Are you a dividend investor, searching out companies with sustainable payouts? For ideas on where to look, we honed in on companies with considerable profits, backed by ratings of 'Strong Buy' by analysts. We think you'll find our list rather interesting.
Return on Assets [ROA] illustrates how much a company is generating in earnings from its assets alone. This metric gives investors a picture of how profitable the company is relative to the assets in current possession. As well, it lets investors see how efficient and effective management is at generating earnings from the company's assets. While most management teams can probably make money by throwing money at an issue very few can make very large profits with little investment.
The Net Margin is a profitability metric that illustrates, by percentage, how much of every dollar earned gets turned into a bottom line profit. This is just one of many profitability metrics used by investors and analysts to better understand what the company is being left with at the end of the day. Generally, a firm that can expand its net profit margins over a period of time will see its stock price rise as well due to the trend of increasing profitability. Net Margin = Net Income/Total Revenue
We first looked for dividend stocks. From here, we then looked for companies with strong profitability (ROA > 10%)(Net Margin [TTM]>10%). From here, we then looked for companies that analysts rate as "Strong Buy" (mean recommendation < 2). We did not screen out any market caps or sectors.
Do you think these stocks have what it takes to grow? Please use our list to assist with your own analysis.
1) Deluxe Corp. (NYSE:DLX)
Deluxe Corp. has a Dividend Yield of 4.37% and Payout Ratio of 32.88% and Return on Assets of 11.45% and Net Margin of 10.80% and Analysts' Rating of 1.30. The short interest was 15.59% as of 05/31/2012. Deluxe Corporation, together with its subsidiaries, provides printed products, forms, and marketing solutions to small businesses and financial institutions primarily in the United States, Canada, Europe, and South America. The company offers checks; printed forms, including billing forms, work orders, job proposals, purchase orders, invoices, and personnel forms, as well as computer forms, deposit tickets, and check registers; and accessories and other products, such as envelopes, office supplies, stamps, and labels, as well as retail packaging supplies and checkbook covers. It also provides marketing solutions, which include Web design, hosting and other Web services, logo design, search engine marketing, and digital printing services for the sales and marketing needs of small businesses, business cards, greeting cards, brochures, and apparel; and customer acquisition programs and marketing communications services, and package insert programs. In addition, the company offers fraud protection services; payroll services; and financial institution profitability, regulatory, and compliance programs.
2) W. P. Carey & Co. LLC (NYSE:WPC)
|Industry:||Real Estate Development|
W. P. Carey & Co. LLC has a Dividend Yield of 4.99% and Payout Ratio of 67.64% and Return on Assets of 10.25% and Net Margin of 40.46% and Analysts' Rating of 1.00. The short interest was 0.22% as of 05/31/2012. W. P. Carey & Co. LLC, together with its subsidiaries, provides long-term sale-leaseback and build-to-suit transactions for companies worldwide and manages a global investment portfolio. It invests primarily in commercial properties that are each triple-net leased to single corporate tenants, which requires each tenant to pay substantially all of the costs associated with operating and maintaining the property. The company also operates as an advisor to publicly owned, non-actively traded real estate investment trusts, which are sponsored by it under the Corporate Property Associates brand name, as well as invests in similar properties.
3) American Software, Inc. (NASDAQ:AMSWA)
American Software, Inc. has a Dividend Yield of 4.52% and Payout Ratio of 80.42% and Return on Assets of 10.26% and Net Margin of 10.63% and Analysts' Rating of 1.00. The short interest was 3.65% as of 05/31/2012. American Software, Inc. and its subsidiaries develop, market, and support a portfolio of software and services that deliver enterprise management and collaborative supply chain solutions worldwide. The company operates in three segments: Supply Chain Management, Enterprise Resource Planning, and Information Technology Consulting. The Supply Chain Management segment provides collaborative supply chain solutions, which include supply chain planning, inventory optimization, manufacturing, and transportation and logistics solutions to streamline the market planning, management, production, and distribution of products for manufacturers, suppliers, distributors, and retailers.
4) FutureFuel Corp. (NYSE:FF)
|Industry:||Chemicals - Major Diversified|
FutureFuel Corp. has a Dividend Yield of 3.94% and Payout Ratio of 42.12% and Return on Assets of 10.61% and Net Margin of 11.43% and Analysts' Rating of 1.00. The short interest was 2.97% as of 05/31/2012. FutureFuel Corp. engages in the manufacture and sale of diversified chemicals and biobased products in the United States. The company operates in two segments, Chemicals and Biofuels. The Chemicals segment offers custom manufacturing products, including nonanoyloxybenzene-sulfonate, a bleach activator for detergent and consumer products manufacturers; a proprietary herbicide for life sciences companies; and chlorinated polyolefin adhesion promoters and antioxidant precursors for chemical companies, as well as a biocide intermediates for other diversified chemical companies.
*Company profiles were sourced from Finviz. Financial data was sourced from Google Finance and Yahoo Finance.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.