Seeking Alpha
Value, growth, long-term horizon, medium-term horizon
Profile| Send Message|
( followers)  

A company’s dividend is only as reliable as the company’s cash flows from which they’re paid. When choosing an income investment, it is important to check dividend sustainability by looking at the strength of cash flows. With that in mind, we constructed a list of oversold stocks that have impressive dividend coverage. We started with a universe of about 120 companies with RSI(14) below 40. We then calculated trailing 12-month (TTM) operating cash flow per share, and TTM levered free cash flow per share, and identified those with the best dividend coverage.

Do you trust these dividends to continue? Use this list as a starting-off point for your own analysis. List sorted by operating cash flow per share per $1 of dividend per share.

1. Computer Sciences Corporation (NYSE:CSC): Information Technology Services Industry. Market cap of $6.93B. RSI(14) at 36.98. Dividend yield at 1.8%, annual dividend per share at $0.80. With TTM operating cash flow at $2.04B, the company's operating cash flow per share / dividend per share ratio stands at 16.44. With TTM levered free cash flow at $1.05B, the company's levered free cash flow per share / dividend per share ratio stands at 8.46.

2. Gerdau S.A. (NYSE:GGB): Steel & Iron Industry. Market cap of $14.73B. RSI(14) at 30.5. Dividend yield at 1.4%, annual dividend per share at $0.15. With TTM operating cash flow at $2.62B, the company's operating cash flow per share / dividend per share ratio stands at 11.64. With TTM levered free cash flow at $863.32M, the company's levered free cash flow per share / dividend per share ratio stands at 3.84. The stock has performed poorly over the last month, losing 13.28%.

3. Vale S.A. (NYSE:VALE): Steel & Iron Industry. Market cap of $154.98B. RSI(14) at 36.48. Dividend yield at 1.5%, annual dividend per share at $0.45. With TTM operating cash flow at $26.76B, the company's operating cash flow per share / dividend per share ratio stands at 11.39. With TTM levered free cash flow at $5.71B, the company's levered free cash flow per share / dividend per share ratio stands at 2.43. The stock has gained 10.37% over the last year.

4. Teck Resources Limited (NYSE:TCK): Industrial Metals & Minerals Industry. Market cap of $27.39B. RSI(14) at 33.42. Dividend yield at 1.3%, annual dividend per share at $0.62. With TTM operating cash flow at $3.08B, the company's operating cash flow per share / dividend per share ratio stands at 8.41. With TTM levered free cash flow at $1.82B, the company's levered free cash flow per share / dividend per share ratio stands at 4.97. This is a risky stock that is significantly more volatile than the overall market (beta = 3.47).

5. Cisco Systems, Inc. (NASDAQ:CSCO): Networking & Communication Devices Industry. Market cap of $93.31B. RSI(14) at 39.6. Dividend yield at 1.4%, annual dividend per share at $0.24. With TTM operating cash flow at $10.48B, the company's operating cash flow per share / dividend per share ratio stands at 7.90. With TTM levered free cash flow at $5.71B, the company's levered free cash flow per share / dividend per share ratio stands at 4.30. The stock has lost 32.07% over the last year.

6. Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX): Copper Industry. Market cap of $45.73B. RSI(14) at 38.94. Dividend yield at 2.1%, annual dividend per share at $1.00. With TTM operating cash flow at $6.81B, the company's operating cash flow per share / dividend per share ratio stands at 7.19. With TTM levered free cash flow at $3.57B, the company's levered free cash flow per share / dividend per share ratio stands at 3.77. The stock has gained 40.81% over the last year.

7. Lowe's Companies Inc. (NYSE:LOW): Home Improvement Stores Industry. Market cap of $33.96B. RSI(14) at 39.69. Dividend yield at 1.7%, annual dividend per share at $0.44. With TTM operating cash flow at $3.85B, the company's operating cash flow per share / dividend per share ratio stands at 6.63. With TTM levered free cash flow at $2.52B, the company's levered free cash flow per share / dividend per share ratio stands at 4.34. The stock has gained 0.74% over the last year.

8. Exxon Mobil Corporation (NYSE:XOM): Major Integrated Oil & Gas Industry. Market cap of $398.37B. RSI(14) at 36.6. Dividend yield at 2.3%, annual dividend per share at $1.88. With TTM operating cash flow at $52.22B, the company's operating cash flow per share / dividend per share ratio stands at 5.63. With TTM levered free cash flow at $19.45B, the company's levered free cash flow per share / dividend per share ratio stands at 2.10.The stock has gained 30.29% over the last year.

9. Microsoft Corporation (NASDAQ:MSFT): Application Software Industry. Market cap of $211.07B. RSI(14) at 38.35. Dividend yield at 2.6%, annual dividend per share at $0.64. With TTM operating cash flow at $26.66B, the company's operating cash flow per share / dividend per share ratio stands at 4.94. With TTM levered free cash flow at $15.77B, the company's levered free cash flow per share / dividend per share ratio stands at 2.92.

10. Parker Hannifin Corporation (NYSE:PH): Industrial Equipment & Components Industry. Market cap of $14.19B. RSI(14) at 37.48. Dividend yield at 1.7%, annual dividend per share at $1.48. With TTM operating cash flow at $1.18B, the company's operating cash flow per share / dividend per share ratio stands at 4.92. With TTM levered free cash flow at $822.97M, the company's levered free cash flow per share / dividend per share ratio stands at 3.43. The stock has gained 34.22% over the last year.

11. Statoil ASA (NYSE:STO): Oil & Gas Drilling & Exploration Industry. Market cap of $82.11B. RSI(14) at 37.08. Dividend yield at 3.6%, annual dividend per share at $0.94. With TTM operating cash flow at $13.76B, the company's operating cash flow per share / dividend per share ratio stands at 4.60. With TTM levered free cash flow at $11.03B, the company's levered free cash flow per share / dividend per share ratio stands at 3.69. The stock has gained 21.98% over the last year.

12. ConocoPhillips (NYSE:COP): Major Integrated Oil & Gas Industry. Market cap of $100.97B. RSI(14) at 35.54. Dividend yield at 3.7%, annual dividend per share at $2.64. With TTM operating cash flow at $15.95B, the company's operating cash flow per share / dividend per share ratio stands at 4.28. With TTM levered free cash flow at $9.02B, the company's levered free cash flow per share / dividend per share ratio stands at 2.42. The stock has gained 32.92% over the last year.

Dividend, operating cash flow, and levered free cash flow data sourced from Yahoo! Finance, all other data sourced from Finviz.

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

Source: 12 Oversold Stocks With Strong Dividend Coverage