8 Dividend Stocks With Strong Cash Coverage Reaching New Highs

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 |  Includes: AEA, BR, DPS, DVN, FLO, LLL, LMT, NOC
by: Kapitall

If you’re considering dividend stocks as a source of income, remember that dividends are not a guarantee of future payments. To be sure that your dividend will stick around, checking the company’s cash flows can give an idea of how easily they can continue paying income to shareholders.

We screened today’s stocks reaching new 52-week highs for those paying substantial dividends. We then analyzed this list to find those with strong operating and levered free cash flows relative to their dividend payment.

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.

List sorted by TTM operating cash flow per share/annual dividend per share.

1. Advance America, Cash Advance Centers Inc. (NYSE:AEA): Credit Services Industry. Market cap of $417.54M. Dividend yield at 3.6%. TTM Operating Cash Flow at $137.56M, or $2.21 on a per-share basis (vs. annual dividend per share at $0.25, TTM Operating Cash Flow per share/annual dividend per share stands at 8.83).

TTM Levered Free Cash Flow at $51.96M, or $0.83 on a per-share basis (vs. annual dividend per share at $0.25, TTM Levered Free Cash Flow per share/dividend per share stands at 3.34). This is a risky stock that is significantly more volatile than the overall market (beta = 2.94).

The stock might be undervalued at current levels, with a PEG ratio at 0.69, and P/FCF ratio at 3.69. It is exhibiting strong upside momentum--currently trading 13.77% above its SMA20, 17.83% above its SMA50, and 30.59% above its SMA200.

2. L-3 Communications Holdings Inc. (NYSE:LLL): Aerospace/Defense Products & Services Industry. Market cap of $9.23B. Dividend yield at 2.1%. TTM Operating Cash Flow at $1.41B, or $13.29 on a per-share basis (vs. annual dividend per share at $1.80, TTM Operating Cash Flow per share/annual dividend per share stands at 7.38).

TTM Levered Free Cash Flow at $853.75M, or $8.04 on a per-share basis (vs. annual dividend per share at $1.80, TTM Levered Free Cash Flow per share/dividend per share stands at 4.47).

The stock has gained 24.36% over the last year.

3. Crosstex Energy Inc. (XTXI): Oil & Gas Refining & Marketing Industry. Market cap of $558.61M. Dividend yield at 3.2%. TTM Operating Cash Flow at $111.85M, or $2.37 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 6.6).

TTM Levered Free Cash Flow at $62.16M, or $1.32 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 3.67).

The stock is a short squeeze candidate, with a short float at 6.3% (equivalent to 6.12 days of average volume). Exhibiting strong upside momentum--currently trading 9.1% above its SMA20, 17.01% above its SMA50, and 31.59% above its SMA200. The stock has had a couple of great days, gaining 9.01% over the last week.

4. Dr Pepper Snapple Group, Inc. (NYSE:DPS): Beverages Industry. Market cap of $9.17B. Dividend yield at 3.1%. TTM Operating Cash Flow at $1.60B, or $7.23 on a per-share basis (vs. annual dividend per share at $1.28, TTM Operating Cash Flow per share/annual dividend per share stands at 5.65).

TTM Levered Free Cash Flow at $664.38M, or $3.00 on a per-share basis (vs. annual dividend per share at $1.28, TTM Levered Free Cash Flow per share/dividend per share stands at 2.34).

The stock has gained 17.38% over the last year.

5. Flowers Foods, Inc. (NYSE:FLO): Processed & Packaged Goods Industry. Market cap of $2.0B. Dividend yield at 1.8%. TTM Operating Cash Flow at $296.05M, or $2.19 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 5.47).

TTM Levered Free Cash Flow at $152.70M, or $1.13 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 2.82).

The stock is a short squeeze candidate, with a short float at 11.65% (equivalent to 8.97 days of average volume). The stock has gained 24.79% over the last year.

6. Northrop Grumman Corporation (NYSE:NOC): Conglomerates Industry. Market cap of $19.07B. Dividend yield at 2.9%. TTM Operating Cash Flow at $2.86B, or $9.77 on a per-share basis (vs. annual dividend per share at $2.00, TTM Operating Cash Flow per share/annual dividend per share stands at 4.89).

TTM Levered Free Cash Flow at $2.55B, or $8.71 on a per-share basis (vs. annual dividend per share at $2.00, TTM Levered Free Cash Flow per share/dividend per share stands at 4.36).

The stock is a short squeeze candidate, with a short float at 9.46% (equivalent to 12.09 days of average volume). The stock has gained 18.66% over the last year.

7. Broadridge Financial Solutions Inc. (NYSE:BR): Information & Delivery Services Industry. Market cap of $2.96B. Dividend yield at 2.50%. TTM Operating Cash Flow at $346.00M, or $2.80 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 4.67).

TTM Levered Free Cash Flow at $424.04M, or $3.44 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 5.73).

The stock has gained 11.29% over the last year.

8. Lockheed Martin Corporation (NYSE:LMT): Aerospace/Defense Products & Services Industry. Market cap of $27.91B. Dividend yield at 3.8%. TTM Operating Cash Flow at $3.58B, or $10.31 on a per-share basis (vs. annual dividend per share at $3.00, TTM Operating Cash Flow per share/annual dividend per share stands at 3.44).

TTM Levered Free Cash Flow at $2.86B, or $8.23 on a per-share basis (vs. annual dividend per share at $3.00, TTM Levered Free Cash Flow per share/dividend per share stands at 2.74).

The stock is a short squeeze candidate, with a short float at 5.07% (equivalent to 7.75 days of average volume). The stock has gained 18.5% over the last year.

Dividend data, operating 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.