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Are you searching for stocks that will increase your portfolio’s income while reducing your exposure to systemic risk? If so, this may be an interesting starting point for your own analysis.

To construct this list we looked for stocks with the following characteristics:

  • Dividend yield above 2%.
  • Beta between 0 to 0.5.
  • Rising return on equity (ROE) for the recent quarter, on a year-over-year basis.

In order to focus on quality improvements of the ROE, we performed a DuPont analysis on these names and focused on those candidates that experienced:

Improving profit margin, i.e. higher Net Income/ Revenues.

Improving asset turnover, i.e. higher Sales/Assets.

Decreasing leverage ratio, i.e. lower Assets/Equity.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.

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.

1. Magellan Midstream Partners LP (MMP): Oil & Gas Pipelines Industry. Market cap of $6.53B. Dividend yield 5.32%. Beta at 0.35. MRQ net profit margin 20.35% vs. PQ net profit margin at 19.57%. MRQ sales/assets ratio 0.12 vs. PQ sales/assets ratio 0.1. MRQ assets/equity ratio 2.65 vs. PQ assets/equity ratio 2.71. The stock has gained 40.96% over the last year.

2. MGE Energy Inc. (MGEE): Diversified Utilities Industry. Market cap of $928.56M. Dividend yield 3.73%. Beta at 0.3. MRQ net profit margin 10.8% vs. PQ net profit margin at 8.93%. MRQ sales/assets ratio 0.12 vs. PQ sales/assets ratio 0.12. MRQ assets/equity ratio 2.47 vs. PQ assets/equity ratio 2.53. The stock has gained 20.99% over the last year.

3. Enersis S.A. (ENI): Foreign Utilities Industry. Market cap of $14.26B. Dividend yield 3.57%. Beta at 0.49. MRQ net profit margin 8.31% vs. PQ net profit margin at 7.98%. MRQ sales/assets ratio 0.13 vs. PQ sales/assets ratio 0.12. MRQ assets/equity ratio 3.48 vs. PQ assets/equity ratio 3.75. The stock has gained 17.93% over the last year.

4. Wisconsin Energy Corp. (WEC): Diversified Utilities Industry. Market cap of $7.26B. Dividend yield 3.35%. Beta at 0.37. MRQ net profit margin 12.86% vs. PQ net profit margin at 10.39%. MRQ sales/assets ratio 0.1 vs. PQ sales/assets ratio 0.1. MRQ assets/equity ratio 3.35 vs. PQ assets/equity ratio 3.46. The stock has gained 33.43% over the last year.

5. National Healthcare Corp. (NHC): Long-Term Care Facilities Industry. Market cap of $646.83M. Dividend yield 2.57%. Beta at 0.39. MRQ net profit margin 9.7% vs. PQ net profit margin at 6.05%. MRQ sales/assets ratio 0.23 vs. PQ sales/assets ratio 0.22. MRQ assets/equity ratio 1.44 vs. PQ assets/equity ratio 1.48. The stock has gained 44.62% over the last year.

Data sourced from Google Finance and Finviz.

Source: 5 High-Yielding Stocks With Low Beta and Improving ROE