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Looking for ways to dip deeper into a company's profitability? Here are some ideas you may find interesting.

DuPont analyzes return on equity (ROE, or net income/equity) profitability by breaking ROE up into three components:

ROE
= (Net Profit/Equity)
= (Net profit/Sales)*(Sales/Assets)*(Assets/Equity)
= (Net Profit margin)*(Asset turnover)*(Leverage ratio)

It therefore focuses on companies with the following positive characteristics: Increasing ROE along with,

• Decreasing leverage, i.e. decreasing Asset/Equity ratio
• Improving asset use efficiency (i.e. increasing Sales/Assets ratio) and improving net profit margin (i.e. increasing Net Income/Sales ratio)

Companies with all of these characteristics are experiencing increasing profits due to operations and not to increased use of financial leverage.

We ran DuPont analysis on stocks paying dividend yields above 2% and sustainable payout ratios below 50%.

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 dividends? Use this list as a starting point for your own analysis.

List sorted by increase in ROE.

1. Steel Dynamics Inc. (STLD): Engages in the manufacture and sale of steel products in the United States. Market cap of $3.32B. Dividend yield at 2.64%, payout ratio at 32.02%. MRQ Net Profit Margin increased to 2.12% from 1.18% year-over-year, Sales/Assets increased to 0.34 from 0.28, while Assets/Equity decreased to 2.61 from 2.68. The stock has had a good month, gaining 23.74%.

2. Brookfield Properties Corporation (BPO): A publicly owned real estate investment firm. Market cap of $8.43B. Dividend yield at 3.34%, payout ratio at 12.90%. MRQ Net Profit Margin increased to 84.35% from 49.23% year-over-year, Sales/Assets increased to 0.0203 from 0.0171, while Assets/Equity decreased to 2.47 from 2.54. The stock has had a couple of great days, gaining 5.95% over the last week.

3. Chevron Corporation (CVX): Engages in petroleum, chemicals, mining, power generation, and energy operations worldwide. Market cap of $212.75B. Dividend yield at 3.03%, payout ratio at 22.20%. MRQ Net Profit Margin increased to 12.15% from 7.58% year-over-year, Sales/Assets increased to 0.32 from 0.28, while Assets/Equity decreased to 1.69 from 1.73. The stock has gained 18.04% over the last year.

4. Bob Evans Farms Inc. (BOBE): Operates full-service restaurants under the Bob Evans and Mimi's Cafe brand names in the United States. Market cap of $1.03B. Dividend yield at 2.84%, payout ratio at 39.77%. MRQ Net Profit Margin increased to 3.13% from 1.87% year-over-year, Sales/Assets increased to 0.3839 from 0.3837, while Assets/Equity decreased to 1.60 from 1.70. The stock is a short squeeze candidate, with a short float at 5.79% (equivalent to 8.85 days of average volume). The stock has gained 8.42% over the last year.

5. NYSE Euronext, Inc. (NYX): Operates securities exchanges. Market cap of $7.05B. Dividend yield at 4.46%, payout ratio at 48.77%. MRQ Net Profit Margin increased to 15.90% from 12.19% year-over-year, Sales/Assets increased to 0.10 from 0.08, while Assets/Equity decreased to 1.91 from 2.0. The stock has lost 13.59% over the last year.

6. Quaker Chemical Corporation (KWR): Develops, produces, and markets formulated chemical specialty products for various heavy industrial and manufacturing applications. Market cap of $534.91M. Dividend yield at 2.31%, payout ratio at 42.12%. MRQ Net Profit Margin increased to 7.33% from 4.61% year-over-year, Sales/Assets increased to 0.36 from 0.32, while Assets/Equity decreased to 1.99 from 2.39. This is a risky stock that is significantly more volatile than the overall market (beta = 2.63). The stock has had a good month, gaining 13.63%.

7. General Electric Company (GE): Operates as a technology, service, and finance company worldwide. Market cap of $200.80B. Dividend yield at 3.58%, payout ratio at 47.38%. MRQ Net Profit Margin increased to 9.12% from 5.81% year-over-year, Sales/Assets increased to 0.0479 from 0.0466, while Assets/Equity decreased to 5.93 from 6.57. The stock has had a good month, gaining 14.37%.

8. Nacco Industries Inc. (NC): Engages in lift trucks, small appliances, specialty retail, and mining businesses primarily in the Americas, Europe, and the Asia-Pacific. Market cap of $833.36M. Dividend yield at 2.15%, payout ratio at 12.11%. MRQ Net Profit Margin increased to 3.12% from 2.03% year-over-year, Sales/Assets increased to 0.47 from 0.41, while Assets/Equity decreased to 3.21 from 3.95. This is a risky stock that is significantly more volatile than the overall market (beta = 2.39). The stock has had a good month, gaining 17.98%.

9. McGrath Rentcorp (MGRC): Operates as a business-to-business rental company in the United States. Market cap of $746.21M. Dividend yield at 3.0%, payout ratio at 45.30%. MRQ Net Profit Margin increased to 14.63% from 11.66% year-over-year, Sales/Assets increased to 0.12 from 0.10, while Assets/Equity decreased to 2.79 from 2.89. The stock has had a good month, gaining 12.7%.

10. Cal-Maine Foods, Inc. (CALM): Engages in the production, grading, packaging, marketing, and distribution of shell eggs primarily in the southeastern, southwestern, mid-western, and mid-Atlantic regions of the United States. Market cap of $882.0M. Dividend yield at 2.55%, payout ratio at 33.38%. MRQ Net Profit Margin increased to 8.01% from 6.48% year-over-year, Sales/Assets increased to 0.42 from 0.37, while Assets/Equity decreased to 1.58 from 1.62. The stock is a short squeeze candidate, with a short float at 17.57% (equivalent to 27.94 days of average volume). The stock has gained 32.25% over the last year.

11. MTS Systems Corp. (MTSC): Supplies test systems and industrial position sensors in the Americas, Europe, and Asia. Market cap of $705.33M. Dividend yield at 2.23%, payout ratio at 25.91%. MRQ Net Profit Margin increased to 11.31% from 8.08% year-over-year, Sales/Assets increased to 0.3076 from 0.3057, while Assets/Equity decreased to 2.03 from 2.09. The stock has had a good month, gaining 14.42%.

12. The Dow Chemical Company (DOW): Manufactures and supplies products used as raw materials in the production of customer products and services worldwide. Market cap of $39.18B. Dividend yield at 3.02%, payout ratio at 32.23%. MRQ Net Profit Margin increased to 5.96% from 4.64% year-over-year, Sales/Assets increased to 0.23 from 0.19, while Assets/Equity decreased to 2.77 from 3.01. This is a risky stock that is significantly more volatile than the overall market (beta = 2.33). The stock has had a couple of great days, gaining 7% over the last week.

13. Snap-on Inc. (SNA): Manufactures and markets tools, diagnostics, equipment, software, and service solutions for professional users in the United States, the United Kingdom, Canada, Germany, Japan, France, Australia, Spain, the Netherlands, Italy, China, and Sweden. Market cap of $3.12B. Dividend yield at 2.53%, payout ratio at 22.65%. MRQ Net Profit Margin increased to 9.72% from 7.12% year-over-year, Sales/Assets increased to 0.1921 from 0.1889, while Assets/Equity decreased to 2.33 from 2.50. The stock has lost 3.42% over the last year.

14. Rockwell Automation Inc. (ROK): Provides industrial automation power, control, and information solutions. Market cap of $11.66B. Dividend yield at 2.08%, payout ratio at 30.37%. MRQ Net Profit Margin increased to 12.20% from 9.67% year-over-year, Sales/Assets increased to 0.31 from 0.29, while Assets/Equity decreased to 3.02 from 3.25. Exhibiting strong upside momentum--currently trading 8.74% above its SMA20, 11.13% above its SMA50, and 11.78% above its SMA200. The stock has had a couple of great days, gaining 9.43% over the last week.

15. Honeywell International Inc. (HON): Operates as a diversified technology and manufacturing company worldwide. Market cap of $45.01B. Dividend yield at 2.56%, payout ratio at 40.04%. MRQ Net Profit Margin increased to 9.27% from 7.35% year-over-year, Sales/Assets increased to 0.24 from 0.21, while Assets/Equity decreased to 3.38 from 3.69. The stock has had a good month, gaining 11.03%.

16. Eaton Corporation (ETN): Operates as a power management company worldwide. Market cap of $16.52B. Dividend yield at 2.75%, payout ratio at 35.17%. MRQ Net Profit Margin increased to 8.85% from 7.50% year-over-year, Sales/Assets increased to 0.23 from 0.21, while Assets/Equity decreased to 2.28 from 2.36. Exhibiting strong upside momentum--currently trading 10.03% above its SMA20, 12.32% above its SMA50, and 10.39% above its SMA200. The stock has had a good month, gaining 17.75%.

17. Compass Minerals International Inc. (CMP): Produces and markets inorganic mineral products primarily in North America and the United Kingdom. Market cap of $2.37B. Dividend yield at 2.50%, payout ratio at 35.54%. MRQ Net Profit Margin increased to 15.10% from 10.97% year-over-year, Sales/Assets increased to 0.20 from 0.18, while Assets/Equity decreased to 2.75 from 3.51. The stock has lost 18.66% over the last year.

18. Entergy Corporation (ETR): Operates as an integrated energy company in the United States. Market cap of $12.55B. Dividend yield at 4.66%, payout ratio at 41.72%. MRQ Net Profit Margin increased to 18.64% from 14.94% year-over-year, Sales/Assets increased to 0.0867 from 0.0862, while Assets/Equity decreased to 4.22 from 4.28. The stock has gained 3.01% over the last year.

19. Kronos Worldwide Inc. (KRO): Engages in the production and marketing of titanium dioxide pigments in North America and Europe. Market cap of $2.45B. Dividend yield at 2.83%, payout ratio at 44.81%. MRQ Net Profit Margin increased to 15.68% from 8.52% year-over-year, Sales/Assets increased to 0.31 from 0.28, while Assets/Equity decreased to 2.0 from 3.26. The stock is a short squeeze candidate, with a short float at 18.76% (equivalent to 5.27 days of average volume). It's been a rough couple of days for the stock, losing 6.98% over the last week. The stock has had a good month, gaining 22.64%.

20. Cabot Corp. (CBT): Provides specialty chemicals and performance materials worldwide. Market cap of $2.18B. Dividend yield at 2.11%, payout ratio at 26.11%. MRQ Net Profit Margin increased to 5.89% from 5.0% year-over-year, Sales/Assets increased to 0.26 from 0.24, while Assets/Equity decreased to 2.11 from 2.22. The stock has lost 17.84% over the last year.

*Accounting data sourced from Google Finance, all other data sourced from Finviz.

Source: 20 Dividend Stocks With Strong Sources Of Profitability