Dividends are a great way to improve portfolio returns when volatility is making it easier to squeeze water out of a rock than getting a decent return in the markets. When looking at dividend stocks, one metric to always review is a firm’s net profit margin. Dividend stocks that can keep a healthy net margin and expand it over time should be rewarded with share price growth along with making dividends more reliable.
We ran a screen for dividend stocks that have retraced at least 20% from their 52-week highs and have strong profitability (net margin TTM>15%).
The list is ranked from lowest to highest by net margin TTM.
1. Portugal Telecom SA (PT)
Sector | Communication Services |
Industry | Telecom Services |
Market Cap | $7,647M |
Beta | 0.76 |
The company offers telecommunications services in Brazil, Portugal, and Africa. The firm's net margin (TTM) is 153.83%. PT's dividend yield is 11.04%. The stock is 44.03% below its 52-week high. The short interest is N/A as of 08/15/2011.
2. Ares Capital Corporation (ARCC)
Sector | Financial Services |
Industry | Asset Management |
Market Cap | $2,837M |
Beta | 2.01 |
The company is a private equity firm specializing in complex financing, leveraged transactions, and more. ARCC’s net margin (TTM) is 77.52%. The firm’s dividend yield is 10.12%. The stock is 23.04% below its 52-week high. The short interest is 1.70% as of 08/15/2011.
3. TC Pipelines LP (TCLP)
Sector | Energy |
Industry | Oil & Gas Midstream |
Market Cap | $2,182M |
Beta | 0.55 |
The company owns and operates pipelines in the U.S. The firm’s net margin (TTM) is 77.40%. TCLP’s dividend yield is 7.40%. The stock is 25.73% below its 52-week high. The short interest is 0.60% as of 08/15/2011.
4. Spectra Energy Partners, LP (SEP)
Sector | Energy |
Industry | Oil & Gas Midstream |
Market Cap | $2,553M |
Beta | 0.10 |
The company transports natural gas through interstate pipeline systems and stores it as well. SEP’s Net Margin (TTM) is 75.82%. The firm’s dividend yield is 6.85%. The stock is 27.02% below its 52-week high. The short interest is 0.90% as of 08/15/2011.
5. Apollo Investment Corp (AINV)
Sector | Financial Services |
Industry | Asset Management |
Market Cap | $1,589M |
Beta | 1.87 |
The company operates as a closed-end management investment firm and does business development. AINV’s net margin (TTM) is 70.58%. The firm’s dividend yield is 13.84%. The stock is 35.07% below its 52-week high. The short interest is N/A as of 08/15/2011.
6. KKR Financial Corporation (KFN)
Sector | Financial Services |
Industry | Asset Management |
Market Cap | $1,368M |
Beta | N/A |
The company invests while using leverage to generate competitive risk-adjusted returns in multiple asset classes. The firm’s net margin (TTM) is 68.02%. KFN’s dividend yield is 8.20%. The stock is 27.55% below its 52-week high. The short interest is 0.50% as of 08/15/2011.
7. Safe Bulkers, Inc. (SB)
Sector | Industrials |
Industry | Shipping & Ports |
Market Cap | $476M |
Beta | 2.48 |
The firm’s Net Margin (TTM) is 60.13%. SB’s dividend yield is 8.94%. The stock is 31.39% below its 52-week high. The short interest is 2.40% as of 08/15/2011.
8. SL Green Realty Corporation (SLG)
Sector | Real Estate |
Industry | REIT - Office |
Market Cap | $5,630M |
Beta | 2.59 |
The company is a Real Estate Investment Trust that operates in a variety of different real estate spaces. SLG’s net margin (TTM) is 59.00%. The firm’s dividend yield is 0.61%. The stock is 26.81% below its 52-week high. The short interest is 6.60% as of 08/15/2011.
9. Devon Energy Corp (DVN)
Sector | Energy |
Industry | Oil & Gas E&P |
Market Cap | $26,227M |
Beta | 1.13 |
The company explores, develops, & transports oil and gas. The firm’s net margin (TTM) is 58.97%. DVN’s dividend yield is 1.03%. The stock is 32.69% below its 52-week high. The short interest is as 1.50% of 08/15/2011.
10. Buenaventura Mining Company (BVN)
Sector | Basic Materials |
Industry | Gold |
Market Cap | $11,384M |
Beta | 0.75 |
The company mines and processes silver, gold, and some other metals to a smaller degree. BVN’s net margin (TTM) is 58.57%. The firm’s dividend yield is 1.05%. The stock is 21.78% below its 52-week high. The short interest is N/A as of 08/15/2011.
We hope this list helps as investors due their own due diligence on dividend stocks with strong net margins.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
