual dividend yield is very high at 7.28%, and the payout ratio is at 81%. 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 at 15.56%.

The TCAP stock price is 1.35% above its 20-day simple moving average, 2.04% above its 50-day simple moving average and 7.96% above its 200-day simple moving average. That indicates a short-term, mid-term and long-term uptrend.

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

Source: Portfolio123

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Source: Company presentation

TCAP will report its latest quarterly financial results on November 06. TCAP is expected to post a profit of $0.53 a share, an 8.6% decline from the company's actual earnings for the same quarter a year ago.

Triangle Capital has recorded strong revenue, dividend and EPS growth, and considering its compelling valuation metrics, and the fact that the stock is in an uptrend, TCAP stock still has room to go up. Furthermore, the very rich dividend represents a gratifying income.

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Chart: finviz.com

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.