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Dividend investors would do well to pay attention to some of the following key metrics as they could prove to be of great assistance during the selection process.

Enterprise value is a combination of the market cap, debt, minority interests, preferred shares less total cash and cash equivalents. This provides a better picture because it is a more accurate representation of a company's value contrary to simply looking at the Market cap.

Levered free cash flow is the amount of cash available to stock holders after interest payments on debt are made. A company with a small amount of debt will only have to spend a modest amount of money on interest payments, which in turn means that there is more money to send to shareholders in the form of dividends and vice versa. Individuals searching for other investment ideas might find this article to be of interest 7 Dividend Plays That Sport Yields As High As 16%

Operating cash flow is generally a better metric than earnings per share because a company can show positive net earnings and still not be able to properly service its debt; the cash flow is what pays the bills.

The payout ratio tells us what portion of the profit is being returned to investors. A pay out ratio over 100% indicates that the company is paying out more money to shareholders, then they are making; this situation cannot last forever. In general if the company has a high operating cash flow and access to capital markets, they can keep this going on for a while.

As companies usually only pay the portion of the debt that is coming due and not the whole debt, this technique/trick can technically be employed to maintain the dividend for sometime. If the payout ratio continues to increase, the situation warrants close monitoring as this cannot last forever; if your tolerance for risk is a low, look for similar companies with the same or higher yields, but with lower payout ratios

Turnover Ratio lets you know the number of times a company's inventory is replaced in a given time period. It is calculated by dividing the cost of goods sold by average inventory during the time period studied. A high turn over ratio indicates that a company is producing and selling its good and services very quickly.

Debt to Equity Ratio is found by dividing the company's total amount of long-term debt (debts with interest rates that have a maturity longer than one year) by the total amount of equity. A debt to equity ratio of 0.5 tells us that the company is using 50 cents of liabilities in addition to each $1 dollar of shareholders equity in the business.

Current Ratio is obtained by dividing the current assets by current liabilities. This ratio allows you to see if the company can pay its current debts without potentially jeopardising their future earnings. Ideally the company should have a ratio of 1 or higher.

Two noteworthy plays are Chesapeake Energy (NYSE:CHK) and Encana Corporation (NYSE:ECA).

ECA has enterprise value of $20 billion , a yield of 4.6%, a revenue growth of -0.3%, a ROE of 1.38%, a five-year dividend growth rate of 31.6%, a five dividend average of 3.9%, has total 3 year return of -19% and has been paying dividends since 1960.

Net income for ECA for the past three years is as follows:

  1. 2008= $4.8 billion
  2. 2009 = $1.86 billion
  3. 2010= $1.499 billion

CHK has a yield of 1.6%, an enterprise value of $26.38 billion a revenue growth of 54%, a quarterly earnings growth rate of 65%, a ROE of 9.46%, a five-year dividend growth rate of 7.9%, a five dividend average of 1.42%, has total three year return of 50% and has been paying dividends since 1997. It has an operating cash flow of $4.87 billion and revenue of $10.88 Billion.

Net income for CHK for the past three years is as follows:

  1. 2008= $ 723 million
  2. 2009 =- $5.8 billion
  3. 2010= $1.77 billion
  4. 2011= It stands at $1.2 billion and could top the $2 billon mark.

Stock

Dividend Yield

Market Cap

Forward PE

EBITDA

Quarterly Revenue Growth

Beta

Revenue

Operating Cash flow

(CLCT)

8.70%

121.28M

N/A

10.86M

23.80%

0.15

46.75M

11.19M

(HIHO)

15.90%

10.46M

N/A

1.96M

-28.60%

0.85

28.92M

N/A

(NYSE:GNI)

20.4%

169M

8

21.91M

7.91%

0.21

24.88M

20.99M

(NASDAQ:MCGC)

16.4%

309M

6.59

65.55M

-8.20%

2.04

89.7M

41.7M

(HIMX)

8.60%

219M

10.15

31.20M

17.2%

1.26

605M

55.96M

Collectors Universe Inc (NASDAQ: CLCT)

Industry: Miscellaneous Consumer Services

CLCT sports a levered free cash flow of $9.36 million and a quarterly earnings growth rate of 33.6%

Net income for the past three years

  1. 2008= it reported a net income of- $16.92 million
  2. 2009 = net income dropped to $16.6 million
  3. 2010= it dropped to $5.1 million
  4. 20011= net income so far is roughly $4.5 million and could top the $6 million mark.

Total cash flow from operating activities

  1. 2008= $762.000
  2. 2009 =$9.2 million
  3. 2010 =$10.54 million

Key Ratios

• Price to sale 19.5

• Price to tangible book 0

• Price to cash flow 8.7

• Price to free cash flow 10

• 5 year sales growth N.A.

• Inventory turnover 0

• Asset turnover 0

• ROE 21.01%

• Return on assets 17.91%

• 200 day moving average 15.26

• Total debt 0

• Book value 3.07

• Dividend yield 5 year Average 9.70%

• Dividend rate $ 1.30 %

• Payout ratio 188.00%

• Dividend growth rate 3 year average 105.77%

• Dividend growth rate 5 year average 84.84%

• Consecutive dividend increases 2 years

• Paying dividends since 2006

• Total return last 3 years 477.38%

• Total return last 5 years 57.61%

Highway Holdings Ltd. (British (NASDAQ: HIHO)

Industry: Industrial Machinery & Equipment

HIHO is trading roughly 40 cents below book value.

Net income for the past three years

  1. 2009= $710,000
  2. 2010 = $400,000
  3. 2011= $1,6 million

Total cash flow from operating activities

  1. 2009= $2.05 million
  2. 2010 =$1.74 million
  3. 2011 =$2.05 million

HIHO only made one dividend payment of $.20 in 2011; the payment was made on the 28th of July 2011.

Key Ratios

• Price to sale 9.6

• Price to tangible book 0

• Price to cash flow 7.2

• Price to free cash flow 4.8

• 5 year sales growth N.A.

• Inventory turnover 0

• Asset turnover 0

• ROE 10.26%

• Return on assets 4.46%

• 200 day moving average 2.85

• Total debt 522.00K

• Book value 3.13

• Dividend yield 5 year Average 5.50%

• Dividend rate $ 0.14 %

• Payout ratio 83.00%

• Dividend growth rate 3 year average 0.00%

• Dividend growth rate 5 year average 0.00%

• Consecutive dividend increases 2 years

• Paying dividends since 1997

• Total return last 3 years 320.78%

• Total return last 5 years -38.09%

Great Northern Iron Ore Proper (GNI)

Industry: Steel & Iron

It has a levered free cash flow rate of $ 13.79 million and a quarterly earnings growth rate of 7.9%

Net income for the past three years

  1. 2008= $$17.6 million
  2. 2009 = $ 11.4 million
  3. 2010= $17.4 million
  4. 2011= So far it stands at roughly $15.6 million and could potentially top the $21 million mark.

Total cash flow from operating activities

  1. 2008= $13.5 million
  2. 2009 =$15.6 million
  3. 2010 =$15.4 million
  4. 2011= it stands at $15.6 million and could top the $20 million mark.

Potential warnings

On April 6, 2015, the properties of the company will be transferred to ConocoPhillips; the trust will be dissolved, and the stock shares retired. There are approximately 17 quarters left for GNI to make regular distributions. Assuming that every distribution for the next 17 quarters is at its current peak of $4.50, it works out to $76.5; add in the final distribution of $8.53 per share and you get a price of $85.03, which is well below the current share price of $114. This play is not for long-term investors. Only short term to intermediate term players willing to take on a bit of extra risk should consider this play.

  1. Price to sales 6.81
  2. Price to tangible book 13.79
  3. Price to cash flow 7.70
  4. Price to free cash flow 92.60
  5. 5 year sales growth 5.58
  6. Inventory turnover 9.30
  7. Asset turnover 1.30

  1. ROE 186.58%
  2. Return on assets 71.9%
  3. 200 day moving average $107.28
  4. Total debt $0.00
  5. Book value $8.19
  6. Dividend yield 5 year Average 11%
  7. Dividend rate $15.00
  8. Payout ratio 105%
  9. Dividend growth rate 5 year average 8.98%
  10. Consecutive dividend increases 2 years
  11. Paying dividends since 1990
  12. Total return last 3 years 80%
  13. Total return last 5 years 49%

Himax Technologies Inc (NASDAQ: HIMX)

Industry: Semiconductor - Specialized

Net income for the past three years

  1. 2008= -$76.3 million
  2. 2009 = $39.6 Million
  3. 2010= -$33.2 million

Total cash flow from operating activities

  1. 2008= $136.5 million
  2. 2009 =$ 73.6 million
  3. 2010 =-$57.6 million

Potential flags

Net income and total cash flow from operating activities have been dropping for the past three years in a row.

Dividend dropped from 24 cents to 11 cents. Only speculators should consider taking a position in this play.

Key Ratios

• Price to sale 0.37

• Price to tangible book 0.63

• Price to cash flow 5.40

• Price to free cash flow -35.60

• 5 year sales growth -4.87

• Inventory turnover 4.30

• Asset turnover 1.00

• ROE 3.82%

• Return on assets 1.90

• 200 day moving average 1.29

• Total debt 84M

• Book value 2.21

• Dividend yield 5 year Average ----

• Dividend rate $ 0.18

• Payout ratio ---

• Dividend growth rate 3 year average -5.21%

• Dividend growth rate 5 year average 0

• Consecutive dividend increases 0 years

• Paying dividends since 2007

• Total return last 3 years 34.50

• Total return last 5 years -47

MCG Capital Corporation (MCGC)

Industry: Asset Management

Net income for the past three years

  1. 2008= -$191 million
  2. 2009 = -51 Million
  3. 2010= -$13 million
  4. 20011= net income so far is roughly -$44 million

Total cash flow from operating activities

  1. 2008= $150 million
  2. 2009 =$ 179 million
  3. 2010 =-$35.7 million
  4. 2011= It stands at $148 million.

On January 17, 2012, MCG Capital, Corporation announced that its Board of Directors had authorized a stock repurchase program of up to $35.0 million.

Potential flags

Net income has been dropping for the past three years and is on course to drop for the 4th year in a row. Only speculators should consider this play.

Key Ratios

• Price to sale 3.56

• Price to tangible book 0.64

• Price to cash flow -5.20

• Price to free cash flow 21.70

• 5 year sales growth -14.78

• Inventory turnover 0

• Asset turnover 0 .10

• ROE -11.23%

• Return on assets 3.6%

• 200 day moving average 4.57

• Total debt 490M

• Book value 6.95

• Dividend yield 5 year Average 38.20%

• Dividend rate $ 0.68

• Payout ratio 188.00%

• Dividend growth rate 3 year average 16.99%

• Dividend growth rate 5 year average 9.8%

• Consecutive dividend increases 1 years

• Paying dividends since 2002

• Total return last 3 years 342%

• Total return last 5 years -61%

Conclusion

The markets are rather overbought on the short and intermediate time frames, and the charts are indicating that the markets could top around the 18-21st of this month. Long term dividend investors would be best served by waiting for the markets to pull back strongly before committing new sums of money.

All charts were sourced from dividata.com

Source: 7 Plays Sporting Yields As High As 19.8%