8 Low-Debt Stocks With Rapid Dividend Growth And Strong Corporate Governance

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 |  Includes: BK, CSCO, CY, FITB, HRL, SMP, STI, WFC
by: Kapitall

One important consideration for stocks is the corporate governance policies of the company, such as its board composition and shareholder rights, which have important implications for the company’s performance.

RiskMetrics Group gives ratings for four areas of corporate governance, on risks related to the board, the audit committee, the compensation committee, and shareholder rights.

We ran a screen on stocks with low debt and rapid dividend growth, comparing the current year dividend per share estimate to the trailing-twelve-month dividend per share. We screened these companies for those receiving “low risk” ratings from RiskMetrics on all four corporate governance categories.

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 companies are being run well? Use this list as a starting point for your own analysis.

List sorted by dividend yield.

1. The Bank of New York Mellon Corporation (NYSE:BK): Asset Management Industry. Market cap of $24.12B. Dividend yield at 2.66%, payout ratio at 18.68%. MRQ total debt to total assets at 0.09. Current year dividend per share estimate at $0.51 vs. TTM dividend per share at $0.40. According to RiskMetrics, the company has "low risk" in all corporate governance categories. Might be undervalued at current levels, with a PEG ratio at 0.72, and P/FCF ratio at 5.77. The stock has performed poorly over the last month, losing 21.12%.

2. Standard Motor Products Inc. (NYSE:SMP): Auto Parts Industry. Market cap of $251.10M. Dividend yield at 2.55%, payout ratio at 15.80%. MRQ total debt to total assets at 0.13. Current year dividend per share estimate at $0.28 vs. TTM dividend per share at $0.24. According to RiskMetrics, the company has "low risk" in all corporate governance categories. This is a risky stock that is significantly more volatile than the overall market (beta = 2.31). It has been a rough couple of days for the stock, losing 5.43% over the last week.

3. Fifth Third Bancorp (NASDAQ:FITB): Regional Banks Industry. Market cap of $8.83B. Dividend yield at 2.50%, payout ratio at 14.65%. MRQ total debt to total assets at 0.12. Current year dividend per share estimate at $0.24 vs. TTM dividend per share at $0.14. According to RiskMetrics, the company has "low risk" in all corporate governance categories. This is a risky stock that is significantly more volatile than the overall market (beta = 2.23). The stock has performed poorly over the last month, losing 22.14%.

4. Cypress Semiconductor Corporation (NASDAQ:CY): Semiconductor Line Industry. Market cap of $2.95B. Dividend yield at 2.10%, payout ratio at 11.04%. MRQ total debt to total assets at 0.01. Current year dividend per share estimate at $0.18 vs. TTM dividend per share at $0.09. According to RiskMetrics, the company has "low risk" in all corporate governance categories. It has been a rough couple of days for the stock, losing 8.04% over the last week.

5. Wells Fargo & Company (NYSE:WFC): Money Center Banks Industry. Market cap of $125.24B. Dividend yield at 2.02%, payout ratio at 7.65%. MRQ total debt to total assets at 0.16. Current year dividend per share estimate at $0.49 vs. TTM dividend per share at $0.34. According to RiskMetrics, the company has "low risk" in all corporate governance categories. Might be undervalued at current levels, with a PEG ratio at 0.71, and P/FCF ratio at 4.49. The stock has performed poorly over the last month, losing 16.98%.

6. Hormel Foods Corp. (NYSE:HRL): Meat Products Industry. Market cap of $7.49B. Dividend yield at 1.82%, payout ratio at 27.23%. MRQ total debt to total assets at 0.13. Current year dividend per share estimate at $0.65 vs. TTM dividend per share at $0.47. According to RiskMetrics, the company has "low risk" in all corporate governance categories. The stock is a short squeeze candidate, with a short float at 6.28% (equivalent to 7.04 days of average volume). The stock has gained 31.71% over the last year.

7. Cisco Systems, Inc. (NASDAQ:CSCO): Networking and Communication Devices Industry. Market cap of $82.56B. Dividend yield at 1.60%, payout ratio at 10.17%. MRQ total debt to total assets at 0.19. Current year dividend per share estimate at $0.16 vs. TTM dividend per share at $0.12. According to RiskMetrics, the company has "low risk" in all corporate governance categories. It has been a rough couple of days for the stock, losing 5.72% over the last week.

8. SunTrust Banks, Inc. (NYSE:STI): Money Center Banks Industry. Market cap of $9.51B. Dividend yield at 1.13%, payout ratio at 5.13%. MRQ total debt to total assets at 0.11. Current year dividend per share estimate at $0.10 vs. TTM dividend per share at $0.04. According to RiskMetrics, the company has "low risk" in all corporate governance categories. It has been a rough couple of days for the stock, losing 5.09% over the last week.

*Dividend per share data sourced from Screener.co, RiskMetrics ratings 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.