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Inventory is a very interesting tool that can give some insight into how healthy a company’s sales trends are.
To demonstrate this, we ran a screen on stocks paying dividend yields above 2% and sustainable payout ratios below 50% for those exhibiting positive inventory trends: increases in quarterly revenue exceeding increases in quarterly inventory year-over-year, as well as inventory becoming a smaller portion of current assets.

To help understand why these trends are positive, think of why the opposite trends would be negative. If inventory were growing faster than revenue, it would probably indicate that the company is having trouble selling its inventory. Of course, other explanations can exist, such as inventory building in anticipation of future sales.

Of course, healthy sales trends have implications for a company’s dividend yield. Companies with strong sales performance are more likely to continue paying or even increase their dividend yield.

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 stocks pay reliable dividends? Use this list as a starting-off point for your own analysis.

List sorted by market cap.

1. Chevron Corp. (NYSE:CVX): Engages in petroleum, chemicals, mining, power generation, and energy operations worldwide. Market cap of $180.03B. Dividend yield at 3.47%, payout ratio at 25.66%. MRQ revenue has increased 30.08% ($68,948M vs. $53,004M yoy) while MRQ inventory has increased 23.26% ($7,286M vs. $5,911M yoy). Inventory/current assets has decreased from 13.94% to 13.49%, comparing 3 months ending 2011-06-30 to 3 months ending 2010-06-30. The stock has gained 14.1% over the last year.

2. The Coca-Cola Company (NYSE:KO):
Distributes, and markets nonalcoholic beverages worldwide. Market cap of $150.21B. Dividend yield at 2.87%, payout ratio at 33.38%. MRQ revenue has increased 46.84% ($12,737M vs. $8,674M yoy) while MRQ inventory has increased 36.99% ($3,237M vs. $2,363M yoy). Inventory/current assets has decreased from 12.72% to 12.20%, comparing 3 months ending 2011-07-01 to 3 months ending 2010-07-02. The stock has gained 14.27% over the last year.

3. ConocoPhillips (NYSE:COP): Operates as an integrated energy company worldwide. Market cap of $83.74B. Dividend yield at 4.33%, payout ratio at 30.57%. MRQ revenue has increased 33.58% ($66,961M vs. $50,127M yoy) while MRQ inventory has decreased 1.87% ($6,986M vs. $7,119M yoy). Inventory/current assets has decreased from 26.70% to 20.15%, comparing 3 months ending 2011-06-30 to 3 months ending 2010-06-30. The stock has performed poorly over the last month, losing 10.27%.

4. Siemens AG (SI):
Operates in the industry, energy, and healthcare sectors worldwide. Market cap of $79.50B. Dividend yield at 4.24%, payout ratio at 18.43%. MRQ revenue has increased 2.40% ($17,844M vs. $17,425M yoy) while MRQ inventory has decreased 2.64% ($15,874M vs. $16,304M yoy). Inventory/current assets has decreased from 33.31% to 29.48%, comparing 3 months ending 2011-06-30 to 3 months ending 2010-06-30. The stock has performed poorly over the last month, losing 14.58%.

5. Occidental Petroleum Corporation (NYSE:OXY):
Operates as an oil and gas exploration and production company primarily in the United States. Market cap of $55.74B. Dividend yield at 2.68%, payout ratio at 24.69%. MRQ revenue has increased 33.88% ($6,208M vs. $4,637M yoy) while MRQ inventory has decreased 1.48% ($1,202M vs. $1,220M yoy). Inventory/current assets has decreased from 13.28% to 12.09%, comparing 3 months ending 2011-06-30 to 3 months ending 2010-06-30. It's been a rough couple of days for the stock, losing 10.92% over the last week.

6. The Home Depot, Inc. (NYSE:HD):
Operates as a home improvement retailer. Market cap of $49.42B. Dividend yield at 3.17%, payout ratio at 43.47%. MRQ revenue has increased 4.23% ($20,232M vs. $19,410M yoy) while MRQ inventory has decreased 0.03% ($10,756M vs. $10,759M yoy). Inventory/current assets has decreased from 68.28% to 67.83%, comparing 13 weeks ending 2011-07-31 to 13 weeks ending 2010-08-01. It's been a rough couple of days for the stock, losing 7.09% over the last week.

7. Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX): Engages in the exploration, mining, and production of mineral resources. Market cap of $28.31B. Dividend yield at 3.35%, payout ratio at 32.18%. MRQ revenue has increased 50.47% ($5,814M vs. $3,864M yoy) while MRQ inventory has increased 29.42% ($3,748M vs. $2,896M yoy). Inventory/current assets has decreased from 39.71% to 36.84%, comparing 3 months ending 2011-06-30 to 3 months ending 2010-06-30. Might be undervalued at current levels, with a PEG ratio at 0.63, and P/FCF ratio at 7.43. It's been a rough couple of days for the stock, losing 11.55% over the last week.

8. Lockheed Martin Corporation (NYSE:LMT):
Engages in the research, design, development, manufacture, integration, operation, and sustainment of advanced technology systems and products in the areas of defense, space, intelligence, homeland security, and government information technology in the United States and internationally. Market cap of $23.88B. Dividend yield at 5.62%, payout ratio at 38.08%. MRQ revenue has increased 2.40% ($11,551M vs. $11,280M yoy) while MRQ inventory has decreased 5.68% ($2,226M vs. $2,360M yoy). Inventory/current assets has decreased from 16.61% to 15.95%, comparing 3 months ending 2011-06-26 to 3 months ending 2010-06-27. The stock is a short squeeze candidate, with a short float at 6.95% (equivalent to 8.04 days of average volume). The stock has gained 6.81% over the last year.

9. Public Service Enterprise Group Inc. (NYSE:PEG): Operates in the energy industry primarily in the northeastern and mid-Atlantic United States. Market cap of $16.36B. Dividend yield at 4.24%, payout ratio at 42.80%. MRQ revenue has increased 4.57% ($2,469M vs. $2,361M yoy), while MRQ inventory has decreased 11.49% ($924M vs. $1,044M yoy). Inventory/current assets has decreased from 29.96% to 24.41%, comparing 3 months ending 2011-06-30 to 3 months ending 2010-06-30. The stock has gained 2.02% over the last year.

10. Teck Resources Limited (NYSE:TCK): Operates as a diversified mining, mineral processing, and metallurgical company. Market cap of $16.06B. Dividend yield at 2.27%, payout ratio at 15.09%. MRQ revenue has increased 27.21% ($2,796M vs. $2,198M yoy) while MRQ inventory has increased 16.33% ($1,553M vs. $1,335M yoy). Inventory/current assets has decreased from 47.41% to 36.58%, comparing 3 months ending 2011-06-30 to 3 months ending 2010-06-30. Might be undervalued at current levels, with a PEG ratio at 0.65, and P/FCF ratio at 11.27. It's been a rough couple of days for the stock, losing 10.06% over the last week.

11. Coca-Cola FEMSA S.A.B de C.V. (NYSE:KOF):
Produces, markets, and distributes Coca-Cola trademark beverages and brands. Market cap of $15.92B. Dividend yield at 2.36%, payout ratio at 26.13%. MRQ revenue has increased 12.87% ($28,417M vs. $25,177M yoy) while MRQ inventory has increased 5.61% ($5,307M vs. $5,025M yoy). Inventory/current assets has decreased from 24.16% to 18.20%, comparing 3 months ending 2011-06-30 to 3 months ending 2010-06-30.

12. The McGraw-Hill Companies, Inc. (MHP):
Provides various information services for financial, educational, and business information markets worldwide. Market cap of $12.03B. Dividend yield at 2.50%, payout ratio at 34.22%. MRQ revenue has increased 7.24% ($1,580.8M vs. $1,474.06M yoy) while MRQ inventory has increased 0.19% ($340.3M vs. $339.65M yoy). Inventory/current assets has decreased from 11.68% to 10.88%, comparing 3 months ending 2011-06-30 to 3 months ending 2010-06-30. It's been a rough couple of days for the stock, losing 7.55% over the last week.

13. Gerdau S.A. (NYSE:GGB): Engages in the production and sale of steel products in Brazil and internationally. Market cap of $11.76B. Dividend yield at 2.18%, payout ratio at 28.57%. MRQ revenue has increased 8.61% ($9,009.87M vs. $8,295.75M yoy), while MRQ inventory has decreased 1.40% ($7,080.61M vs. $7,181.05M yoy). Inventory/current assets has decreased from 44.83% to 44.78%, comparing 3 months ending 2011-06-30 to 3 months ending 2010-06-30. It's been a rough couple of days for the stock, losing 13.42% over the last week.

14. St. Jude Medical Inc. (NYSE:STJ):
Develops, manufactures, and distributes cardiovascular and implantable neurostimulation medical devices worldwide. Market cap of $11.20B. Dividend yield at 2.47%, payout ratio at 15.50%. MRQ revenue has increased 10.21% ($1,446.75M vs. $1,312.77M yoy) while MRQ inventory has increased 5.56% ($699.16M vs. $662.33M yoy). Inventory/current assets has decreased from 21.87% to 20.82%, comparing 13 weeks ending 2011-07-02 to 13 weeks ending 2010-07-03. It's been a rough couple of days for the stock, losing 10.95% over the last week.

15. Murphy Oil Corporation (NYSE:MUR):
Engages in the exploration and production of oil and gas properties worldwide. Market cap of $8.15B. Dividend yield at 2.61%, payout ratio at 22.14%. MRQ revenue has increased 55.97% ($8,721.49M vs. $5,591.93M yoy), while MRQ inventory has decreased 10.60% ($913.34M vs. $1,021.65M yoy). Inventory/current assets has decreased from 27.49% to 21.68%, comparing 3 months ending 2011-06-30 to 3 months ending 2010-06-30. It's been a rough couple of days for the stock, losing 9.05% over the last week.

16. Magna International, Inc. (NYSE:MGA): Operates as an automotive supplier in North America, Europe, and internationally. Market cap of $7.58B. Dividend yield at 3.19%, payout ratio at 18.94%. MRQ revenue has increased 24.42% ($7,338M vs. $5,898M yoy), while MRQ inventory has increased 16.56% ($2,098M vs. $1,800M yoy). Inventory/current assets has decreased from 23.77% to 23.72%, comparing 3 months ending 2011-06-30 to 3 months ending 2010-06-30. The stock has performed poorly over the last month, losing 15%.

17. Coca-Cola Enterprises Inc. (NYSE:CCE): Produces, distributes, and markets non-alcoholic beverages in Europe. Market cap of $7.53B. Dividend yield at 2.20%, payout ratio at 18.42%. MRQ revenue has increased 39.05% ($2,407M vs. $1,731M yoy), while MRQ inventory has decreased 53.74% ($483M vs. $1,044M yoy). Inventory/current assets has decreased from 18.24% to 17.28%, comparing 3 months ending 2011-07-01 to 3 months ending 2010-07-02. It's been a rough couple of days for the stock, losing 7.52% over the last week.

18. Wisconsin Energy Corp. (NYSE:WEC):
Engages in the generation, distribution, and sale of electric energy and steam. Market cap of $7.27B. Dividend yield at 3.35%, payout ratio at 42.43%. MRQ revenue has increased 11.31% ($991.7M vs. $890.9M yoy), while MRQ inventory has decreased 13.10% ($339.1M vs. $390.2M yoy). Inventory/current assets has decreased from 30.65% to 28.94%, comparing 3 months ending 2011-06-30 to 3 months ending 2010-06-30. The stock has gained 11% over the last year.

19. CMS Energy Corp. (NYSE:CMS):
Operates as an energy company primarily in Michigan. Market cap of $4.86B. Dividend yield at 4.38%, payout ratio at 47.99%. MRQ revenue has increased 1.79% ($1,364M vs. $1,340M yoy) while MRQ inventory has decreased 10.03% ($969M vs. $1,077M yoy). Inventory/current assets has decreased from 41.09% to 32.78%, comparing 3 months ending 2011-06-30 to 3 months ending 2010-06-30. The stock has gained 9.66% over the last year.

20. Wyndham Worldwide Corporation (NYSE:WYN):
Provides various hospitality products and services to individual consumers and business customers in the United States and internationally. Market cap of $4.42B. Dividend yield at 2.23%, payout ratio at 23.28%. MRQ revenue has increased 13.19% ($1,090M vs. $963M yoy) while MRQ inventory has increased 0.29% ($344M vs. $343M yoy). Inventory/current assets has decreased from 19.85% to 18.08%, comparing 3 months ending 2011-06-30 to 3 months ending 2010-06-30. This is a risky stock that is significantly more volatile than the overall market (beta = 3.08). It's been a rough couple of days for the stock, losing 12.05% over the last week.

Accounting data sourced from Google Finance; all other data sourced from Finviz.

Source: 20 Dividend Stocks With Positive Inventory Trends