Do you prefer stocks that pay handsome dividend income? For a closer look at interesting dividend stocks of the S&P 500, we ran a screen.
We began by screening the S&P 500 for stocks paying dividend yields above 2% and sustainable payout ratios below 50%. We then screened for those with strong upward momentum, trading within 5% of their 52-week highs.
Then to analyze these companies' profitability, we ran DuPont analysis on the names. DuPont analyzes profitability by breaking up return on equity (net income/equity) into three components:
= (Net Profit/Equity)
= (Net profit/Sales)*(Sales/Assets)*(Assets/Equity)
= (Net Profit margin)*(Asset turnover)*(Leverage ratio)
Because increases in net margin and asset turnover are considered good things, DuPont focuses on companies with these 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)
Those companies that pass DuPont are seeing positive trends in the sources of their increasing profitability, which adds further weight to the idea that the names are profitable.
Interactive Chart: Press Play to compare changes in market cap 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 will break through to new highs? Use this list as a starting point for your own analysis.
List sorted by dividend yield.
1. ConAgra Foods, Inc. (CAG): Operates as a food company primarily in North America. Market cap at $10.63B, most recent closing price at $25.57. Dividend yield at 3.76%, payout ratio at 49.36%. The stock is currently trading within 4.38% of its 52-week high. MRQ net profit margin at 8.05% vs. 6.84% y/y. MRQ sales/assets at 0.287 vs. 0.274 y/y. MRQ assets/equity at 2.339 vs. 2.485 y/y.
2. The Allstate Corporation (ALL): Engages in the personal property and casualty insurance, life insurance, retirement, and investment products businesses primarily in the United States. Market cap at $17.05B, most recent closing price at $34.24. Dividend yield at 2.56%, payout ratio at 41.38%. The stock is currently trading within 0.32% of its 52-week high. MRQ net profit margin at 9.16% vs. 6.47% y/y. MRQ sales/assets at 0.066 vs. 0.062 y/y. MRQ assets/equity at 6.565 vs. 6.754 y/y.
3. Comcast Corporation (CMCSA): Provides entertainment, information, and communications products and services in the United States and internationally. Market cap at $79.27B, most recent closing price at $29.26. Dividend yield at 2.23%, payout ratio at 29.88%. The stock is currently trading within 4.08% of its 52-week high. MRQ net profit margin at 8.23% vs. 7.78% y/y. MRQ sales/assets at 0.094 vs. 0.079 y/y. MRQ assets/equity at 3.327 vs. 3.33 y/y.
4. Snap-on Inc. (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. Market cap at $3.6B, most recent closing price at $61.03. Dividend yield at 2.22%, payout ratio at 26.76%. The stock is currently trading within 3.43% of its 52-week high. MRQ net profit margin at 9.66% vs. 8.1% y/y. MRQ sales/assets at 0.198 vs. 0.181 y/y. MRQ assets/equity at 2.314 vs. 2.578 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.