Liquidity is important to keep in mind when choosing among dividend stocks. If a company’s profits temporarily fall, it can use its sources of liquidity such as cash and marketable securities to bridge the gap and maintain its dividend payment.
Companies with greater liquidity are generally considered to pay more sustainable dividends.
We ran a screen on dividend stocks with high liquidity, indicated by current ratios greater than 3. We screened these stocks for those with the highest net buying from institutional investors such as hedge funds over the current quarter.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the 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 agree with hedge funds’ optimism for these names? Use this list as a starting point for your own analysis.
List sorted by net institutional purchases as a percent of share float.
1. Sun Hydraulics Corp. (SNHY): Designs and manufactures screw-in hydraulic cartridge valves and manifolds, components of fluid-power systems that control force, speed and motion. Market cap of $619.19M. Dividend yield at 1.49%, payout ratio at 47.73%. Current ratio at 7.10. Net institutional shares purchased over the current quarter at 3.6M, which is 14.74% of the company's 24.43M share float. This is a risky stock that is significantly more volatile than the overall market (beta = 2.11). The stock is a short squeeze candidate, with a short float at 5.16% (equivalent to 9.82 days of average volume). It has been a rough couple of days for the stock, losing 6.25% over the last week.
2. LeMaitre Vascular, Inc. (LMAT): Develops, manufactures and markets vascular devices for the treatment of peripheral vascular disease worldwide. Market cap of $86.30M. Dividend yield at 1.43%, payout ratio at 24.69%. Current ratio at 4.35. Net institutional shares purchased over the current quarter at 946.1K, which is 11.29% of the company's 8.38M share float. The stock has lost 13.58% over the last year.
3. Keynote Systems Inc. (KEYN): Provides Internet and mobile cloud monitoring solutions worldwide. Market cap of $324.45M. Dividend yield at 1.28%, payout ratio at 7.71%. Current ratio at 4.58. Net institutional shares purchased over the current quarter at 1.2M, which is 8.55% of the company's 14.04M share float. It's been a rough couple of days for the stock, losing 14.42% over the last week.
4. Superior Industries International, Inc. (SUP): Designs, develops, manufactures, sells and supplies cast aluminum road wheels to automobile and light truck manufacturers primarily in North America. Market cap of $426.14M. Dividend yield at 4.21%, payout ratio at 35.13%. Current ratio at 5.94. Net institutional shares purchased over the current quarter at 891.8K, which is 3.79% of the company's 23.55M share float. The stock has lost 15.74% over the last year.
*Data sourced from 11/18. Institutional data sourced from Fidelity, 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.