Every shareholder would like to see sound top-line growth when holding a dividend-paying stock. However, the consequence of not understanding how a company is growing their top line can mean accidently jumping into a highly leveraged company that is walking a fine line. When reviewing dividend stocks that are posting strong top-line growth, always make sure to understand how much leverage a company is employing and to not take any numbers at face value.
We use the 1-Year Fiscal Revenue Growth Rate because it represents a company’s growth over an extended period of time. This is one of many great metrics to use when trying to identify which companies are navigating the global economic well and generating positive growth trends.
Financial Leverage, also known as the Equity Multiplier, illustrates how a company is financing its assets. The lower the number the more a company is financing its assets internally through stockholder equity. The higher this metric is the more the company is relying on debt to finance its assets.
We first looked for dividend paying companies that have posted clear growth on the top line despite a tough economic environment (1-year fiscal revenue growth rate >20%). From this narrowed list of candidates we singled out companies that had been able to achieve this without using a substantial amount of leverage (Financial Leverage<2). We did not screen out any sectors or market caps.
The list is ranked from highest to lowest by the Financial Leverage Ratio:
1. Scripps Networks Interactive (SNI)
Sector | Consumer Cyclical |
Industry | Media - Diversified |
Market Cap | $6,739M |
Beta | 1.14 |
The company operates as a lifestyle content and Internet search company in the United States and internationally. SNI has a dividend yield of 0.84%. The company has a 1-year fiscal revenue growth rate of 34.12% and operates with a financial leverage ratio of 2.00. The short interest was N/A as of 10/14/2011.
2. Linn Energy LLC (LINE)
Sector | Energy |
Industry | Oil and Gas EandP |
Market Cap | $6,561M |
Beta | 0.84 |
The company Linn Energy, LLC, an independent oil and natural gas company, engages in the development and acquisition of oil and gas properties in the United States. LINE has a dividend yield of 7.27%. The company has a 1-year fiscal revenue growth rate of 182.73% and operates with a financial leverage ratio of 1.98. The short interest was 1.20% as of 10/14/2011.
3. Nucor Corp. (NUE)
Sector | Basic Materials |
Industry | Steel |
Market Cap | $12,195M |
Beta | 1.35 |
The company engages in the manufacture and sale of steel and steel products in North America and internationally. NUE has a dividend yield of 3.72%. The company has a 1-year fiscal revenue growth rate of 41.59% and operates with a financial leverage ratio of 1.97. The short interest was N/A as of 10/14/2011.
4. POSCO (PKX)
Sector | Basic Materials |
Industry | Steel |
Market Cap | $26,343M |
Beta | 1.75 |
The company manufactures and sells steel products in South Korea and internationally. PKX has a dividend yield of 2.51%. The company has a 1-year fiscal revenue growth rate of 64.53% and operates with a financial leverage ratio of 1.96. The short interest was N/A as of 10/14/2011.
5. Rio Tinto PLC (RIO)
Sector | Basic Materials |
Industry | Industrial Metals and Minerals |
Market Cap | $109,987M |
Beta | 1.71 |
The company engages in finding, mining, and processing mineral resources. RIO has a dividend yield of 2.08%. The company has a 1-year fiscal revenue growth rate of 35.27% and operates with a financial leverage ratio of 1.95. The short interest was N/A as of 10/14/2011.
6. Southern Copper Corporation (SCCO)
Sector | Basic Materials |
Industry | Copper |
Market Cap | $26,259M |
Beta | 1.65 |
The company engages in mining, exploring, smelting, and refining copper ores in Peru, Mexico, and Chile. SCCO has a dividend yield of 6.93%. The company has a 1-year fiscal revenue growth rate of 37.90% and operates with a financial leverage ratio of 1.95. The short interest was N/A as of 10/14/2011.
7. CF Industries Holdings Inc. (CF)
Sector | Basic Materials |
Industry | Agricultural Inputs |
Market Cap | $12,508M |
Beta | 0.75 |
The company manufactures and distributes nitrogen and phosphate fertilizer products, serving agricultural and industrial customers worldwide. CF has a dividend yield of 3.55%. The company has a 1-year fiscal revenue growth rate of 52.01% and operates with a financial leverage ratio of 1.93. The short interest was 3.10% as of 10/14/2011.
8. Watsco, Inc. (WSO)
Sector | Technology |
Industry | Electronics Distribution |
Market Cap | $2,081M |
Beta | 0.88 |
The company distributes air conditioning, heating and refrigeration equipment, and related parts and supplies in the United States. WSO has a dividend yield of 4.47%. The company has a 1-year fiscal revenue growth rate of 42.10% and operates with a financial leverage ratio of 1.93. The short interest was 12.70% as of 10/14/2011.
9. PetroChina Co Ltd. (PTR)
Sector | Energy |
Industry | Oil and Gas Integrated |
Market Cap | $237,012M |
Beta | 0.82 |
The company produces and distributes oil and gas in the People's Republic of China. PTR has a dividend yield of 3.70%. The company has a 1-year fiscal revenue growth rate of 43.77% and operates with a financial leverage ratio of 1.92. The short interest was N/A as of 10/14/2011.
10. Merck and Co Inc. (MRK)
Sector | Healthcare |
Industry | Drug Manufacturers - Major |
Market Cap | $106,380M |
Beta | 0.62 |
The company provides various health solutions through its prescription medicines, vaccines, biologic therapies, animal health, and consumer care products. MRK has a dividend yield of 4.47%. The company has a 1-year fiscal revenue growth rate of 67.66% and operates with a financial leverage ratio of 1.91. The short interest was 1.10% as of 10/14/2011.
We hope this list helps as investors do their own due diligence dividend stocks.
*Company profiles were sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
