10 High Dividend Yield Stocks With Strong Inventory Trends

|
 |  Includes: ALV, DPS, JCS, LLY, LMT, MOLX, SIEGY, TAP, UGI, WEC
by: Kapitall

For a look into a company’s sales trends, one idea is to consider their growth in inventory over time. Comparing this to growth in revenue could show some interesting results.

We ran a screen on stocks paying dividend yields above 3% and sustainable payout ratios below 50% for those with positive trends in inventory - growth in quarterly revenue outpacing growth in quarterly inventory year-over-year. We also screened for companies with quarterly inventory decreasing as a percent of current assets.

To understand why these trends are positive, think of why the opposite trends would be negative. If revenue were growing slower than inventory, it may indicate that the company is having trouble selling its inventory – although this could just indicate inventory building or a change in sales policies.

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 dividend yields? Use this list as a starting-off point for your own analysis.

List sorted by difference between growth in revenue and inventory.

1. Communications Systems Inc. (NASDAQ:JCS): Manufactures and sells modular connecting and wiring devices, and media and rate conversion products. Market cap of $131.85M. Dividend yield at 3.84%, payout ratio at 40.17%. MRQ revenue has increased 48.17% ($45.43M vs. $30.66M y/y) while MRQ inventory has increased 3.89% ($26.74M vs. $25.74M y/y). Inventory/current assets has decreased from 33.42% to 28.49%, comparing 3 months ending 2011-06-30 to 3 months ending 2010-06-30. The stock is a short squeeze candidate, with a short float at 5.23% (equivalent to 9.19 days of average volume). The stock has had a good month, gaining 13.75%.

2. Molson Coors Brewing Company (NYSE:TAP): Distributes beer brands. Market cap of $7.28B. Dividend yield at 3.18%, payout ratio at 31.77%. MRQ revenue has increased 9.07% ($954.4M vs. $875M y/y) while MRQ inventory has decreased 12.87% ($201.1M vs. $230.8M y/y). Inventory/current assets has decreased from 12.42% to 10.07%, comparing 13 weeks ending 2011-09-24 to 13 weeks ending 2010-09-25. The stock has lost 16.83% over the last year.

3. 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 $25.36B. Dividend yield at 5.10%, payout ratio at 48.86%. MRQ revenue has increased 6.84% ($12,119M vs. $11,343M y/y) while MRQ inventory has decreased 14.52% ($1,789M vs. $2,093M y/y). Inventory/current assets has decreased from 15.02% to 12.20%, comparing 3 months ending 2011-09-25 to 3 months ending 2010-09-26. The stock is a short squeeze candidate, with a short float at 6.7% (equivalent to 7.81 days of average volume). The stock has had a couple of great days, gaining 5.95% over the last week.

4. Wisconsin Energy Corp. (NYSE:WEC): Engages in the generation, distribution, and sale of electric energy and steam. Market cap of $7.67B. Dividend yield at 3.14%, payout ratio at 43.57%. MRQ revenue has increased 8.18% ($1,052.8M vs. $973.2M y/y) while MRQ inventory has decreased 12.83% ($368.1M vs. $422.3M y/y). Inventory/current assets has decreased from 35.53% to 32.51%, comparing 3 months ending 2011-09-30 to 3 months ending 2010-09-30. The stock has had a couple of great days, gaining 5.04% over the last week.

5. Eli Lilly & Co. (NYSE:LLY): Develops, manufactures, and sells pharmaceutical products worldwide. Market cap of $45.14B. Dividend yield at 5.03%, payout ratio at 48.65%. MRQ revenue has increased 8.72% ($6,147.9M vs. $5,654.8M y/y) while MRQ inventory has decreased 6.21% ($2,513.3M vs. $2,679.6M y/y). Inventory/current assets has decreased from 18.89% to 17.25%, comparing 3 months ending 2011-09-30 to 3 months ending 2010-09-30. The stock has gained 15.12% over the last year.

6. Dr Pepper Snapple Group, Inc. (NYSE:DPS): Engages in the manufacture and distribution of non-alcoholic beverages in the United States, Canada, and Mexico. Market cap of $7.95B. Dividend yield at 3.45%, payout ratio at 45.17%. MRQ revenue has increased 4.94% ($1,529M vs. $1,457M y/y) while MRQ inventory has decreased 8.13% ($260M vs. $283M y/y). Inventory/current assets has decreased from 21.79% to 15.34%, comparing 3 months ending 2011-09-30 to 3 months ending 2010-09-30. The stock has gained 5.85% over the last year.

7. Autoliv, Inc. (NYSE:ALV): Develops, manufactures, and supplies automotive safety systems to automotive industry. Market cap of $5.05B. Dividend yield at 3.32%, payout ratio at 24.02%. MRQ revenue has increased 15.89% ($2,017.6M vs. $1,740.9M y/y) while MRQ inventory has increased 9.76% ($619.4M vs. $564.3M y/y). Inventory/current assets has decreased from 21.12% to 21.04%, comparing 3 months ending 2011-09-30 to 3 months ending 2010-09-30. The stock has lost 24.19% over the last year.

8. UGI Corp. (NYSE:UGI): Distributes and markets energy products and related services in the United States and internationally. Market cap of $3.22B. Dividend yield at 3.61%, payout ratio at 43.33%. MRQ revenue has increased 14.92% ($1,105.4M vs. $961.9M y/y) while MRQ inventory has increased 8.99% ($271.6M vs. $249.2M y/y). Inventory/current assets has decreased from 22.42% to 21.05%, comparing 3 months ending 2011-06-30 to 3 months ending 2010-06-30. The stock has lost 2.04% over the last year.

9. Siemens AG (SI): Operates in the industry, energy, and healthcare sectors worldwide. Market cap of $94.30B. Dividend yield at 3.75%, payout ratio at 18.43%. MRQ revenue has increased 2.40% ($17,844M vs. $17,425M y/y) while MRQ inventory has decreased 2.64% ($15,874M vs. $16,304M y/y). 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. Might be undervalued at current levels, with a PEG ratio at 0.64, and P/FCF ratio at 14.29. The stock has lost 8.79% over the last year.

10. Molex Inc. (NASDAQ:MOLX): Manufactures and sells electronic components worldwide. Market cap of $4.47B. Dividend yield at 3.3%, payout ratio at 43.24%. MRQ revenue has increased 4.27% ($935.99M vs. $897.67M y/y) while MRQ inventory has increased 0.07% ($547.21M vs. $546.81M y/y). Inventory/current assets has decreased from 29.54% to 26.42%, comparing 3 months ending 2011-09-30 to 3 months ending 2010-09-30. The stock has had a couple of great days, gaining 6.63% over the last week.

*Accounting 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.