Reviewing Return on Equity (ROE) in full detail is a great way to get a picture of a company. This stems from the fact that ROE can be broken down into several segments to illustrate the various part of a company and show how they are performing. ROE is sometimes referenced as DuPont analysis and can be a 3 or 5-part equation.
ROE = Profit Margin (Profit/Sales) * Total Asset Turnover (Sales/Assets) * Equity Multiplier (Assets/Equity)
3-Part DuPont analysis illustrates how ROE is affected in three different manners:
- Operating efficiency, which relates to the profit margin
- Asset use efficiency, which relates to the total asset turnover
- Financial leverage, which relates to the equity multiplier
We ran a screen for dividend stocks that are growing their EPS by a fair rate despite economic uncertainty (1-Year Fiscal EPS Growth>10%). From this narrowed pool we then screened for firms with a sound ROE ratio (ROE>10%).
The list is ranked from highest to lowest by ROE.
1. American Capital Agency Corp. (AGNC)
Sector | Real Estate |
Industry | REIT - Residential |
Market Cap | $5107M |
Beta | 0.39 |
Analyst Sentiment | 13/17-List Buy/Outperform (Bullish) |
The company operates as a real estate investment trust (REIT). The firm’s Dividend Yield is 19.57%. AGNC’s 1-Year Fiscal EPS Growth rate is 16.37%. The firm’s Return on Equity is 18.3%. The short interest for the firm is 4% as of 8/15/2011.
2. Frontline, Ltd. (FRO)
Sector | Industrials |
Industry | Shipping & Ports |
Market Cap | $536M |
Beta | 1.38 |
Analyst Sentiment | 10/25-List Hold/Neutral (Neutral) |
The company operates oil tankers and oil/bulk/ore (OBO) carriers. The firm’s Dividend Yield is 5.81%. FRO’s 1-Year Fiscal EPS Growth rate is 56.82%. The firm’s Return on Equity is 12.53%. The short interest for the firm is 22% as of 8/15/2011.
3. Knightsbridge Tankers, Ltd. (VLCCF)
Sector | Industrials |
Industry | Shipping & Ports |
Market Cap | 424 |
Beta | 1.01 |
Analyst Sentiment | 3/6 -List Hold/Neutral (Neutral) |
The company engages in the seaborne transportation of dry bulk cargo and crude oil. The firm’s Dividend Yield is 11.53%. VLCCF’s EPS Growth is 59.06%. The firm’s 1-Year Fiscal EPS Growth rate is 11.96%. The short interest for the firm is 9% as of 8/15/2011.
4. Ares Capital Corporation (ARCC)
Sector | Financial Services |
Industry | Asset Management |
Market Cap | $2816M |
Beta | 2.01 |
Analyst Sentiment | 14/15 -List Buy/Outperform (Bullish) |
The company is a private equity firm specializing in complex financing, leveraged transactions, and more. ARCC’s Dividend Yield is 10.2%. The firm’s 1-Year Fiscal EPS Growth rate is 96.48%. The firm’s Return on Equity is 15.26%. The short interest for the firm is 2% as of 8/15/2011.
5. France Telecom SA (FTE)
Sector | Communication Services |
Industry | Telecom Services |
Market Cap | 47124 |
Beta | 0.79 |
Analyst Sentiment | 17/31-List Hold/Neutral (Neutral) |
The company offers telephone services, mobile telecommunications, data transmission, and more. The firm’s Dividend Yield is 8.12%. FTE’s 1-Year Fiscal EPS Growth rate is 34.91%. The firm’s Return on Equity is 10.56%. The short interest for the firm is N/A as of 8/15/2011.
6. KKR Financial Corporation (KFN)
Sector | Financial Services |
Industry | Asset Management |
Market Cap | $1357M |
Beta | 3.08 |
Analyst Sentiment | 6/6 -List Buy/Outperform (Bullish) |
The company invests while using leverage to generate competitive risk-adjusted returns in multiple asset classes. The firm’s Dividend Yield is 9.45%. The firm's 1-Year Fiscal EPS Growth rate is 364%. The firm’s Return on Equity is 23.77%. The short interest for the firm is 4% as of 8/15/2011.
7. Telefonica SA (TEF)
Sector | Communication Services |
Industry | Telecom Services |
Market Cap | $89044M |
Beta | 1 |
Analyst Sentiment | 25/43-List Buy/Outperform (Bullish) |
The company offers fixed and mobile telephone services in Europe and South America. The firm’s Dividend Yield is 8.81%. TEF’s 1-Year Fiscal EPS Growth rate is 31.58%. The firm’s Return on Equity is 48.13%. The short interest for the firm is N/A as of 8/15/2011.
8. Enerplus Corp (ERF)
Sector | Energy |
Industry | Oil & Gas E&P |
Market Cap | $4892M |
Beta | 1.23 |
Analyst Sentiment | N/A |
The company is an independent oil and gas producer. The firm’s Dividend Yield is 8%. ERF’s 1-Year Fiscal EPS Growth rate is 33.96%. The firm’s Return on Equity is 13.88%. The short interest for the firm is N/A as of 8/15/2011.
9. Macro Bank, Inc. (BMA)
Sector | Financial Services |
Industry | Banks - Regional - Latin America |
Market Cap | $1569M |
Beta | 1.19 |
Analyst Sentiment | 5/7-List Hold/Neutral (Neutral) |
The company offers banking products and services to a variety of customers in Argentina. The firm’s Dividend Yield is 7.9%. BMA’s 1-Year Fiscal EPS Growth rate is 34.92%. The firm’s Return on Equity is 27.26%. The short interest for the firm is N/A as of 8/15/2011.
We hope this helps investors as they do their own due diligence on dividend stocks.
Disclosure: I am long FRO.
