Many small-cap companies are paying dividends. As a matter of fact, 294 companies among the 600 companies which are included in the S&P SmallCap 600 index are paying dividends, 131 of them have a dividend yield greater than 2%, 75 companies have a yield greater than 3%, and 31 companies have a yield of over 4%.
A Ranking system sorts stocks from best to worst based on a set of weighted factors. Portfolio123 has a powerful ranking system which allows the user to create complex formulas according to many different criteria. They also have highly useful several groups of pre-built ranking systems, I used one of them the "ValueRank" in this article.
The "ValueRank" ranking system is quite complex, and it is taking into account dividend yield, sales growth, trailing P/E, price-to-book ratio, price-to-sales ratio and return on equity, as shown in the Portfolio123's chart below.
In order to find out how such a ranking formula would have performed during the last 15 years, I ran a back-test, which is available by the Portfolio123's screener. For the back-test, I took all the 7,014 stocks in the Portfolio123's database.
The back-test results are shown in the chart below. For the back-test, I divided the 7,014 companies into fifty groups according to their ranking. The highest ranked group with the ranking score of 98-100, which is shown by the dark blue column in the chart, has given by far the best return, an average annual return of about 22%, while the average annual return of the S&P 500 index during the same period was about 2% (the red column at the left part of the chart). Also, the second and the third group (scored: 96-98 and 94-96) have given superior returns. This brings me to the conclusion that the ranking system is useful.
After running the "ValueRank" ranking system on the companies which are included in the S&P SmallCap 600 index, on November 05, 2013, before the market open, I discovered the ten best value dividend stocks, which are shown in the charts below. In this article, I describe the three stocks with the best "ValueRank" ranking among the ten stocks. In my opinion, these stocks can reward an investor a significant capital gain along with a rich dividend. I recommend readers use this list of stocks as a basis for further research. All the data for this article were taken from Yahoo Finance, Portfolio123 and finviz.com.
Calamos Asset Management Inc. (NASDAQ:CLMS)
Calamos Asset Management Inc. is a publicly owned investment manager.
Calamos Asset Management has a low debt (total debt to equity is only 0.47), and it has a trailing P/E of 16.15 and a forward P/E of 16.42. The price-to-sales ratio is very low at 0.71, and the price-to-book value is also low at 0.99. The current ratio is very high at 15.30, and the-price-to-cash ratio is extremely low at 0.38. The price to free cash flow for the trailing 12 months is exceptionally low at 1.97, 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 5.16%, and the payout ratio is at 78%.
The CLMS stock price is 1.59% above its 20-day simple moving average and 0.53% above its 50-day simple moving average. That indicates a short-term and a mid-term uptrend.
Calamos Asset Management has recorded strong EPS and dividend growth and moderate revenue growth, during the last three years, as shown in the table below.
On October 22, Calamos Asset Management reported its third-quarter financial results, which beat EPS expectations by $0.07 and was in-line on revenues.
Third-Quarter 2013 Highlights
- Non-GAAP diluted earnings per share was $0.20 for the third quarter compared to $0.22 in the previous quarter. Non-GAAP net income attributable to Calamos Asset Management, Inc. was $4.1 million for the quarter compared to $4.5 million last quarter. GAAP diluted earnings per share was $0.13 for the third quarter compared to $0.09 per share in the previous quarter. Net income attributable to CAM was $2.7 million for the quarter compared to $1.8 million last quarter.
- Our revenues for the current quarter were $65.0 million compared to $66.7 million in the previous quarter. Operating margin was 23.7% for the third quarter and 27.6% in the previous quarter.
- Total Assets were $27.5 billion at September 30, 2013 compared to $26.6 billion at the end of last quarter. Net outflows were $1.0 billion for the quarter compared to net outflows of $2.3 billion in the previous quarter.
- The Board of Directors of CAM declared a regular quarterly dividend of 12.5 cents per share payable on November 19, 2013 to shareholders of record on November 4, 2013.
- Calamos Investments LLC repurchased 904,350 shares of CAM's common stock since the share repurchase program was announced in the first quarter of 2013, for a total cost of $9.7 million.
Calamos Asset Management has compelling valuation metrics and good earnings growth prospects, and considering its latest quarter strong results, CLMS stock can move higher. Furthermore, the very rich dividend represents a gratifying income.
Since the company is very rich in cash ($25.26 a share) and has low debt, there is hardly a risk that the company will reduce its dividend payment.
Brooks Automation Inc. (NASDAQ:BRKS)
Brooks Automation, Inc. provides automation, vacuum, and instrumentation solutions for semiconductor manufacturing, life sciences, and technology device manufacturing markets worldwide.
Brooks Automation has no debt at all, and it has a very low trailing P/E of 5.76 and a forward P/E of 20.41. The PEG ratio is at 1.13, and the average annual earnings growth estimates for the next five years is very high at 18%. The price-to-book value is very low at 1.01, and the price-to-cash ratio is low at 6.12. The forward annual dividend yield is quite high at 3.35%, and the payout ratio is only 19.4%.
The BRKS stock price is 1.12% above its 20-day simple moving average and 2.84% above its 50-day simple moving average. That indicates a short-term and a mid-term uptrend.
Brooks Automation has recorded strong revenue and EPS growth during the last three years, as shown in the table below.
Brooks Automation will report its latest quarterly financial results on November 13. BRKS is expected to post a profit of $0.04 a share.
On August 8, Brooks Automation reported its third-quarter fiscal 2013 results, which missed EPS expectations by $0.01.
Fiscal-Third Quarter of 2013 Financial and Operational Highlights:
- Revenues were $118.1 Million; Order Bookings increased $6.8 million on a sequential basis to $128.1 million;
- Brooks Life Science Systems Bookings increased to $18.5 million;
- GAAP Earnings Per Share was $0.02; Adjusted Earnings Per Share excluding special charges was $0.03
- Cash flow from Operations was $12.9 million;
- Cash, Cash Equivalents and Marketable Securities as of June 30, 2013 were $150.7 million, or $2.26 per diluted share with no Debt;
- Generated 17 Design-in-Wins for Semiconductor and Adjacent market customers.
Brooks Automation has compelling valuation metrics, strong earnings growth prospects, and the stock is trading at about book value. In my opinion, BRKS stock can move higher. Furthermore, the rich dividend represents a nice income.
Since the company is rich in cash ($1.56 a share) and has no debt and its payout ratio is very low, there is hardly a risk that the company will reduce its dividend payment.
Risks to the expected capital gain and to the dividend payment include; a downturn in the U.S. economy and a weakness in the electronics market.
PetMed Express, Inc. (NASDAQ:PETS)
PetMed Express, Inc. and its subsidiaries, doing business as 1-800-PetMeds, operates as a pet pharmacy in the United States.
Source: company presentation
PetMed Express has no debt at all, and it has a trailing P/E of 16.29 and a forward P/E of 15.89. The current ratio is very high at 7.20, and the average annual earnings growth estimates for the next five years is at 5%. The forward annual dividend yield is high at 4.59%.
PetMed Express' return on capital has been much better than that of the industry median, the sector median and the S&P 500 median, as shown in the table below.
Most of PetMed Express' stock valuation parameters have been better than its industry median, as shown in the table below.
On October 21, PetMed Express reported its second-quarter financial results, which missed EPS expectations by $0.01 and was in-line on revenues. Net sales for the quarter ended September 30, 2013 were $60.5 million, compared to $58.1 million for the quarter ended September 30, 2012, an increase of 4.0%. Net income was $4.2 million, or $0.21 diluted per share, for the quarter ended September 30, 2013, compared to net income of $4.0 million, or $0.20 diluted per share, for the quarter ended September 30, 2012, a 3.0% increase to EPS.
PetMed Express has good valuation metrics and solid earnings growth prospects. In my opinion, PETS stock can move higher. Furthermore, the very rich dividend represents a gratifying income.
Since the company is rich in cash ($2.58 a share) and has no debt and its payout ratio is very low, there is hardly a risk that the company will reduce its dividend payment.
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.