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Interesting stocks must have good fundamentals, rising profitability, strong growth figures and a convincing equity story. Finally, they must be attractive valuated.

I’ve tried to summarize some of these criteria’s in a list of fundamental well positioned stocks with interesting dividends (from low-yield to high-yield paying stocks). Stocks from the screen have a market capitalization of more than $1 billion. In addition, they grew with double digit rates in earnings per share and with at least eight percent in sales over the past ten years.

Additional criteria are the return on investment and the operating margin in order to indicate the profitability of the company. As pricing criteria, I decided to choose the price to earnings ratio, dividend yield and price to book ratio. Here are the details of my criteria:

  • Market capitalization: > 1 Billion
  • Price/earnings ratio:> 0 < 100
  • Dividend yield: > 2 < 20
  • Return on investment: > 10 < 100
  • Operating margin: > 10 < 100
  • 10-year revenue growth: > 8 < 200
  • 10-year EPS growth: > 10 < 100

Here are my most promising stocks from the list:

  1. China Mobile (CHL) is acting within the wireless communication industry. The company has a market capitalization of $203.5 billion, generates revenues in an amount of $79.2 billion and a net income of $19.3 billion. It follows price/earnings ratio is 10.7, price/sales 2.6 and price/book ratio 2.3. Dividend yield: 4%. Years of consecutive dividend increasing: 0 years. 5-year dividend growth: 17%. The company paid dividends since 2003. The expected EPS growth for the next year amounts to -2.7 and 1.8% for the upcoming five years.
  2. Garmin (GRMN) is acting within the scientific and technical instruments industry. The company has a market capitalization of $6.5 billion, generates revenues in an amount of $2.7 billion and a net income of $617.4 million. It follows price/earnings ratio is 10.7, price/sales 2.7 and price/book ratio 2.2. Dividend yield: 4.8%. Years of consecutive dividend increasing: 0 years. 5-year dividend growth: 82.0%. The company paid dividends since 2003. The expected EPS growth for the next year amounts to 2.4 and 4.1% for the upcoming five years.
  3. Novartis (NVS) is acting within the major drug manufacturing industry. The company has a market capitalization of $156.7 billion, generates revenues in an amount of $56.6 billion and a net income of $9.9 billion. It follows price/earnings ratio is 13.5, price/sales 2.8 and price/book ratio 2.1. Dividend yield: 4.1%. Years of consecutive dividend increasing: 4 Years. 5-year dividend growth: 22.3%. The company paid dividends since 1992. The expected EPS growth for the next year amounts to 6.6 and 4.8% for the upcoming five years.

Take a closer look at the full list. The average dividend yield amounts to 3.64% while the average price to earnings ratio is 12.33. Stocks grew with 16.66% in revenues and 19.30% in earnings per share over the past decade. The average operating margin is 27.87% and the return on investment finally 19.05% (5-year average).

Source: 3 Favorite Dividend Stocks For September 2011