If you’re considering dividend stocks, you should also consider the amount of debt those companies are holding. Because debtholders are always paid before dividends to shareholders, large amounts of company debt can threaten a dividend’s stability.
We ran a screen on today’s technically oversold stocks (with RSI(14) < 40) for those that pay handsome dividend yields (above 2% based on the most recent quarter). These companies also have low long-term debt under 10% of market cap. We also controlled for sustainable payout ratios less than 35%.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.
Do you think these companies’ dividends are here to stay? Use this list as a starting-off point for your own analysis.
List sorted by dividend yield.
1. Bank of Hawaii Corporation (BOH): Regional Banks Industry. Market cap of $2.18B. RSI (14) at 38.98. Dividend yield at 3.95%, payout ratio at 0.05%. MRQ long-term debt at 32.6M. The stock is a short squeeze candidate, with a short float at 5.44% (equivalent to 7.95 days of average volume). The stock has gained 2.77% over the last year.
2. Microsoft Corporation (MSFT): Application Software Industry. Market cap of $201.88B. RSI (14) at 37.33. Dividend yield at 2.68%, payout ratio at 25.78%. MRQ long-term debt at 11.9B. MSFT might be undervalued at current levels, with a PEG ratio at 0.88, and P/FCF ratio at 10.5. The stock has lost 1.12% over the last year.
3. Applied Materials Inc. (AMAT): Semiconductor Equipment & Materials Industry. Market cap of $16.78B. RSI (14) at 31.47. Dividend yield at 2.52%, payout ratio at 21.57%. MRQ long-term debt at 204M. The stock is currently stuck in a downtrend, trading 6.96% below its SMA20, 12.34% below its SMA50, and 6.04% below its SMA200. The stock has performed poorly over the last month, losing 14.85%.
4. Best Buy Co. Inc. (BBY): Electronics Stores Industry. Market cap of $11.14B. RSI (14) at 35.69. Dividend yield at 2.10%, payout ratio at 9.22%. MRQ long-term debt at 711M. It's been a rough couple of days for the stock, losing 7.43% over the last week.
*Dividend and debt data sourced from Screener.co, 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.