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Only stocks that met the following criteria were included on this list. Novice investors would do well to follow some of the suggested guidelines when it comes to looking for new investment ideas. In terms of stocks that pay dividends investors would do well not to obsess on the yield factor only. Unusually high yields are generally not associated with safe long-term investors, and they can sometimes be a sign that all is not well with the company.

  1. Net income should be generally trending upwards for the past 3 years
  2. EPS should be trending upwards for the past 3 years
  3. Sales should be trending upwards for the past 3 years
  4. Cash flow per share should be trending upwards for the past 3 years
  5. Annual EPS before NRI should be generally trending upwards for the past 3 years
  6. 5 year average ROE of 9% or higher
  7. 3-5 year projected EPS growth rate of 6% or higher
  8. Interest coverage ratio of 2.4 or higher
  9. If the company has a positive levered free cash flow, it should be viewed as "icing on the cake"

Company: Leggett & Platt Incorporated (NYSE:LEG)

Levered Free Cash Flow = $240 million

Basic Key ratios

  1. Relative Strength 52 weeks = 57
  2. Cash Flow 5 -year Average = 2.17

Growth

  1. Net Income ($mil) 12/2011 = 153
  2. Net Income ($mil) 12/2010 = 177
  3. Net Income ($mil) 12/2009 = 112
  1. Cash Flow ($/share) 12/2011 = 2.02
  2. Cash Flow ($/share) 12/2010 = 2.05
  3. Cash Flow ($/share) 12/2009 = 1.78
  1. Sales ($mil) 12/2011 = 3636
  2. Sales ($mil) 12/2010 = 3359
  3. Sales ($mil) 12/2009 = 3055
  1. Annual EPS before NRI 12/2007 = 1.18
  2. Annual EPS before NRI 12/2008 = 0.88
  3. Annual EPS before NRI 12/2009 = 0.86
  4. Annual EPS before NRI 12/2010 = 1.16
  5. Annual EPS before NRI 12/2011 = 1.12

Dividend history

  1. Dividend Yield = 5.3
  2. Dividend Yield 5 Year Average 12/2011 = 5.18
  3. Dividend 5 year Growth 12/2011 = 6.52

Dividend sustainability

  1. Payout Ratio 06/2011 = 0.95
  2. Payout Ratio 5 Year Average 12/2011 = 1.02

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = 15
  2. EPS Growth Quarterly(1)/Q(-3) = 126.67
  3. ROE 5 Year Average 12/2011 = 9.83
  1. Current Ratio 06/2011 = 2.09
  2. Current Ratio 5 Year Average = 2.36
  3. Quick Ratio = 1.34
  4. Cash Ratio = 0.48
  5. Interest Coverage Quarterly = 2.48

Company: Brady Corp (NYSE:BRC)

Basic Key ratios

Percentage Held by Insiders = 15.6

Growth

  1. Net Income ($mil) 12/2011 = 109
  2. Net Income ($mil) 12/2010 = 82
  3. Net Income ($mil) 12/2009 = 70
  1. Cash Flow ($/share) 12/2011 = 3.1
  2. Cash Flow ($/share) 12/2010 = 2.76
  3. Cash Flow ($/share) 12/2009 = 2.77
  1. Sales ($mil) 12/2011 = 1340
  2. Sales ($mil) 12/2010 = 1259
  3. Sales ($mil) 12/2009 = 1209
  1. Annual EPS before NRI 12/2009 = 1.71
  2. Annual EPS before NRI 12/2010 = 1.74
  3. Annual EPS before NRI 12/2011 = 2.16

Dividend history

  1. Dividend Yield = 2.4
  2. Dividend Yield 5 Year Average 12/2011 = 2.26
  3. Dividend 5 year Growth 12/2011 = 5.96

Dividend sustainability

  1. Payout Ratio 09/2011 = 0.33
  2. Payout Ratio 5 Year Average 12/2011 = 0.34

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = 7
  2. EPS Growth Quarterly(1)/Q(-3) = 110.91
  3. 5 Year History EPS Growth 12/2011 = -1.7
  4. ROE 5 Year Average 12/2011 = 11.24
  5. Current Ratio 12/2011 = 2.87
  6. Current Ratio 5 Year Average = 2.4
  7. Quick Ratio = 2.17
  8. Cash Ratio = 1.41
  9. Interest Coverage Quarterly = 2.80

Company: Energy Transfer Partners (NYSE:ETP)

Growth

  1. Net Income ($mil) 12/2011 = 669
  2. Net Income ($mil) 12/2010 = 617
  3. Net Income ($mil) 12/2009 = 792
  1. Cash Flow ($/share) 12/2011 = 5.67
  2. Cash Flow ($/share) 12/2010 = 5.34
  3. Cash Flow ($/share) 12/2009 = 6.32
  1. Sales ($mil) 12/2011 = 6850
  2. Sales ($mil) 12/2010 = 5885
  3. Sales ($mil) 12/2009 = 5417
  1. Annual EPS before NRI 12/2009 = 2.51
  2. Annual EPS before NRI 12/2010 = 1.47
  3. Annual EPS before NRI 12/2011 = 1.48

Dividend history

  1. Dividend Yield = 7.7
  2. Dividend Yield 5 Year Average 12/2011 = 7.65
  3. Dividend 5 year Growth = 7

Dividend sustainability

  1. Payout Ratio 06/2011 = 2.31
  2. Payout Ratio 5 Year Average 12/2011 = 1.59

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = 14.46
  2. EPS Growth Quarterly(1)/Q(-3) = 130.99
  3. ROE 5 Year Average 12/2011 = 18.6
  4. Current Ratio 06/2011 = 0.81
  5. Current Ratio 5 Year Average = 1.16
  6. Quick Ratio = 0.61
  7. Cash Ratio = 0.19
  8. Interest Coverage Quarterly = 2.50

Company: Firstmerit Corp (NASDAQ:FMER)

Growth

  1. Net Income ($mil) 12/2011 = 120
  2. Net Income ($mil) 12/2010 = 103
  3. Net Income ($mil) 12/2009 = 82
  1. Cash Flow ($/share) 12/2011 = 1.44
  2. Cash Flow ($/share) 12/2010 = 1.26
  3. Cash Flow ($/share) 12/2009 = 1.13
  1. Sales ($mil) 12/2011 = 763
  2. Sales ($mil) 12/2010 = 755
  3. Sales ($mil) 12/2009 = 670
  1. Annual EPS before NRI 12/2009 = 0.9
  2. Annual EPS before NRI 12/2010 = 1.02
  3. Annual EPS before NRI 12/2011 = 1.1

Dividend history

  1. Dividend Yield = 3.8
  2. Dividend Yield 5 Year Average 12/2011 = 4.63
  3. Dividend 5 year Growth 12/2011 = -15.44

Dividend sustainability

  1. Payout Ratio 09/2011 = 0.57
  2. Payout Ratio 5 Year Average 12/2011 = 0.71
  3. Change in Payout Ratio = -0.13

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = 6.00
  2. EPS Growth Quarterly(1)/Q(-3) = -112
  3. 5 Year History EPS Growth 12/2011 = -7.49
  4. ROE 5 Year Average 12/2011 = 9.77
  1. Current Ratio 12/2011 = 0.79
  2. Current Ratio 5 Year Average = 0.86
  3. Quick Ratio = 0.8
  4. Cash Ratio = 0.03
  5. Interest Coverage Quarterly = 31.27

Company: Emerson Electric Company (NYSE:EMR)

Levered Free Cash Flow = 2.37B

Growth

  1. Net Income ($mil) 12/2011 = 2480
  2. Net Income ($mil) 12/2010 = 2164
  3. Net Income ($mil) 12/2009 = 1724
  4. Cash Flow ($/share) 12/2011 = 4.46
  5. Cash Flow ($/share) 12/2010 = 3.8
  6. Cash Flow ($/share) 12/2009 = 3.26
  1. Sales ($mil) 12/2011 = 24222
  2. Sales ($mil) 12/2010 = 21039
  3. Sales ($mil) 12/2009 = 20915
  1. Annual EPS before NRI 12/2009 = 2.27
  2. Annual EPS before NRI 12/2010 = 2.69
  3. Annual EPS before NRI 12/2011 = 3.24

Dividend history

  1. Dividend Yield = 3.3
  2. Dividend Yield 5 Year Average =2.8%
  3. Dividend 5 year Growth = 9%

Dividend sustainability

  1. Payout Ratio 06/2011 = 0.51
  2. Payout Ratio 5 Year Average 06/2011 = 0.47

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = 11.5
  2. EPS Growth Quarterly(1)/Q(-3) = 120.64
  3. ROE 5 Year Average 06/2011 = 23.45
  4. Current Ratio 06/2011 = 1.40
  5. Current Ratio 5 Year Average = 1.43
  6. Quick Ratio = 1.12
  7. Cash Ratio = 0.42
  8. Interest Coverage = 14.20

Conclusion

Long-term investors can use strong pullbacks to slowly start deploying money into long-term investments. One of the best ways to do this is by selling naked puts at strikes you would not mind owning the stock at. In essence, you are getting paid to wait. Investors looking for other ideas might find some in this article - Seadrill Ltd. Among 5 Growth Candidates To Reflect On.

Disclaimer

This list of stocks is meant to serve as a starting point. Please do not treat this as a buying list. It is imperative that you 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.

Source: Leggett & Platt Among 5 Interesting Candidates To Consider

Additional disclosure: EPS and Price Vs industry charts obtained from zacks.com. A major portion of the historical data used in this article was obtained from zacks.com.