Do you prefer stocks that pay reliable dividend income? For a closer look at some interesting dividend stocks, we ran a screen.
We began by screening for stocks paying dividend yields above 2% and sustainable payout ratios below 50%. We then screened for stocks with strong liquidity, with current ratios above 3. The current ratio is current assets/current liabilities, so ratios above 3 indicate the company has at least 3 times the liquid assets to cover their short-term liabilities.
Finally, we screened for those stocks with strong profitability compared to industry peers, with higher gross, operating, and pretax margins than their industry averages by at least 5% on each margin. This indicates that these companies are taking a greater percentage of their revenues as profits, and they also have stronger control over their cost structures.
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 difference between pretax profit margin and industry average.
1. Kronos Worldwide Inc. (KRO): Engages in the production and marketing of titanium dioxide pigments in North America and Europe. Market cap at $2.25B, most recent closing price at $19.34. Dividend yield at 3.09%, payout ratio at 17.51%. Current ratio at 3.43. TTM gross margin at 43.72% vs. industry average at 37.23%. TTM operating margin at 31.4% vs. industry average at 16.93%. TTM pretax margin at 30.29% vs. industry average at 15.95%.
2. 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 $11.08B, most recent closing price at $36.96. Dividend yield at 3.23%, payout ratio at 36.92%. Current ratio at 8.82. TTM gross margin at 69.7% vs. industry average at 60.1%. TTM operating margin at 34.37% vs. industry average at 22.28%. TTM pretax margin at 33.74% vs. industry average at 20.53%.
3. Xilinx Inc. (XLNX): Designs, develops, and markets programmable platforms in North America, the Asia Pacific, Europe, and Japan. Market cap at $8.63B, most recent closing price at $32.84. Dividend yield at 2.67%, payout ratio at 36.82%. Current ratio at 7.15. TTM gross margin at 67.4% vs. industry average at 60.1%. TTM operating margin at 28.85% vs. industry average at 22.28%. TTM pretax margin at 27.33% vs. industry average at 20.53%.
*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.
