For a company it is very important to have a high consumer loyalty and therefore a huge price increase leeway in order to compete successfully with competitors. A figure that measures this fact is the operating margin. In addition, the ratio shows how much profit from sales is remaining to pay taxes and interest.
I screened stocks with a market capitalization of more than $10 billion as well as a dividend yield of more than 5 percent. In addition, the operation margin should be above 25 percent. That’s a pretty high value which is fulfilled by only a few U.S. listed stocks (11.3 percent). Within the category high yield large caps, 31 percent fulfilled this criterion. Here are three interesting stocks from the screening results:
1. Southern Copper (SCCO) is acting within the copper industry. The company has a market capitalization of $23.6 billion, generates revenues in an amount of $6.2 billion and a net income of $2.0 billion. It follows P/E ratio is 11.9 and forward price to earnings ratio 8.4, Price/Sales 3.8 and Price/Book ratio 5.9. Dividend Yield: 7.8 percent. The operating margin amounts to 52.2 percent and net profit margin 32.5 percent.
2. AstraZeneca (AZN) is acting within the major drug manufacturing industry. The company has a market capitalization of $58.7 billion, generates revenues in an amount of $33.0 billion and a net income of $8.2 billion. It follows P/E ratio is 7.7 and forward price to earnings ratio 7.3, Price/Sales 1.8 and Price/Book ratio 2.7. Dividend Yield: 6.2 percent. The operating margin amounts to 34.1 percent and net profit margin 24.9 percent.
3. National Grid (NGG) is acting within the gas utility industry. The company has a market capitalization of $35.7 billion, generates revenues in an amount of $22.6 billion and a net income of $3.4 billion. It follows P/E ratio is 10.1 and forward price to earnings ratio 11.9, Price/Sales 1.6 and Price/Book ratio 2.5. Dividend Yield: 5.8 percent. The operating margin amounts to 26.2 percent and net profit margin 15.1 percent.
Take a closer look at the full table of 15 high yield large caps with best margin. The average price to earnings ratio (P/E ratio) amounts to 12.4 while the average forward P/E ratio is 9.6. The dividend yield has an average value of 7.5 percent. Price to book ratio is 3.7 and price to sales ratio 3.1. The operating margin amounts to 34.1 percent.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
