For dividend investors, it's all about yield. Today we focused on high yield (5%+) stocks that can sustain their payouts due to having cash in the bank. We think you'll like the list we came up with, especially since we're only talking about companies that analysts rate as 'Buy'.
The Current ratio is a liquidity ratio used to determine a company's financial health. The metric illustrates how easily a firm can pay back its short obligations all at once through current assets. A company that has a current ratio of one or less is generally a liquidity red flag. Now this doesn't mean the company will go bankrupt tomorrow, but it also doesn't bode well for the company, and may indicate that it could have an issue paying back upcoming obligations.
The Quick ratio measures a company's ability to use its cash or assets to extinguish its current liabilities immediately. Quick assets include assets that presumably can be converted to cash at close to their book values. A company with a Quick Ratio of less than 1 cannot currently pay back its current liabilities. The quick ratio is more conservative than the Current Ratio because it excludes inventory from current assets, since some companies have difficulty turning their inventory into cash. If short-term obligations need to be paid off immediately, sometimes the current ratio would overestimate a company's short-term financial strength. In general, the higher the ratio, the greater the company's liquidity (i.e., the better able to meet current obligations using liquid assets).
We first looked for stocks with a very high yield (more than 5%). Next, we then screened for businesses that have strong liquidity (Current Ratio>2)(Quick Ratio>2). We then screened for businesses that analysts rate as "Buy" (2 < mean recommendation < 3). We did not screen out any market caps or sectors.
Do you think these stocks should have higher valuations? Use our list to help with your own analysis.
1) Orchids Paper Products Company (TIS)
|Industry:||Paper & Paper Products|
Orchids Paper Products Company has a Dividend Yield of 5.03%, a Payout Ratio of 55.69%, a Current Ratio of 3.25, a Quick Ratio of 2.15, and a Analysts' Rating of 1.80. The short interest was 0.13% as of 06/06/2012. Orchids Paper Products Company engages in the manufacture and sale of various private label tissue products for the consumer market. Its products include paper towels, bathroom tissue, and paper napkins. The company offers its products under various brand names, such as Colortex, My Size, Velvet, Big Mopper, Soft & Fluffy, Tackle, and Nobel.
2) NTELOS Holdings Corp. (NTLS)
NTELOS Holdings Corp. has a Dividend Yield of 8.75%, a Payout Ratio of 169.26%, a Current Ratio of 2.20, a Quick Ratio of 2.07, and a Analysts' Rating of 1.90. The short interest was 1.95% as of 06/06/2012. NTELOS Holdings Corp., through its subsidiaries, provides wireless communications services to consumers and businesses primarily in Virginia and West Virginia, as well as parts of Maryland, North Carolina, Pennsylvania, Ohio, and Kentucky. It primarily offers wireless digital personal communications services, such as wireless voice and data products and services, and roaming/travel services under the NTELOS Wireless brand name. The company also provides wholesale network services to Sprint Nextel in the western Virginia and West Virginia area for various Sprint CDMA wireless customers.
3) Douglas Dynamics, Inc. (PLOW)
Douglas Dynamics, Inc. has a Dividend Yield of 6.43%, a Payout Ratio of 117.49%, a Current Ratio of 6.10, a Quick Ratio of 2.46, and a Analysts' Rating of 1.80. The short interest was 6.03% as of 06/06/2012. Douglas Dynamics, Inc. designs, manufactures, and sells snow and ice control equipment for light trucks in North America. It principally offers snowplows, sand and salt spreaders, and related parts and accessories. The company sells its products under the WESTERN, FISHER, and BLIZZARD brands.
*Company profiles were sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.