16 Highly Liquid Dividend Stocks With Strong Sources Of Profitability

|
 |  Includes: ALCO, ALG, CLMS, FCX, FELE, GROW, HI, KLAC, LYTS, MXIM, RAVN, RECN, STLD, SUP, TIF, TKR
by: Kapitall

Profitability is a very important consideration for dividend stocks. For a closer look at a company’s profitability, DuPont analysis of return on equity (ROE) can narrow in on a company’s sources of profitability.

ROE can be broken up into three components such that increases in ROE can be attributed to those components.

ROE
= (Net Profit/Equity)
= (Net profit/Sales)*(Sales/Assets)*(Assets/Equity)
= (Net Profit margin)*(Asset turnover)*(Leverage ratio)

Analyzing the sources of returns for a company, we can focus on companies with the following characteristics: Increasing ROE along with,

• Decreasing leverage, i.e. decreasing Asset/Equity ratio
• Improving asset use efficiency (i.e. increasing Sales/Assets ratio) and improving net profit margin (i.e. increasing Net Income/Sales ratio)

Companies passing all requirements are thus experiencing increasing profits due to operations and not to increased use of leverage.

We ran DuPont analysis on stocks paying dividend yields above 1% and sustainable payout ratios below 50%. We also screened for stocks with current ratios above 3 indicating high liquidity, which is also an important consideration for dividend stocks.

‪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. Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX): Engages in the exploration, mining, and production of mineral resources. Market cap of $37.44B. Dividend yield at 2.53%, payout ratio at 34.62%. Current ratio at 3.37. MRQ Net Profit Margin increased to 23.53% from 17.18% year-over-year, Sales/Assets increased to 0.19 from 0.15, while Assets/Equity decreased to 2.11 from 2.47. The stock has had a couple of great days, gaining 12.5% over the last week.

2. Tiffany & Co. (NYSE:TIF): Engages in the design, manufacture, and retail of fine jewelry worldwide. Market cap of $9.71B. Dividend yield at 1.52%, payout ratio at 32.49%. Current ratio at 5.31. MRQ Net Profit Margin increased to 10.32% from 10.12% year-over-year, Sales/Assets increased to 0.22 from 0.19, while Assets/Equity decreased to 1.67 from 1.75. Exhibiting strong upside momentum--currently trading 10.03% above its SMA20, 10.06% above its SMA50, and 11.56% above its SMA200. The stock has had a couple of great days, gaining 8.78% over the last week.

3. Maxim Integrated Products Inc. (NASDAQ:MXIM): Designs, develops, manufactures, and markets a range of linear and mixed-signal integrated circuits worldwide. Market cap of $7.57B. Dividend yield at 3.40%, payout ratio at 49.68%. Current ratio at 3.89. MRQ Net Profit Margin increased to 20.05% from 10.33% year-over-year, Sales/Assets increased to 0.18 from 0.16, while Assets/Equity decreased to 1.41 from 1.48. The stock has gained 37.65% over the last year.

4. KLA-Tencor Corporation (NASDAQ:KLAC): Engages in the design, manufacture, and marketing of process control and yield management solutions for the semiconductor and related nanoelectronics industries. Market cap of $7.46B. Dividend yield at 3.12%, payout ratio at 21.07%. Current ratio at 4.17. MRQ Net Profit Margin increased to 27.46% from 20.21% year-over-year, Sales/Assets increased to 0.19 from 0.14, while Assets/Equity decreased to 1.63 from 1.74. The stock has had a good month, gaining 18.79%.

5. Timken Co. (NYSE:TKR): Develops, manufactures, markets, and sells anti-friction bearings and related products and steel products primarily in the United States and Europe. Market cap of $4.11B. Dividend yield at 1.91%, payout ratio at 17.19%. Current ratio at 3.27. MRQ Net Profit Margin increased to 9.14% from 8.46% year-over-year, Sales/Assets increased to 0.32 from 0.25, while Assets/Equity decreased to 1.91 from 2.44. This is a risky stock that is significantly more volatile than the overall market (beta = 2.06). The stock has had a couple of great days, gaining 9.17% over the last week.

6. Steel Dynamics Inc. (NASDAQ:STLD): Engages in the manufacture and sale of steel products in the United States. Market cap of $2.73B. Dividend yield at 3.21%, payout ratio at 32.02%. Current ratio at 3.48. MRQ Net Profit Margin increased to 4.75% from 3.01% year-over-year, Sales/Assets increased to 0.35 from 0.29, while Assets/Equity decreased to 2.59 from 2.66. The stock has recently rebounded, and is currently trading 11.48% above its SMA20 and 7.02% above its SMA50. However, the stock still trades 22.12% below its SMA200. The stock has had a couple of great days, gaining 14.81% over the last week.

7. Hillenbrand, Inc. (NYSE:HI): Through its subsidiary, Batesville Services, Inc., manufactures, distributes, and sells funeral service products to licensed funeral directors operating licensed funeral homes. Market cap of $1.33B. Dividend yield at 3.57%, payout ratio at 45.47%. Current ratio at 3.71. MRQ Net Profit Margin increased to 10.65% from 6.46% year-over-year, Sales/Assets increased to 0.21 from 0.20, while Assets/Equity decreased to 2.18 from 2.96. The stock is a short squeeze candidate, with a short float at 5.58% (equivalent to 9.38 days of average volume). The stock has had a couple of great days, gaining 8.41% over the last week.

8. Raven Industries Inc. (NASDAQ:RAVN): Manufactures products for industrial, agricultural, construction, and military/aerospace markets in North America. Market cap of $1.10B. Dividend yield at 1.18%, payout ratio at 25.91%. Current ratio at 4.3. MRQ Net Profit Margin increased to 13.79% from 11.41% year-over-year, Sales/Assets increased to 0.43 from 0.38, while Assets/Equity decreased to 1.2876 from 1.2917. Exhibiting strong upside momentum--currently trading 10.17% above its SMA20, 15.31% above its SMA50, and 13.65% above its SMA200. The stock has had a couple of great days, gaining 6.37% over the last week.

9. Franklin Electric Co. Inc. (NASDAQ:FELE): Engages in the design, manufacture, and distribution of groundwater and fuel pumping systems. Market cap of $1.06B. Dividend yield at 1.18%, payout ratio at 23.33%. Current ratio at 3.04. MRQ Net Profit Margin increased to 9.66% from 5.84% year-over-year, Sales/Assets increased to 0.2595 from 0.2590, while Assets/Equity decreased to 1.87 from 1.90. The stock has had a couple of great days, gaining 16.13% over the last week.

10. Superior Industries International, Inc. (NYSE:SUP): Designs, develops, manufactures, sells, and supplies cast aluminum road wheels to automobile and light truck manufacturers primarily in North America. Market cap of $515.23M. Dividend yield at 3.37%, payout ratio at 31.11%. Current ratio at 6.07. MRQ Net Profit Margin increased to 7.04% from 5.19% year-over-year, Sales/Assets increased to 0.3545 from 0.3468, while Assets/Equity decreased to 1.35 from 1.48. The stock is a short squeeze candidate, with a short float at 5.01% (equivalent to 7.64 days of average volume). The stock has had a couple of great days, gaining 9.46% over the last week.

11. Resources Connection Inc. (NASDAQ:RECN): Provides professional services in provides finance, accounting, risk management and internal audit, corporate advisory, strategic communications and restructuring, information management, human capital, supply chain management, actuarial, and legal and regulatory services in support of client-led projects and initiatives. Market cap of $498.12M. Dividend yield at 1.77%, payout ratio at 29.41%. Current ratio at 3.93. MRQ Net Profit Margin increased to 1.88% from 0.99% year-over-year, Sales/Assets increased to 0.30 from 0.26, while Assets/Equity decreased to 1.26 from 1.33. The stock has recently rebounded, and is currently trading 5.72% above its SMA20 and 10.27% above its SMA50. However, the stock still trades 22.83% below its SMA200. The stock has had a couple of great days, gaining 11.02% over the last week.

12. Alamo Group Inc. (NYSE:ALG): Provides equipment and related replacement parts for maintenance and agriculture. Market cap of $284.53M. Dividend yield at 1.00%, payout ratio at 10.62%. Current ratio at 3.69. MRQ Net Profit Margin increased to 5.54% from 3.53% year-over-year, Sales/Assets increased to 0.37 from 0.36, while Assets/Equity decreased to 1.59 from 1.63. The stock has had a couple of great days, gaining 13.98% over the last week.

13. Calamos Asset Management Inc. (NASDAQ:CLMS): Provides investment advisory services to individuals including high net worth individuals, and institutions. Market cap of $244.58M. Dividend yield at 3.25%, payout ratio at 31.29%. Current ratio at 11.68. MRQ Net Profit Margin increased to 7.20% from 5.80% year-over-year, Sales/Assets increased to 0.16 from 0.15, while Assets/Equity decreased to 3.03 from 3.18. This is a risky stock that is significantly more volatile than the overall market (beta = 3.21). The stock has had a good month, gaining 20.06%.

14. LSI Industries Inc. (NASDAQ:LYTS): Provides corporate visual image solutions primarily in the United States, Canada, Australia, and Latin America. Market cap of $168.09M. Dividend yield at 2.89%, payout ratio at 44.41%. Current ratio at 4.92. MRQ Net Profit Margin increased to 2.02% from 1.14% year-over-year, Sales/Assets increased to 0.42 from 0.37, while Assets/Equity decreased to 1.16 from 1.21. The stock has had a couple of great days, gaining 5.01% over the last week.

15. Alico Inc. (NASDAQ:ALCO): Operates as a land management company in central and southwest Florida. Market cap of $164.71M. Dividend yield at 2.14%, payout ratio at 12.72%. Current ratio at 3.86. MRQ Net Profit Margin increased to 15.18% from 8.05% year-over-year, Sales/Assets increased to 0.21 from 0.14, while Assets/Equity decreased to 1.68 from 1.87. The stock has had a couple of great days, gaining 11.94% over the last week.

16. U.S. Global Investors, Inc. (NASDAQ:GROW): A publicly owned investment manager. Market cap of $111.10M. Dividend yield at 3.33%, payout ratio at 40.81%. Current ratio at 7.59. MRQ Net Profit Margin increased to 15.89% from 11.27% year-over-year, Sales/Assets increased to 0.2108 from 0.2101, while Assets/Equity decreased to 1.12 from 1.13. The stock has lost 10.78% over the last year.

*DuPont data sourced from Google Finance, 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.