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In coming up with the following plays the minimum requirements were: A dividend history in excess of 20 years or consecutive dividend increases for 10 years in a row. The only exception was Crestwood Midstream (CMLP), and it was included on this list because it has a very strong quarterly revenue growth rate of 93%, five-year dividend average of 5.7%, a three-year dividend growth rate of 11% and its net income has been increasing for the past three years.

Our favorite play is Atmos Energy Corp. (ATO). It has a quarterly revenue growth rate of 1.4%, a quarterly earnings growth rate of 27%, a five-year dividend average of 4.6%, a payout ratio of 63%, a five-year dividend growth rate of 1.53%, has consecutively increased its dividends for 20 years in a row. The total return for the last three years is 47.3%, and it has been paying dividends since 1984. A close second is DTE Energy Co. (DTE). It has a total three-year return of 70.55%, has a five-year dividend average of 5%, a five-year dividend growth rate of 2.31%, a quarterly earnings growth rate of 12.3%, a quarterly revenue growth rate of 5.9% and has been paying dividends since 1909.

Before we go any further we would like to state that there are many ratios that are important when it comes to investing in stocks that pay dividends. We have listed some of the more important ones below. Understanding these ratios could prove to be very useful in the selection process.

The payout ratio tells us what portion of the profit is being returned to investors. A payout 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 low, look for similar companies with the same or higher yields, but with lower payout ratios. Individuals searching for other ideas might find this article to be of interest: 5 Stocks Sporting Lofty Yields As High As 16%.

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.

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.

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 goods 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 shareholder equity in the business. There is no fixed ideal number as it depends on the industry the company is in. However, in general a ratio under 1 is acceptable and ideally it should be in the 0.5-0.6 ranges.

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 jeopardizing future earnings. Ideally the company should have a ratio of 1 or higher.

Interest coverage is usually calculated by dividing the earnings before interest and taxes for a period of one year by the interest expenses for the same time period. This ratio informs you of a company's ability to make its interest payments on its outstanding debt. Lower interest coverage ratios indicate that there is a larger debt burden on the company and vice versa.

Inventory turnover is calculated by dividing sales by inventory. If a company generated $30 million in sales and had an average inventory of $6 million, the inventory turn over would be equal to 5. This value indicates that there are five inventory turnovers per year. This means that it takes roughly 2.4 months to sell the inventory. A low inventory turnover is a sign of inefficiency and vice versa. Additional key metrics are addressed in this article: Dividend Champs With Tempting Yields As High As 8.3%.

Another play of interest is Westar Energy Inc (WR), which has a ROE of 8.81%, a quarterly earnings growth of 17.60%, a five-year dividend growth rate of 5.08%, a five-year dividend average of 5.00%, a total return for the past three years of 64.5%, has consecutively increased its dividend for seven years in a row and has been paying dividends since 1924.

It has a levered free cash flow rate of -$174 million and a current ratio of 0.68. It has also consecutively increased dividends for seven years in a row and has a payout ratio of 70%. Out of a possible five stars we would assign WR three.

Net income for the past three years

2008 = $.18 billion

2009 = $.18 billion

2010 = $.2 billion

Total cash flow from operating activities

2008 = $.27 billion

2009 = $.48 billion

2010 = $.61 billion

Key Ratios

ROE 8.81%

Return on Assets 3.63%

200 day moving average 26.71

Current Ratio 0.68

Total debt 3.16B

Book value 22.1

Qtrly Earnings Growth 17.60%

Stock

Dividend Yield

Market Cap

Forward PE

EBITDA

Quarterly Revenue Growth

Beta

Revenue

Operating Cash flow

ATO

4.20%

2.92B

12.94

705.55M

1.40%

0.50

4.35B

582.84M

NJR

3.00%

1.99B

16.94

178.20M

6.20%

0.26

3.01B

250.10M

CMLP

6.00%

1.18B

20.55

99.78M

93.00%

0.31

177.82M

59.35M

TCP

6.40%

2.50B

15.42

200.40M

9.40%

0.25

220.50M

164.40M

DTE

4.30%

9.07B

14.29

2.38B

5.90%

0.64

8.90B

1.80B

Atmos Energy Corp. (ATO)

Industry: Gas utilities

It has a levered free cash flow rate of $-325 million and a current ratio of 1.17

Net income for the past three years

2009 = $190.98 million

2010 = $205.84 million

2011 = $207.61 million

Total cash flow from operating activities

2009 = $919.24 million

2010 = $726.48 million

2011 = $582.85 million

Key Ratios

P/E Ratio = 14.2

P/E High - Last 5 Yrs = 17.4

P/E Low - Last 5 Yrs = 9.5

Price to Sales = 0.67

Price to Book = 1.3

Price to Tangible Book = 1.93

Price to Cash Flow = 6.6

Price to Free Cash Flow = -17.8

Quick Ratio = 0.5

Current Ratio = 1.2

LT Debt to Equity = 0.98

Total Debt to Equity = 1.07

Interest Coverage = 3.1

Inventory Turnover = 9.9

Asset Turnover = 0.6

ROE = 8.97%

Return on Assets = 4.2%

200 day moving average = 33.03

Current Ratio = 1.17

Total debt = 2.41B

Book value = 24.98

Qtrly Earnings Growth = 27.6%

Dividend yield 5 year average = 4.6%

Dividend rate = $ 1.38

Payout ratio = 63%

Dividend growth rate 3 year avg = 1.51%

Dividend growth rate 5 year avg = 1.53%

Consecutive dividend increases = 20 years

Paying dividends since = 1984

Total return last 3 years = 47.33%

Total return last 5 years = 24.77%

New Jersey Resources Corp (NJR)

Industry: Gas utilities

It has a levered free cash flow rate of $18.2 million and a current ratio of 1.02

Net income for the past three years

2009 = $27.25 million

2010 = $117.46 million

2011 = $101.3 million

Total cash flow from operating activities

2009 = $267.25 million

2010 = $139.42 million

2011 = $250.11 million

Key Ratios

P/E Ratio = 19.7

P/E High - Last 5 Yrs = 66.2

P/E Low - Last 5 Yrs = 10.8

Price to Sales = 0.66

Price to Book = 2.57

Price to Tangible Book = 2.57

Price to Cash Flow = 14.6

Price to Free Cash Flow = 89.4

Quick Ratio = 0.3

Current Ratio = 1

LT Debt to Equity = 0.55

Total Debt to Equity = 0.76

Interest Coverage = 8.1

Inventory Turnover = 8.4

Asset Turnover = 1.2

ROE = 13.49%

Return on Assets = 3.43%

200 day moving average = 45.98

Current Ratio = 1.04

Total debt = 593.72M

Book value = 18.74

Qtrly Earnings Growth = N/A

Dividend yield 5 year average = 3.2%

Dividend rate = $ 1.52

Payout ratio = 60%

Dividend growth rate 3 year avg = 8.3%

Dividend growth rate 5 year avg = 8.48%

Consecutive dividend increases = 16 years

Paying dividends since = 1951

Total return last 3 years = 32.54%

Total return last 5 years = 75.42%

Crestwood Midstream Partners L (CMLP)

Industry: Equipment and services

It has a levered free cash flow rate of $3.98 million and a current ratio of 0.96.

Net income for the past three years

2008 = $26.42 million

2009 = $32.5 million

2010 = $34.88 million

Total cash flow from operating activities

2008 = $52.69 million

2009 = $68.95 million

2010 = $48.01 million

Key Ratios

P/E Ratio = 34

P/E High - Last 5 Yrs = N.A.

P/E Low - Last 5 Yrs = N.A.

Price to Sales = 6.75

Price to Book = 2.6

Price to Tangible Book = 4.71

Price to Cash Flow = 17.6

Price to Free Cash Flow = -3.6

Quick Ratio = 0.9

Current Ratio = 1

LT Debt to Equity = 0.94

Total Debt to Equity = 0.94

Interest Coverage = 2.6

Inventory Turnover = N.A.

Asset Turnover = 0.2

ROE = 11.63%

Return on Assets = 5.95%

200 day moving average = 27.64

Current Ratio = 0.96

Total debt = 435.28M

Book value = 11.42

Qtrly Earnings Growth = 6.8%

Dividend yield 5 year average = 5.7%

Dividend rate = $ 1.87

Payout ratio = 203%

Dividend growth rate 3 year avg = 11.27%

Dividend growth rate 5 year avg = 0%

Consecutive dividend increases = 4 years

Paying dividends since = 2007

Total return last 3 years = 146%

Total return last 5 years = N/A

Positive news

Dividend was increased from 48 cents to 49 cents.

TC PipeLines, LP (TCP)

Industry : Equipment and services

TCP has a levered free cash flow rate of $124.4 million and a current ratio of 0.05

Net income for the past three years

2008 = $107.7 million

2009 = $106.1 million

2010 = $137.1 million

Total cash flow from operating activities

2008 = $113.6 million

2009 = $123.4 million

2010 = $156.1 million

Key Ratios

P/E Ratio = 15.2

P/E High - Last 5 Yrs = 18

P/E Low - Last 5 Yrs = 6.6

Price to Sales = 36.34

Price to Book = 1.9

Price to Tangible Book = 2.11

Price to Cash Flow = 14.8

Price to Free Cash Flow = -4.8

Quick Ratio = 0

Current Ratio = 0.1

LT Debt to Equity = 0.33

Total Debt to Equity = 0.56

Interest Coverage = 16.9

Inventory Turnover = 24.9

Asset Turnover = 0

ROE = 12.8%

Return on Assets = 6.09%

200 day moving average = 45.63

Current Ratio = 0.05

Total debt = 750.30M

Book value = 24.42

Qtrly Earnings Growth = 5.4%

Dividend yield 5 year average = 7.5%

Dividend rate = $ 3.06

Payout ratio = 97%

Dividend growth rate 3 year avg = 3.09%

Dividend growth rate 5 year avg = 5.55%

Consecutive dividend increases = 12 years

Total return last 3 years = 121.78%

Total return last 5 years = 66.94%

DTE Energy Co.

Industry: Electric utilities

It has a levered free cash flow rate of $135.6 million and a current ratio of 1.39.

Net income for the past three years

2008 = $546 million

2009 = $532 million

2010 = $630 million

Total cash flow from operating activities

2008 = $1.57 billion

2009 = $1.82 billion

2010 = $1.83 billion

Key Ratios

P/E Ratio = 12.8

P/E High - Last 5 Yrs = 20.3

P/E Low - Last 5 Yrs = 7.2

Price to Sales = 1.02

Price to Book = 1.3

Price to Tangible Book = 1.86

Price to Cash Flow = 5.3

Price to Free Cash Flow = 101.9

Quick Ratio = 0.7

Current Ratio = 1.4

LT Debt to Equity = 1.08

Total Debt to Equity = 1.15

Interest Coverage = 2.9

Inventory Turnover = 8.2

Asset Turnover = 0.4

ROE = 10.5%

Return on Assets = 3.67%

200 day moving average = 50.85

Current Ratio = 1.39

Total debt = 8.02B

Book value = 41.18

Qtrly Earnings Growth = 12.3%

Dividend yield 5 year average = 5%

Dividend rate = $ 2.35

Payout ratio = 55%

Dividend growth rate 3 year avg = 3.12%

Dividend growth rate 5 year avg = 2.31%

Consecutive dividend increases = 2 years

Paying dividends since = 1909

Total return last 3 years = 70.55%

Total return last 5 years = 40.01%

Conclusion

The markets are pulling back as expected after hitting the targets we posted roughly six weeks ago. At that point we had stated that the SPX was projecting a test of the 1305-1325 ranges with the possibility of an intraday spike as high as 1340. After that we stated that the markets would most likely put in a top. This scenario now appears to be in play. On Dec. 16, we made the following comments:

On a short-term basis, the Dow has put in a bottom and is getting ready to challenge the 12,000 ranges again. However, there is a chance that the recent lows could be tested before the rally gathers steam. Going out a little further, the cycles suggest that the Dow should be able to rally until early next year and there is a fairly good chance that the Dow could trade to the 12,800 range and the and the SPX could trade to the 1305-1330 plus range with the possibility of mounting an intra-day spike to the 1340 range. The dollar is overbought and has generated a few sell signals on the hourly time frames, so a pullback here would help drive commodities and the general market higher.

This pullback is projected to be fast and furious. After that the markets are expected to mount a strong counter rally until March. March is a very important time frame, and we are preparing our subscribers for this key timing point. It marks the three year anniversary of this bull run. Long-term investors would be best served by waiting for a strong pullback before deploying new funds into this market.

All dividend charts were sourced from dividata.com and all earnings estimates and growth rates were sourced from dailyfinance.com.

Source: 5 Plays With Stellar Payment Histories

Additional disclosure: This list of stocks is meant to serve as a starting point. Please do not treat this as a buying list. It is very important that you check the finer details, do your due diligence and then determine if any of the above plays meet with your risk tolerance levels. The Latin maxim caveat emptor applies-let the buyer beware.