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A company’s liquidity is vital to its ability to continually pay a dividend. If you’re considering a stock for its dividend, be sure to check the company’s liquidity first.

To illustrate this, we ran a screen on Friday’s technically oversold stocks, with RSI(14) readings below 40. We searched for those that pay a handsome dividend yield (between 2 and 7%, based on the most recent quarter) under a sustainable payout ratio (of less than 35% of earnings).

Among these stocks, we searched for those with the best 10-year track record for improving liquidity. We found those with 10-year compounded annual growth rates (CAGR) for current assets exceeding the 10-year CAGR for current liabilities by at least 5%.

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.


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

List sorted by dividend yield.

1. Suburban Propane Partners LP (NYSE:SPH): Gas Utilities Industry. Market cap of $1.80B. RSI(14) at 35.33. Dividend yield at 6.72%, payout ratio at 30.08%. 10-year CAGR for current assets at 9.27% vs. 2.27% for current liabilities. The stock has gained 18.06% over the last year.



2. Star Gas Partners LP (NYSE:SGU): Specialty Retail Industry. Market cap of $364.39M. RSI(14) at 39.56. Dividend yield at 5.78%, payout ratio at 10.85%. 10-year CAGR for current assets at 6.87% vs. 1.75% for current liabilities. The stock has gained 33.5% over the last year.



3. Gap Inc. (NYSE:GPS):
Apparel Stores Industry. Market cap of $10.38B. RSI(14) at 27.51. Dividend yield at 2.53%, payout ratio at 27.47%. 10-year CAGR for current assets at 4.02% vs. -2.86% for current liabilities. The stock is currently stuck in a downtrend, trading 10.54% below its SMA20, 17.25% below its SMA50, and 13% below its SMA200. The stock has performed poorly over the last month, losing 22.5%.

4. Brinker International Inc. (NYSE:EAT): Restaurants Industry. Market cap of $2.0B. RSI(14) at 36.12. Dividend yield at 2.38%, payout ratio at 30.31%. 10-year CAGR for current assets at 17.07% vs. 6.89% for current liabilities. The stock is a short squeeze candidate, with a short float at 9.93% (equivalent to 5.36 days of average volume). The stock has gained 44.81% over the last year.

5. Computer Sciences Corporation (NYSE:CSC): Information Technology Services Industry. Market cap of $5.95B. RSI(14) at 29.73. Dividend yield at 2.09%, payout ratio at 19.63%. 10-year CAGR for current assets at 8.96% vs. 1.53% for current liabilities. The stock is currently stuck in a downtrend, trading 8.98% below its SMA20, 17.14% below its SMA50, and 19.81% below its SMA200. The stock has performed poorly over the last month, losing 14.69%.

*Dividend, current asset and current liability 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.

Source: 5 Oversold Dividend Stocks With High Liquidity Growth