Liquidity is a very important consideration when looking at dividend stocks. If a company’s profitability takes a temporary hit, the company can use sources of liquidity such as cash and securities to maintain its dividend yield. Companies with greater liquidity are considered to have more sustainable dividends.
We ran a screen on dividend stocks with high liquidity, with current ratios (current assets/current liabilities) and quick ratios (current assets less inventory/current liabilities) above 3. We screened these stocks for those that have seen significant net institutional buying over the current quarter.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the 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.
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Do you think these stocks pay reliable dividends? Use this list as a starting point for your own analysis.
List sorted by dividend yield.
1. Communications Systems Inc. (JCS): Manufactures and sells modular connecting and wiring devices, and media and rate conversion products. Market cap of $117.43M. Dividend yield at 4.31%, payout ratio at 40.17%. Current ratio at 5.73, quick ratio at 4.10. Net institutional shares purchased over the current quarter at 506.3K, which is 8.79% of the company's 5.76M share float. The stock has gained 32.79% over the last year.
2. Hillenbrand, Inc. (HI): Manufactures, distributes and sells funeral service products to licensed funeral directors operating licensed funeral homes. Market cap of $1.21B. Dividend yield at 3.93%, payout ratio at 45.47%. Current ratio at 3.71, quick ratio at 3.05. Net institutional shares purchased over the current quarter at 2.9M, which is 4.98% of the company's 58.26M share float. The stock is a short squeeze candidate, with a short float at 5.41% (equivalent to 7.91 days of average volume). The stock has lost 5.71% over the last year.
3. Cognex Corporation (CGNX): Provides machine vision products that capture and analyze visual information to automate tasks, primarily in manufacturing processes. Market cap of $1.21B. Dividend yield at 1.25%, payout ratio at 18.04%. Current ratio at 6.04, quick ratio at 5.56. Net institutional shares purchased over the current quarter at 1.6M, which is 4.16% of the company's 38.43M share float. The stock has performed poorly over the last month, losing 10.13%.
*Institutional 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.