3 Consumer High-Yield Stocks With Low Debt Ratios

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 |  Includes: PHG, PLOW, RAI
by: Dividend Screen

The amount of debt is very important in terms of dividend payments. The higher the debt ratio, the bigger the risk of a dividend cut or even a slowdown in dividend growth. The nature of business is also a big item for dividend considerations. If the company is acting within a stable environment, it doesn’t need huge reserves to guarantee a reliable dividend. One of the sectors with the lowest fluctuations is the consumer goods sector.

I screened stocks from the consumer goods sector with a dividend yield of more than 5 percent (high yields) as well as attractive debt levels. 15 stocks have such a high yield but most of them are micro caps and offer a higher risk. Only 7 of them have a market capitalization of more than $300 million - you can find more information of these stocks in the table below the article. Finally, 3 of these high yields have low debt ratios. These are the results:

1. Koninklijke Philips Electronics (NYSE:PHG) has a market capitalization of $18.69 billion. The company employs 124,218 people, generates revenue of $34,951.26 million and has a net income of $1,971.76 million. Earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $4,794.64 million. Because of these figures, the EBITDA margin is 13.72 percent (operating margin 8.12 percent and the net profit margin finally 5.64 percent).

The total debt representing 14.43 percent of the company’s assets and the total debt in relation to the equity amounts to 30.96 percent. The return on equity amounts to 9.76 percent. As of last reported quarter, the company had $2.6 billion long-term debt and $4.7 billion cash and short-term investments.

Finally, earnings per share amounts to $-0.62 of which $1.03 were paid in form of dividends to shareholders last fiscal year.

Here are the price ratios of the company: The P/E ratio is not calculable, Price/Sales 0.57 and Price/Book ratio 0.91. Dividend Yield: 5.60 percent. The beta ratio is 1.40.

2. Reynolds American (NYSE:RAI) has a market capitalization of $22.68 billion. The company employs 5,700 people, generates revenue of $8,551.00 million and has a net income of $1,329.00 million. Earnings before interest, taxes, depreciation and amortization amounts to $2,570.00 million. Because of these figures, the EBITDA margin is 30.05 percent (operating margin 28.29 percent and the net profit margin finally 15.54 percent).

The total debt representing 24.01 percent of the company’s assets and the total debt in relation to the equity amounts to 63.00 percent. The return on equity amounts to 20.43 percent. As of last reported quarter, the company had $3.2 billion long-term debt and $2.0 billion cash and short-term investments. Finally, earnings per share amounts to $2.28 of which $1.84 was paid in form of dividends to shareholders last fiscal.

Here are the price ratios of the company: The P/E ratio is 17.09, Price/Sales 2.65 and Price/Book ratio 3.48. Dividend Yield: 5.76 percent. The beta ratio is 0.59.

3. Douglas Dynamics (NYSE:PLOW) has a market capitalization of $329.60 million. The company employs 450 people, generates revenue of $176.80 million and has a net income of $1.66 million.Earnings before interest, taxes, depreciation and amortization amounts to $25.15 million. Because of these figures, the EBITDA margin is 14.22 percent (operating margin 7.60 percent and the net profit margin finally 0.94 percent).

The total debt representing 34.81 percent of the company’s assets and the total debt in relation to the equity amounts to 71.48 percent. The return on equity amounts to 1.19 percent. As of last reported quarter, the company had $122.1 million long-term debt and $3.1 million cash and short-term investments. Finally, earnings per share amounts to $0.82 of which $0.38 was paid in form of dividends to shareholders last fiscal.

Here are the price ratios of the company: The P/E ratio is 18.30, Price/Sales 1.86 and Price/Book ratio 1.91. Dividend Yield: 5.34 percent. The beta ratio is is not calculable.

Take a closer look at the full table. The average price-to-earnings ratio (P/E ratio) amounts to 15.2 while the forward price-to-earnings ratio is 13.5. The dividend yield has a value of 6.3 percent. Price-to-book ratio is 4.7 and price-to-sales ratio 1.4. The operating margin amounts to 15.2 percent.

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Disclosure: I am long MO, AVP.