Are you a dividend investor searching for stocks that not only offer attractive yields, but also payouts that they can sustain over time? One place to look is at companies with hearty profits fueling those dividends. Today we screened for consumer companies with strong profitability, and narrowed our focus to only the stocks rated as "Buy" or "Strong Buy" by industry analysts. We think you'll find our list rather interesting.
EPS growth (earnings per share growth) illustrates the growth of earnings per share over time. EPS growth rates help investors identify stocks that are increasing or decreasing in profitability. This profitability metric is generally a key driver in the price of the stock as it directly correlates to the profitability of the company as a whole.
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 consumer dividend stocks. Next, we then screened for businesses that have shown strong bottom line growth over the last year (1-year fiscal EPS growth rate>10%)(Net Margin [TTM]>10%). We then looked for businesses that analysts rate as "Buy" or "Strong Buy" (mean recommendation < 3). We did not screen out any market caps.
Do you think these stocks will perform well? Please use our list to assist with your own analysis.
1) Lorillard, Inc. (LO)
Lorillard, Inc. has a Dividend Yield of 5.03%, a Payout Ratio of 67.74%, a Earnings Per Share Growth Rate of 17.82%, a Net Margin of 16.89%, and a Analysts' Rating of 2.50. The short interest was 3.26% as of 06/13/2012. Lorillard, Inc., through its subsidiaries, manufactures and sells cigarettes in the United States. It markets approximately 43 product offerings in various brand names, including Newport, Kent, True, Maverick, and Old Gold. The company sells its products primarily to wholesale distributors, who in turn service retail outlets, chain store organizations, and government agencies.
2) Mattel Inc. (MAT)
|Industry:||Toys & Games|
Mattel Inc. has a Dividend Yield of 3.90%, a Payout Ratio of 45.32%, a Earnings Per Share Growth Rate of 17.42%, a Net Margin of 12.17%, and a Analysts' Rating of 2.00. The short interest was 3.25% as of 06/13/2012. Mattel, Inc., together with its subsidiaries, designs, manufactures, and markets various toy products. Its products comprise fashion dolls and accessories, vehicles and play sets, and games and puzzles. The company offers its products under the Mattel Girls and Boys brands, including Barbie, Polly Pocket, Little Mommy, Disney Classics, Monster High, Hot Wheels, Matchbox, Tyco R/C, CARS, Radica, Toy Story, WWE Wrestling, and Batman; Fisher-Price brands comprising Fisher-Price, Little People, BabyGear, View-Master, Dora the Explorer, Go Diego Go!, Thomas and Friends, Mickey Mouse, Sing-a-ma-jigs, See N Say, and Power Wheels; and American Girl Brands, such as My American Girl, Bitty Baby, McKenna, and the newest Girl of the Year.
3) Cresud Sociedad An (CRESY)
Cresud Sociedad An has a Dividend Yield of 4.19%, a Payout Ratio of 42.66%, a Earnings Per Share Growth Rate of 12.59%, a Net Margin of 10.38%, and a Analysts' Rating of 2.30. The short interest was 0.39% as of 06/13/2012. Cresud, Inc., an agricultural company, engages in crop production, cattle raising, and milk production in Argentina. The company engages in the planting and harvesting, and sale of fine and coarse grains and oilseeds, including wheat, corn, soybeans, and sunflowers.
4) Procter & Gamble Co. (PG)
Procter & Gamble Co. has a Dividend Yield of 3.59%, a Payout Ratio of 62.46%, a Earnings Per Share Growth Rate of 11.27%, a Net Margin of 11.40%, and a Analysts' Rating of 2.10. The short interest was 0.51% as of 06/13/2012. The Procter & Gamble Company provides consumer packaged goods in the United States and internationally. The company offers beauty products, such as cosmetics, female antiperspirant and deodorant, female personal cleansing, female shave care, hair care, hair color, hair styling, pharmacy channel, prestige products, salon professional, and skin care products under the Head & Shoulders, Olay, Pantene, and Wella brands; and grooming products, including electronic hair removal devices, home small appliances, male blades and razors, and male personal care products under the Braun, Fusion, Gillette, and Mach3 brands. It also provides health care products comprising feminine care, gastrointestinal, incontinence, rapid diagnostics, respiratory, toothbrush, toothpaste, water filtration, and other oral care products under the Always, Crest, and Oral-B brands; snacks and pet care products under the Iams and Pringles brands; fabric care and home care products consisting of laundry additives, air care, batteries, dish care, fabric enhancers, laundry detergents, and surface care products under the Ace, Ariel, Dawn, Downy, Duracell, Gain, Tide, and Febreze brands; and baby care and family care products, such as baby wipes, diapers, paper towels, tissues, and toilet paper products under Bounty, Charmin, and Pampers brands. The company sells its products in approximately 180 countries through retail operations, including mass merchandisers, grocery stores, membership club stores, drug stores, department stores, salons, and high-frequency stores.
5) Philip Morris International, Inc. (PM)
Philip Morris International, Inc. has a Dividend Yield of 3.59%, a Payout Ratio of 58.57%, a Earnings Per Share Growth Rate of 23.58%, a Net Margin of 11.72%, and a Analysts' Rating of 2.30. The short interest was 0.49% as of 06/13/2012. Philip Morris International Inc., through its subsidiaries, manufactures and sells cigarettes and other tobacco products. Its portfolio of international and local brands include Marlboro, Merit, Parliament, Virginia Slims, L&M, Chesterfield, Bond Street, Lark, Muratti, Next, Philip Morris, and Red & White. The company's local brands comprise Sampoerna A, Dji Sam Soe, and Sampoerna Kretek in Indonesia; Fortune, Champion, and Hope in the Philippines; Diana in Italy; Optima and Apollo-Soyuz in Russia; Morven Gold in Pakistan; Boston in Colombia; Belmont, Canadian Classics, and Number 7 in Canada; Best and Classic in Serbia; f6 in Germany; Delicados in Mexico; Assos in Greece; and Petra in the Czech Republic and Slovakia.
*Company profiles were sourced from Finviz. Financial data was sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.