Research, such as Credit Suisse analysts Pankaj N. Patel, Souheang Yao and Heath Barefoot's paper "High Yield, Low Payout," has indicated that the combination of a high dividend yield and a low payout ratio is better than high yield alone.
With this in mind, I screened for stocks which have a dividend yield above 4% and are rated four or five stars by my dividend rating system. The following stocks are those with the lowest payout ratios.
Universal Corp. (NYSE:UVV)
Universal Corporation (Universal) is a leaf tobacco merchant and processor. Universal is a holding company that operates through numerous directly and indirectly owned subsidiaries. Universal’s primary subsidiary is Universal Leaf Tobacco Company, Incorporated. The largest portion of the Company’s business involves the procurement, processing, packing, and supply of flue-cured and burley leaf tobacco to manufacturers of consumer tobacco products. (see full description)
|Total Debt to Assets||26.83%|
|ROE 10y Low||-0.3%|
|# of Consecutive Increases||40|
Royal Dutch Shell plc (NYSE:RDS.A)
Royal Dutch Shell plc (Shell) is an independent oil and gas company. The Company owns, directly or indirectly, investments in the numerous companies constituting the Group. Shell is engaged worldwide in the aspects of the oil and gas industry and also has interests in chemicals and other energy-related businesses. The Company operates in three segments: Upstream, Downstream and Corporate. Its Upstream business explores for and extracts crude oil and natural gas, often in joint ventures with international and national oil companies. Shell’s Downstream segment turns crude oil into a range of refined products, which are moved and marketed worldwide for domestic, industrial and transport use. The Corporate segment covers the non-operating activities supporting Shell. (see full description)
|Total Debt to Assets||12.41%|
|ROE 10y Low||9.2%|
|# of Consecutive Increases||5|
AstraZeneca PLC (NYSE:AZN)
AstraZeneca PLC (AstraZeneca) is a global biopharmaceutical company. AstraZeneca discovers, develops and commercializes prescription medicines for six areas of healthcare: Cardiovascular, Gastrointestinal, Infection, Neuroscience, Oncology, and Respiratory and Inflammation. It has a range of medicines that includes treatments for illnesses, such as its antibiotic, Merrem/Meronem and Losec/Prilosec for acid related diseases. AstraZeneca’s products include Crestor, Seloken/Toprol-XL, Atacand, Nexium, Synagis, Seroquel IR, Seroquel XR, Arimidex, Zoladex and Symbicort. (see full description)
|Total Debt to Assets||16.43%|
|ROE 10y Low||14.2%|
|# of Consecutive Increases||7|
Eli Lilly & Co. (NYSE:LLY)
Eli Lilly and Company discovers, develops, manufactures and sells products in one business segment, pharmaceutical products. It also has an animal health business segment. The Company manufactures and distributes its products through facilities in the United States, Puerto Rico, and 17 other countries. Its products are sold in approximately 125 countries. The Company’s products include neuroscience products, endocrinology products, oncology products, cardiovascular products, animal health products and other pharmaceuticals. (see full description)
|Total Debt to Assets||21.05%|
|ROE 10y Low||-30.8%|
|# of Consecutive Increases||0|
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.