Many industrial companies are paying dividends. According to Portfolio123's database, 476 companies with a market cap greater than $100 million and price greater than $1.00 are classified as industrial. Among these companies 261 companies are paying dividends, and 36 of them have a dividend yield greater than 3.0%.
I have searched for very profitable industrial stocks that pay rich dividends with a low payout ratio. Those stocks would also have to show low debt.
I used the Portfolio123's powerful screener to perform the search. The screen's formula requires all stocks to comply with all following demands:
- The stock does not trade over-the-counter (OTC).
- Market cap is greater than $100 million.
- Price is greater than 1.00.
- Sector is Industrial.
- Dividend yield is greater than 3%.
- The payout ratio is less than 100%.
- Total debt to equity is less than 0.80.
- The nine stocks with the lowest payout ratio among all the stocks that complied with the first seven demands.
As a result, nine stocks came out, as shown in the charts 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 nine stocks. In my opinion, these stocks can reward an investor a capital gain along with a nice income. I recommend readers use this list of stocks as a basis for further research. All the data for this article were taken from Portfolio123 and finviz.com, on October 18, before the market open.
Houston Wire & Cable Company (HWCC)
Houston Wire & Cable Company, through its subsidiaries, provides wire and cable, hardware, and related services in the United States.
Source: company presentation
Houston Wire & Cable Company has a low debt (total debt to equity is 0.41), and it has a low trailing P/E of 14.71 and a low forward P/E of 13.12. The PEG ratio is very low at 0.98, and the average annual earnings growth estimates for the next five years is quite high at 15%. The forward annual dividend yield is quite high at 3.23%, and the payout ratio is only 41%. The annual rate of dividend growth over the past three years was at 1.92% and over the past five years was also very high at 19.14%.
The HWCC stock price is 2.04% above its 20-day simple moving average, 3.74% above its 50-day simple moving average and 4.62% above its 200-day simple moving average. That indicates a short-term, mid-term and long-term uptrend.
Houston Wire & Cable Company has recorded strong revenue and EPS growth during the last three years, as shown in the table below.
The company is penetrating to target markets, as shown in the chart below.
Source: company presentation
Houston Wire & Cable will report its latest quarterly financial results on November 12. HWCC is expected to post a profit of $0.23 a $0.01 decline from the company's actual earnings for the same quarter a year ago.
On August 6, Houston Wire & Cable reported its second-quarter results, which missed EPS expectations by $0.04 and missed on revenues.
Second-Quarter 2013 Highlights
- Sales of $99.3 million up 1.3% over Q2 2012
- Operating cash flow of $3.3 million
- Net income of $4.1 million
- Diluted EPS of $0.23 per share
- Debt decreased to $46.6 million, lowest level since Q1 2010
- Declared a dividend of $0.11 per share
Although Houston Wire & Cable missed, in its latest quarter report, wall street's expectations, the company has recorded revenue, EPS and dividend growth, and considering its compelling valuation metrics and its strong earnings growth prospects, HWCC stock can move higher. Furthermore, the rich dividend represents a nice income.
Risks to the expected capital gain and to the dividend payment include; a downturn in the U.S. economy, and shortage of new large capital projects.
International Shipholding Corp. (ISH)
International Shipholding Corporation provides maritime transportation services to commercial and governmental customers primarily under the medium to long-term time charters or contracts of affreightment in the United States and internationally.
Source: company presentation
International Shipholding has a very low trailing P/E of 12.74 and a forward P/E of 18.10. The price-to-sales ratio is very low at 0.74, and the price to book value is also very low at 0.71. The forward annual dividend yield is quite high at 3.68%, and the payout ratio is only 46%.
The ISH stock price is 4.43% above its 20-day simple moving average, 9.92% above its 50-day simple moving average and 32.86% above its 200-day simple moving average. That indicates a short-term, mid-term and long-term uptrend.
Analysts recommend the stock. Among the two analysts covering the stock, one rates it as a strong buy, and one rates it as a buy.
International Shipholding will report its latest quarterly financial results on October 21. ISH is expected to post a profit of $0.26 a $0.15 decline from the company's actual earnings for the same quarter a year ago.
On July 31, International Shipholding reported its second-quarter financial results. EPS came in at $0.17 or $0.15 below expectations.
Second-Quarter 2013 Highlights
- Reported net income of $1.9 million for the three months ended June 30, 2013
- Priced $27.5 million of 9% Series B Cumulative Redeemable Perpetual Preferred Stock on July 25, 2013
- Declared a second-quarter dividend of $0.25 per share of common stock payable on September 4, 2013 to shareholders of record as of August 16, 2013
- Paid a $2.375 per share dividend on its Series A Preferred Stock on July 30, 2013
The chart below, which was taken from the company presentation, emphasizes the significant and consistent quarterly dividend.
International Shipholding has compelling valuation metrics and considering the fact that the stock is in an uptrend, ISH stock still has room to go up. Furthermore, the rich dividend represents a nice income.
Risks to the expected capital gain and to the dividend payment include; a downturn in the U.S. economy and a decline in sea freight rates.
Ennis Inc. (EBF)
Ennis, Inc., together with its subsidiaries, engages in the print and manufacture of business forms and other business products.
Ennis has a very low debt (total debt to equity is only 0.09) and it has a low trailing P/E of 14.86 and a very low forward P/E of 10.83. The PEG ratio is very low at 0.87, and the price-to-sales ratio is also very low at 0.89. The price to free cash flow for the trailing 12 months is very low at 12.19, and the average annual earnings growth estimates for the next five years is very high at 17%. The forward annual dividend yield is quite high at 3.85%, and the payout ratio is at 58%.
The EBF stock price is 0.44% above its 20-day simple moving average, 0.82% above its 50-day simple moving average and 9.79% above its 200-day simple moving average. That indicates a short-term, mid-term and long-term uptrend.
Ennis, Inc's stock valuation has been much better than its industry median, sector median and the S&P 500 median, as shown in the table below.
On September 23, Ennis reported its latest quarterly financial results.
Highlights for the quarter include:
- Consolidated gross profit margin increased 260 basis points for the quarter and 440 basis points for the period.
- Apparel gross profit margin increased 870 basis points for the quarter and 1,110 basis points for the period.
- Diluted EPS increased 31.0% to $0.38 per share for the quarter and 59.1% to $0.70 per share for the period.
In the report, Keith Walters, Chairman, Chief Executive Officer and President, commented by stating:
Overall we are pleased with our results for the quarter. Our apparel results continued to improve on both a sequential and comparative basis, as lower input costs of manufacturing and raw materials are favorably impacting their operational results. We realized a 270 basis point sequential margin improvement last quarter and a 280 basis point sequential margin improvement this quarter in our apparel margins. We would expect our apparel margin to continue to improve as our operational efficiencies improve as production levels increase. While the overall apparel market continues to be challenging, both from a pricing and volume perspective, we are seeing some pricing stability in the marketplace. Our print margin continues to remain healthy improving 30 basis points sequentially and 60 basis points for the period, as we continue to integrate acquisitions. We feel positive about the quarter and the remainder of the year.
Ennis, Inc. has compelling valuation metrics, and considering its strong earnings growth prospects and the fact that the stock is in an uptrend, EBF stock still has room to go up. Furthermore, the rich dividend represents a nice income.