One of the most important considerations with dividend stocks is whether the company's cash flows are strong enough to continue paying the dividend. If they aren't, the company cannot go for much longer without suspending their dividend.
We ran a screen on highly profitable dividend stocks, beating their industry averages of gross, operating, and pretax profit margins. We then screened these stocks for those with at least 5 times the trailing-twelve-month operating cash flow per share relative to their TTM dividend.
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 think these stocks pay reliable dividends? Use this list as a starting point for your own analysis.
List sorted by dividend yield.
1. Estee Lauder Companies Inc. (EL): Engages in the manufacture, marketing, and sale of skin care, makeup, fragrance, and hair care products worldwide. Dividend yield at 3.67%, payout ratio at 24.25%. TTM operating cash flow per share at $2.82 vs. TTM dividend per share at $0.53. TTM gross margin at 81.37% vs. industry average at 70.81%. TTM operating margin at 14.73% vs. industry average at 13.35%. TTM pretax margin at 13.2% vs. industry average at 11.11%.
2. Norfolk Southern Corp. (NSC): Engages in the rail transportation of raw materials, intermediate products, and finished goods primarily in the United States. Dividend yield at 2.38%, payout ratio at 29.73%. TTM operating cash flow per share at $9.18 vs. TTM dividend per share at $1.66. TTM gross margin at 36.99% vs. industry average at 36.05%. TTM operating margin at 29.28% vs. industry average at 26.58%. TTM pretax margin at 26.12% vs. industry average at 23.21%.
3. PNC Financial Services Group Inc. (PNC): Operates as a diversified financial services company. Dividend yield at 2.31%, payout ratio at 14.08%. TTM operating cash flow per share at $9.42 vs. TTM dividend per share at $0.90. TTM gross margin at 83.27% vs. industry average at 71.28%. TTM operating margin at 49.36% vs. industry average at 40.63%. TTM pretax margin at 25.72% vs. industry average at 22.06%.
4. CSX Corp. (CSX): Provides rail-based transportation services. Dividend yield at 2.17%, payout ratio at 36.78%. TTM operating cash flow per share at $3.21 vs. TTM dividend per share at $0.62. TTM gross margin at 37.42% vs. industry average at 36.05%. TTM operating margin at 29.11% vs. industry average at 26.58%. TTM pretax margin at 24.59% vs. industry average at 23.21%.
5. Union Pacific Corporation (UNP): Provides rail transportation services in North America. Dividend yield at 2.10%, payout ratio at 28.49%. TTM operating cash flow per share at $11.99 vs. TTM dividend per share at $1.93. TTM gross margin at 37.54% vs. industry average at 36.09%. TTM operating margin at 29.27% vs. industry average at 26.63%. TTM pretax margin at 26.92% vs. industry average at 23.26%.
*Dividend and operating cash flow data sourced from Screener.co, 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.
