Do you like to be able to rely on a stock's dividend income? For ideas on how to start your own dividend stock search, we ran a screen.
We began by screening for "dividend champion" stocks, those listed by DRiP Investing as those that have consistently increased their dividends over the last 25 years. We also screened for those paying dividend yields above 2% and sustainable payout ratios below 50%.
We then screened for those 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.
For an interactive version of this chart, click on the image below. Analyst ratings sourced from Zacks Investment Research.
Tool provided by Kapitall.
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 margin and industry average.
1. McDonald's Corp. (MCD): Operates as a foodservice retailer worldwide. Market cap at $88.B, most recent closing price at $86.59. Dividend yield at 3.23%, payout ratio at 48.32%. TTM gross margin at 44.84% vs. industry average at 36.81%. TTM operating margin at 30.76% vs. industry average at 19.28%. TTM pretax margin at 29.74% vs. industry average at 17.4%.
2. Commerce Bancshares, Inc. (CBSH): Operates as the bank holding company for Commerce Bank, N. Market cap at $3.28B, most recent closing price at $37.11. Dividend yield at 2.48%, payout ratio at 30.62%. TTM gross margin at 91.69% vs. industry average at 73.62%. TTM operating margin at 49.69% vs. industry average at 39.64%. TTM pretax margin at 35.75% vs. industry average at 24.23%.
3. Community Trust Bancorp Inc. (CTBI): Operates as the holding company for Community Trust Bank, Inc. Market cap at $505.98M, most recent closing price at $32.56. Dividend yield at 3.81%, payout ratio at 46.08%. TTM gross margin at 82.36% vs. industry average at 73.62%. TTM operating margin at 50.% vs. industry average at 39.64%. TTM pretax margin at 30.02% vs. industry average at 24.23%.
*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.