6 Low-Debt Dividend Stocks With High Profitability

by: Kapitall

Do you like to rely on a particular stock's dividend income? If so, it's important to check that the company has healthy profits that can continue funding the dividend, otherwise the payout to shareholders may be in danger.

For ideas on how to analyze a stock's dividend sustainability, we ran a screen on low-debt dividend stocks, with total debt/equity below 0.3, dividend yields above 2% and payout ratios below 50%.

We then screened for those stocks that also have superior profitability, beating their industry peers on gross, operating and pretax margins by over 5%.

Interactive Chart: Press Play to compare changes in market cap 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. Analog Devices Inc. (ADI): Engages in the design, manufacture and marketing of analog, mixed-signal and digital signal processing integrated circuits used in industrial, communication, computer and consumer applications. Market cap at $12.03B.Price at $40.13. Dividend yield at 2.97%, payout ratio at 36.92%. Total debt/equity at 0.23. TTM gross margin at 69.7% vs. industry average at 59.37%. TTM operating margin at 34.37% vs. industry average at 23.23%. TTM pretax margin at 33.74% vs. industry average at 22.16%.

2. GrupoAeroportuario Del Sureste SA de CV (ASR): Holds concessions to operate, maintain and develop airports in the southeast region of Mexico. Market cap at $2.06B.Price at $70.10. Dividend yield at 3.73%, payout ratio at 48.36%. Total debt/equity at 0.05. TTM gross margin at 56.1% vs. industry average at 47.35%. TTM operating margin at 44.06% vs. industry average at 28.42%. TTM pretax margin at 45.17% vs. industry average at 25.9%.

3. BancFirst Corporation (BANF): Operates as the holding company for BancFirst that provides commercial banking services to retail customers and small to medium-sized businesses in the non-metropolitan trade centers of Oklahoma and the metropolitan markets of Oklahoma City, Tulsa, Lawton, Muskogee, Norman and Shawnee. Market cap at $659.50M.Price at $43.62. Dividend yield at 2.48%, payout ratio at 34.60%. Total debt/equity at 0.13. TTM gross margin at 88.6% vs. industry average at 72.11%. TTM operating margin at 45.32% vs. industry average at 40.03%. TTM pretax margin at 27.31% vs. industry average at 22.29%.

4. Intel Corporation (INTC): Engages in the design, manufacture and sale of integrated circuits for computing and communications industries worldwide. Market cap at $140.49B.Price at $28.42. Dividend yield at 2.99%, payout ratio at 31.29%. Total debt/equity at 0.16. TTM gross margin at 74.11% vs. industry average at 59.4%. TTM operating margin at 33.21% vs. industry average at 23.11%. TTM pretax margin at 32.93% vs. industry average at 21.98%.

5. RPC Inc. (RES): Provides a range of oilfield services and equipment to the oil and gas companies primarily in the United States. Market cap at $2.33B.Price at $10.45. Dividend yield at 3.02%, payout ratio at 15.97%. Total debt/equity at 0.27. TTM gross margin at 45.15% vs. industry average at 34.17%. TTM operating margin at 26.85% vs. industry average at 18.14%.TTM pretax margin at 26.46% vs. industry average at 13.41%.

6. First Financial Corp. (THFF): Provides various financial services. Market cap at $420.37M. Price at $32.00. Dividend yield at 2.96%, payout ratio at 34.56%. Total debt/equity at 0.11. TTM gross margin at 84.7% vs. industry average at 72.13%. TTM operating margin at 45.69% vs. industry average at 40.05%. TTM pretax margin at 34.47% vs. industry average at 22.31%.

*Profitability data sourced from Fidelity, 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.