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When evaluating potential income investments, two primary concerns should be the health of cash flows and the degree of firm liquidity. Because cash flows are used to pay dividends and because assets can be also be sold to fund a dividend payment, both of these are considerations for a dividend’s sustainability.

Here we report 11 companies that appear to have sustainable dividends from both perspectives.

We began by searching for companies with high current ratios and quick ratios, indicating high liquidity. From this universe, we then searched for those with enough TTM operating cash flow and TTM levered free cash flow to cover their annual dividend. (Note: All companies have dividend yields above 1%.)


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We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.



Do you think these companies have sustainable dividends? Use this list as a starting-off point for your own analysis.

List sorted by dividend yield.

1. Comtech Telecommunications Corp. (NASDAQ:CMTL):
Communication Equipment Industry. Market cap of $733.44M. Dividend yield at 3.64%, with a payout ratio of 17.68%. Current ratio at 7.93, and quick ratio at 7.11.

TTM Operating Cash Flow at $140.80M, or $5.28 on a per-share basis (vs. annual dividend per share at $1.00, TTM Operating Cash Flow per share / annual dividend per share stands at 5.28).

TTM Levered Free Cash Flow at $126.05M, or $4.72 on a per-share basis (vs. annual dividend per share at $1.00, TTM Levered Free Cash Flow per share / dividend per share stands at 4.72).

The stock is a short squeeze candidate, with a short float at 8.03% (equivalent to 8.77 days of average volume).

2. Superior Industries International, Inc. (NYSE:SUP):
Auto Parts Industry. Market cap of $579.59M. Dividend yield at 2.98%, with a payout ratio of 33.78%. Current ratio at 5.12, and quick ratio at 4.09.

TTM Operating Cash Flow at $65.08M, or $2.41 on a per-share basis (vs. annual dividend per share at $0.64, TTM Operating Cash Flow per share / annual dividend per share stands at 3.77).

TTM Levered Free Cash Flow at $33.37M, or $1.24 on a per-share basis (vs. annual dividend per share at $0.64, TTM Levered Free Cash Flow per share / dividend per share stands at 1.93).

The stock is a short squeeze candidate, with a short float at 5.27% (equivalent to 6.86 days of average volume). The stock has performed poorly over the last month, losing 14.01%.

3. KLA-Tencor Corporation (NASDAQ:KLAC):
Semiconductor Equipment & Materials Industry. Market cap of $6.83B. Dividend yield at 2.46%, with a payout ratio of 22.78%. Current ratio at 4, and quick ratio at 3.35.

TTM Operating Cash Flow at $616.64M, or $3.67 on a per-share basis (vs. annual dividend per share at $1.00, TTM Operating Cash Flow per share / annual dividend per share stands at 3.67).

TTM Levered Free Cash Flow at $316.29M, or $1.88 on a per-share basis (vs. annual dividend per share at $1.00, TTM Levered Free Cash Flow per share / dividend per share stands at 1.88).


4. Simpson Manufacturing Co., Inc. (NYSE:SSD): Small Tools & Accessories Industry. Market cap of $1.33B. Dividend yield at 1.88%, with a payout ratio of 50.33%. Current ratio at 7.55, and quick ratio at 5.41.

TTM Operating Cash Flow at $74.29M, or $1.48 on a per-share basis (vs. annual dividend per share at $0.50, TTM Operating Cash Flow per share / annual dividend per share stands at 2.97).

TTM Levered Free Cash Flow at $82.11M, or $1.64 on a per-share basis (vs. annual dividend per share at $0.50, TTM Levered Free Cash Flow per share / dividend per share stands at 3.28).

The stock has lost 4.21% over the last year.


5. National Semiconductor Corporation (NSM): Semiconductor Industry. Market cap of $5.96B. Dividend yield at 1.63%, with a payout ratio of 27.76%. Current ratio at 8.34, and quick ratio at 7.48.

TTM Operating Cash Flow at $383.70M, or $1.60 on a per-share basis (vs. annual dividend per share at $0.40, TTM Operating Cash Flow per share / annual dividend per share stands at 4.01).

TTM Levered Free Cash Flow at $146.45M, or $0.61 on a per-share basis (vs. annual dividend per share at $0.40, TTM Levered Free Cash Flow per share / dividend per share stands at 1.53).

The stock has gained 83% over the last year.


6. Cisco Systems, Inc. (NASDAQ:CSCO): Networking & Communication Devices Industry. Market cap of $90.38B. Dividend yield at 1.47%, with a payout ratio of 4.61%. Current ratio at 3.43, and quick ratio at 3.34.

TTM Operating Cash Flow at $10.49B, or $1.90 on a per-share basis (vs. annual dividend per share at $0.24, TTM Operating Cash Flow per share / annual dividend per share stands at 7.93).

TTM Levered Free Cash Flow at $5.34B, or $0.97 on a per-share basis (vs. annual dividend per share at $0.24, TTM Levered Free Cash Flow per share / dividend per share stands at 4.04).


7. Hawkins Inc. (NASDAQ:HWKN):
Synthetics Industry. Market cap of $432.51M. Dividend yield at 1.43%, with a payout ratio of 29.11%. Current ratio at 4.39, and quick ratio at 3.47.

TTM Operating Cash Flow at $33.43M, or $3.24 on a per-share basis (vs. annual dividend per share at $0.60, TTM Operating Cash Flow per share / annual dividend per share stands at 5.4).

TTM Levered Free Cash Flow at $18.83M, or $1.82 on a per-share basis (vs. annual dividend per share at $0.60, TTM Levered Free Cash Flow per share / dividend per share stands at 3.04).

The stock is a short squeeze candidate, with a short float at 8.22% (equivalent to 10.96 days of average volume). The stock has gained 57.2% over the last year.


8. Park Electrochemical Corp. (NYSE:PKE): Printed Circuit Boards Industry. Market cap of $602.62M. Dividend yield at 1.38%, with a payout ratio of 88.6%. Current ratio at 11.76, and quick ratio at 11.25.

TTM Operating Cash Flow at $42.67M, or $2.06 on a per-share basis (vs. annual dividend per share at $0.40, TTM Operating Cash Flow per share / annual dividend per share stands at 5.15).

TTM Levered Free Cash Flow at $31.22M, or $1.51 on a per-share basis (vs. annual dividend per share at $0.40, TTM Levered Free Cash Flow per share / dividend per share stands at 3.77).


9. Techne Corp. (NASDAQ:TECH): Biotechnology Industry. Market cap of $3.0B. Dividend yield at 1.34%, with a payout ratio of 36.02%. Current ratio at 16.73, and quick ratio at 15.91.

TTM Operating Cash Flow at $124.30M, or $3.35 on a per-share basis (vs. annual dividend per share at $1.08, TTM Operating Cash Flow per share / annual dividend per share stands at 3.1).

TTM Levered Free Cash Flow at $104.27M, or $2.81 on a per-share basis (vs. annual dividend per share at $1.08, TTM Levered Free Cash Flow per share / dividend per share stands at 2.6).


10. Stryker Corp. (NYSE:SYK):
Medical Instruments & Supplies Industry. Market cap of $24.46B. Dividend yield at 1.14%, with a payout ratio of 20.6%. Current ratio at 4.1, and quick ratio at 3.33.

TTM Operating Cash Flow at $1.48B, or $3.81 on a per-share basis (vs. annual dividend per share at $0.72, TTM Operating Cash Flow per share / annual dividend per share stands at 5.3).

TTM Levered Free Cash Flow at $863.91M, or $2.23 on a per-share basis (vs. annual dividend per share at $0.72, TTM Levered Free Cash Flow per share / dividend per share stands at 3.09).


11. Cognex Corporation (NASDAQ:CGNX): Scientific & Technical Instruments Industry. Market cap of $1.32B. Dividend yield at 1.13%, with a payout ratio of 17.07%. Current ratio at 5.65, and quick ratio at 5.15.

TTM Operating Cash Flow at $87.42M, or $2.11 on a per-share basis (vs. annual dividend per share at $0.36, TTM Operating Cash Flow per share / annual dividend per share stands at 5.85).

TTM Levered Free Cash Flow at $47.57M, or $1.15 on a per-share basis (vs. annual dividend per share at $0.36, TTM Levered Free Cash Flow per share / dividend per share stands at 3.18).


*Operating cash flow, levered free cash flow, and dividend per share 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.