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Do you prefer stocks that pay part of their return in dividend income? For a closer look at 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 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:

ROE

= (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.

(click to enlarge)

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. American States Water Company (NYSE:AWR): Provides water, electric, and contracted services in the United States. Market cap at $687.64M, most recent closing price at $36.46. Dividend yield at 3.07%, payout ratio at 46.95%. The stock is trading 1.89% below its 52-week high. MRQ net profit margin at 9.49% vs. 8.05% y/y. MRQ sales/assets at 0.086 vs. 0.078 y/y. MRQ assets/equity at 3.004 vs. 3.162 y/y.

2. Fidelity National Financial, Inc. (NYSE:FNF): Provides title insurance, mortgage services, specialty insurance, and information services in the United States. Market cap at $4.17B, most recent closing price at $18.73. Dividend yield at 2.99%, payout ratio at 35.30%. The stock is trading 3.30% below its 52-week high. MRQ net profit margin at 6.25% vs. 3.75% y/y. MRQ sales/assets at 0.149 vs. 0.145 y/y. MRQ assets/equity at 2.143 vs. 2.272 y/y.

3. The Allstate Corporation (NYSE:ALL): Engages in the personal property and casualty insurance, life insurance, retirement, and investment products businesses primarily in the United States. Market cap at $16.26B, most recent closing price at $33.09. Dividend yield at 2.66%, payout ratio at 41.38%. The stock is trading 4.46% below 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.

4. Mine Safety Appliances Co. (NYSE:MSA): Develops, manufactures, and supplies health and safety products used by workers in the fire service, homeland security, construction, and other industries, as well as the military. Market cap at $1.56B, most recent closing price at $42.15. Dividend yield at 2.66%, payout ratio at 48.02%. The stock is trading 4.30% below its 52-week high. MRQ net profit margin at 8.15% vs. 4.8% y/y. MRQ sales/assets at 0.258 vs. 0.225 y/y. MRQ assets/equity at 2.472 vs. 2.641 y/y.

5. Bob Evans Farms Inc. (NASDAQ:BOBE): Operates full-service restaurants under the Bob Evans and Mimi's Cafe brand names in the United States. Market cap at $1.17B, most recent closing price at $40.27. Dividend yield at 2.48%, payout ratio at 38.76%. The stock is trading 0.05% below its 52-week high. 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.

6. Frisch's Restaurants Inc. (NYSEMKT:FRS): Operates restaurants in the United States. Market cap at $132.59M, most recent closing price at $26.84. Dividend yield at 2.38%, payout ratio at 40.54%. The stock is trading 3.06% below its 52-week high. MRQ net profit margin at 4.11% vs. 2.76% y/y. MRQ sales/assets at 0.355 vs. 0.346 y/y. MRQ assets/equity at 1.512 vs. 1.579 y/y.

7. 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. Market cap at $3.53B, most recent closing price at $60.68. Dividend yield at 2.24%, payout ratio at 26.76%. The stock is trading 4.40% below 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.

Source: 7 Dividend Stocks Trading Near Highs With Strong Sources Of Profitability