18 Dividend Stocks With Strong Sources Of Profitability

by: Kapitall

Do you prefer stocks that pay part of their return in dividend income? For ideas on how to start your search, we ran a screen.

We began by screening for dividend stocks, with dividend yields above 2% and sustainable payout ratios below 50%. We then screened these names for those with strong sources of profitability, as measured by DuPont analysis.

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


= (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.

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.

Do you think these stocks pay reliable dividends? Use this list as a starting point for your own analysis.

1. ABM Industries Inc. (NYSE:ABM): Provides facility services for commercial, industrial, institutional, and retail facilities primarily in the United States. Dividend yield at 2.46%, payout ratio at 42.50%. MRQ net profit margin at 0.99% vs. 0.82% y/y. MRQ sales/assets at 0.569 vs. 0.526 y/y. MRQ assets/equity at 2.343 vs. 2.612 y/y.

2. Advance America, Cash Advance Centers Inc. (NYSE:AEA): Provides cash advance services in the United States, the United Kingdom, and Canada. Dividend yield at 2.39%, payout ratio at 23.07%. MRQ net profit margin at 14.54% vs. 9.83% y/y. MRQ sales/assets at 0.375 vs. 0.371 y/y. MRQ assets/equity at 1.684 vs. 1.836 y/y.

3. Boeing Co. (NYSE:BA): Engages in the design, development, manufacture, sale, and support of commercial jetliners, military aircraft, satellites, missile defense, human space flight, and launch systems and services worldwide. Dividend yield at 2.33%, payout ratio at 31.43%. MRQ net profit margin at 7.12% vs. 7.03% y/y. MRQ sales/assets at 0.244 vs. 0.241 y/y. MRQ assets/equity at 22.756 vs. 24.789 y/y.

4. Bob Evans Farms Inc. (NASDAQ:BOBE): Operates full-service restaurants under the Bob Evans and Mimi's Cafe brand names in the United States. Dividend yield at 2.59%, payout ratio at 38.76%. MRQ net profit margin at 4.73% vs. 3.61% y/y. MRQ sales/assets at 0.399 vs. 0.395 y/y. MRQ assets/equity at 1.63 vs. 1.658 y/y.

5. CA Technologies (NASDAQ:CA): Designs, develops, markets, delivers, licenses, and supports information technology management software products that operate on a range of hardware platforms and operating systems. Dividend yield at 3.63%, payout ratio at 10.64%. MRQ net profit margin at 20.82% vs. 17.48% y/y. MRQ sales/assets at 0.107 vs. 0.096 y/y. MRQ assets/equity at 2.058 vs. 2.176 y/y.

6. Cardinal Health, Inc. (NYSE:CAH): Operates as a healthcare solutions company that provides health care products and services. Dividend yield at 2.06%, payout ratio at 29.77%.MRQ net profit margin at 0.97% vs. 0.85% y/y. MRQ sales/assets at 1.116 vs. 1.11 y/y. MRQ assets/equity at 4.093 vs. 4.215 y/y.

7. Cal-Maine Foods, Inc. (NASDAQ: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. Dividend yield at 2.25%, payout ratio at 33.38%. MRQ net profit margin at 8.01% vs. 6.48% y/y. MRQ sales/assets at 0.422 vs. 0.368 y/y. MRQ assets/equity at 1.576 vs. 1.625 y/y.

8. Hillenbrand, Inc. (NYSE:HI): Through its subsidiary, Batesville Services, Inc., manufactures, distributes, and sells funeral service products to licensed funeral directors operating licensed funeral homes. Dividend yield at 3.31%, payout ratio at 42.70%. MRQ net profit margin at 13.51% vs. 12.84% y/y. MRQ sales/assets at 0.199 vs. 0.193 y/y. MRQ assets/equity at 2.543 vs. 2.733 y/y.

9. Quaker Chemical Corporation (NYSE:KWR): Develops, produces, and markets formulated chemical specialty products for various heavy industrial and manufacturing applications. Dividend yield at 2.50%, payout ratio at 42.12%. MRQ net profit margin at 5.64% vs. 4.85% y/y. MRQ sales/assets at 0.343 vs. 0.316 y/y. MRQ assets/equity at 2.032 vs. 2.492 y/y.

10. Occidental Petroleum Corporation (NYSE:OXY): Operates as an oil and gas exploration and production company primarily in the United States. Dividend yield at 2.18%, payout ratio at 23.07%. MRQ net profit margin at 26.98% vs. 23.83% y/y. MRQ sales/assets at 0.101 vs. 0.097 y/y. MRQ assets/equity at 1.596 vs. 1.614 y/y.

11. Protective Life Corp. (NYSE:PL): And its subsidiaries engage in the production, distribution, and administration of insurance and investment products in the United States. Dividend yield at 2.15%, payout ratio at 15.48%. MRQ net profit margin at 10.13% vs. 9.94% y/y. MRQ sales/assets at 0.017 vs. 0.017 y/y. MRQ assets/equity at 12.542 vs. 14.278 y/y.

12. SLM Corporation (NYSE:SLM): Provides education finance in the United States. Dividend yield at 3.10%, payout ratio at 26.42%. MRQ net profit margin at 26.06% vs. 22.74% y/y. MRQ sales/assets at 0.01 vs. 0.01 y/y. MRQ assets/equity at 36.877 vs. 40.963 y/y.

13. Snap-on Inc. (NYSE: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. Dividend yield at 2.19%, payout ratio at 27.76%. MRQ net profit margin at 10.09% vs. 8.31% y/y. MRQ sales/assets at 0.201 vs. 0.187 y/y. MRQ assets/equity at 2.399 vs. 2.686 y/y.

14. Staples, Inc. (NASDAQ:SPLS): Operates as an office products company. Dividend yield at 2.67%, payout ratio at 28.23%. MRQ net profit margin at 4.39% vs. 4.28% y/y. MRQ sales/assets at 0.481 vs. 0.461 y/y. MRQ assets/equity at 1.915 vs. 2.003 y/y.

15. Steris Corp. (NYSE:STE): Develops, manufactures, and markets infection prevention, contamination control, microbial reduction, and surgical support products and services to healthcare, pharmaceutical, scientific, research, industrial, and governmental customers worldwide. Dividend yield at 2.11%, payout ratio at 28.57%. MRQ net profit margin at 9.47% vs. 6.63% y/y. MRQ sales/assets at 0.258 vs. 0.243 y/y. MRQ assets/equity at 1.766 vs. 1.802 y/y.

16. Symetra Financial Corporation (NYSE:SYA): Operates as a financial services company in the life insurance industry in the United States. Dividend yield at 2.49%, payout ratio at 13.13%. MRQ net profit margin at 13.21% vs. 12.56% y/y. MRQ sales/assets at 0.02 vs. 0.019 y/y. MRQ assets/equity at 9.002 vs. 10.769 y/y.

17. Molson Coors Brewing Company (NYSE:TAP): Distributes beer brands. Dividend yield at 2.99%, payout ratio at 29.23%. MRQ net profit margin at 18.48% vs. 13.15% y/y. MRQ sales/assets at 0.075 vs. 0.066 y/y. MRQ assets/equity at 1.624 vs. 1.628 y/y.

18. Williams-Sonoma Inc. (NYSE:WSM): Operates as a specialty retailer of home products. Dividend yield at 2.38%, payout ratio at 31.92%. MRQ net profit margin at 9.67% vs. 9.49% y/y. MRQ sales/assets at 0.615 vs. 0.561 y/y. MRQ assets/equity at 1.642 vs. 1.693 y/y.

*Accounting data sourced from Google Finance, 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.