11 Undervalued, Low-Debt Dividend Stocks With Impressive Profitability

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 |  Includes: ART, HCC, HON, INTC, KLAC, KSS, MMM, ROK, SYA, TWGP, UTX
by: Kapitall

Stockholders often prefer to invest in companies with lower amounts of debt because debt is a wedge between firm value and the firm’s value to shareholders.

Since debtholders are always paid before shareholder dividends, higher debt diverts money away from dividends toward higher interest payments. High debt also decreases the firm’s financial flexibility.

We ran a screen on low-debt companies paying dividend yields above 2% and sustainable payout ratios below 35%. We screened these companies for those that are trading at significant discounts to mean analyst target price, possibly indicating that they are undervalued. We then screened for those that are highly profitable, beating their industry peers on gross, operating, and pretax margins.

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.

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

List sorted by dividend yield.

1. Intel Corporation (NASDAQ:INTC): Semiconductor Industry. Market cap of $110.55B. Dividend yield at 3.49%, payout ratio at 32.52%. MRQ total debt to assets at 0.03. Target price at $25.86 vs. current price at $20.85 (implies a potential upside of 24.04%). TTM gross margin at 74.42% vs. industry average at 60.85%. TTM operating margin at 34.39% vs. industry average at 26.68%. TTM pretax margin at 34.43% vs. industry average at 26.45%. It's been a rough couple of days for the stock, losing 6.63% over the last week.

2. Honeywell International Inc. (NYSE:HON): Aerospace/Defense Products & Services Industry. Market cap of $38.10B. Dividend yield at 2.74%, payout ratio at 32.68%. MRQ total debt to assets at 0.19. Target price at $67.63 vs. current price at $48.69 (implies a potential upside of 38.90%). TTM gross margin at 28.99% vs. industry average at 26.35%. TTM operating margin at 12.34% vs. industry average at 11.97%. TTM pretax margin at 10.06% vs. industry average at 7.68%. It's been a rough couple of days for the stock, losing 8.13% over the last week.

3. KLA-Tencor Corporation (NASDAQ:KLAC): Semiconductor Equipment & Materials Industry. Market cap of $6.16B. Dividend yield at 2.74%, payout ratio at 17.13%. MRQ total debt to assets at 0.16. Target price at $47.68 vs. current price at $36.66 (implies a potential upside of 30.06%). TTM gross margin at 63.77% vs. industry average at 60.47%. TTM operating margin at 37.82% vs. industry average at 26.50%. TTM pretax margin at 34.96% vs. industry average at 26.30%. It's been a rough couple of days for the stock, losing 12.11% over the last week.

4. 3M Co. (NYSE:MMM): Conglomerates Industry. Market cap of $58.43B. Dividend yield at 2.68%, payout ratio at 33.64%. MRQ total debt to assets at 0.17. Target price at $106.06 vs. current price at $82.23 (implies a potential upside of 28.98%). TTM gross margin at 50.48% vs. industry average at 41.88%. TTM operating margin at 21.38% vs. industry average at 13.75%. TTM pretax margin at 20.85% vs. industry average at 13.05%. The stock is currently stuck in a downtrend, trading 11.54% below its SMA20, 12.01% below its SMA50, and 9.42% below its SMA200. It's been a rough couple of days for the stock, losing 6.1% over the last week.

5. United Technologies Corp. (NYSE:UTX): Conglomerates Industry. Market cap of $67.58B. Dividend yield at 2.59%, payout ratio at 31.34%. MRQ total debt to assets at 0.18. Target price at $98.67 vs. current price at $74.37 (implies a potential upside of 32.67%). TTM gross margin at 30.46% vs. industry average at 26.35%. TTM operating margin at 13.89% vs. industry average at 11.97%. TTM pretax margin at 12.58% vs. industry average at 7.68%. The stock is currently stuck in a downtrend, trading 14.95% below its SMA20, 15.03% below its SMA50, and 11.22% below its SMA200. It's been a rough couple of days for the stock, losing 10.31% over the last week.

6. Artio Global Investors Inc. (NYSE:ART): Asset Management Industry. Market cap of $563.63M. Dividend yield at 2.54%, payout ratio at 15.90%. MRQ total debt to assets at 0.14. Target price at $12.36 vs. current price at $9.46 (implies a potential upside of 30.62%). TTM gross margin at 49.94% vs. industry average at 48.11%. TTM operating margin at 49.27% vs. industry average at 34.84%. TTM pretax margin at 49.41% vs. industry average at 33.48%. The stock is a short squeeze candidate, with a short float at 8.01% (equivalent to 8.55 days of average volume). It's been a rough couple of days for the stock, losing 9.99% over the last week.

7. Tower Group Inc. (NASDAQ:TWGP): Property & Casualty Insurance Industry. Market cap of $912.98M. Dividend yield at 2.36%, payout ratio at 19.92%. MRQ total debt to assets at 0.09. Target price at $28.00 vs. current price at $22.09 (implies a potential upside of 26.75%). TTM gross margin at 15.75% vs. industry average at 15.64%. TTM operating margin at 14.33% vs. industry average at 12.42%. TTM pretax margin at 12.48% vs. industry average at 11.03%. The stock is a short squeeze candidate, with a short float at 11.37% (equivalent to 16.96 days of average volume). The stock has gained 5.39% over the last year.

8. Rockwell Automation Inc. (NYSE:ROK): Industrial Electrical Equipment Industry. Market cap of $9.42B. Dividend yield at 2.15%, payout ratio at 28.25%. MRQ total debt to assets at 0.17. Target price at $87.29 vs. current price at $65.27 (implies a potential upside of 33.73%). TTM gross margin at 41.84% vs. industry average at 35.77%. TTM operating margin at 14.44% vs. industry average at 10.97%. TTM pretax margin at 13.49% vs. industry average at 7.91%. It's been a rough couple of days for the stock, losing 11.17% over the last week.

9. HCC Insurance Holdings Inc. (NYSE:HCC): Property & Casualty Insurance Industry. Market cap of $3.13B. Dividend yield at 2.11%, payout ratio at 23.73%. MRQ total debt to assets at 0.04. Target price at $35.11 vs. current price at $27.56 (implies a potential upside of 27.40%). TTM gross margin at 20.25% vs. industry average at 15.64%. TTM operating margin at 19.49% vs. industry average at 12.42%. TTM pretax margin at 18.55% vs. industry average at 11.03%. The stock is currently stuck in a downtrend, trading 12.04% below its SMA20, 13.77% below its SMA50, and 10.96% below its SMA200. It's been a rough couple of days for the stock, losing 8.53% over the last week.

10. Kohl's Corp. (NYSE:KSS): Department Stores Industry. Market cap of $13.40B. Dividend yield at 2.10%, payout ratio at 34.12%. MRQ total debt to assets at 0.14. Target price at $64.87 vs. current price at $47.67 (implies a potential upside of 36.07%). TTM gross margin at 38.24% vs. industry average at 35.52%. TTM operating margin at 10.40% vs. industry average at 8.04%. TTM pretax margin at 9.69% vs. industry average at 6.92%. The stock is currently stuck in a downtrend, trading 15.46% below its SMA20, 11.89% below its SMA50, and 12.1% below its SMA200. It's been a rough couple of days for the stock, losing 13.59% over the last week.

11. Symetra Financial Corporation (NYSE:SYA): Life Insurance Industry. Market cap of $1.37B. Dividend yield at 2.08%, payout ratio at 11.97%. MRQ total debt to assets at 0.02. Target price at $14.21 vs. current price at $11.59 (implies a potential upside of 22.64%). TTM gross margin at 18.63% vs. industry average at 15.46%. TTM operating margin at 18.63% vs. industry average at 12.22%. TTM pretax margin at 17.00% vs. industry average at 11.05%. The stock is currently stuck in a downtrend, trading 12.1% below its SMA20, 13.91% below its SMA50, and 13.9% below its SMA200. It's been a rough couple of days for the stock, losing 7.21% over the last week.

*Dividend and price data sourced from Screener.co, profitability data sourced from Fidelity, 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.