3 Highly Profitable S&P 500 Dividend Stocks Positively Correlated With Volatility

Includes: HSY, NEE, PEG
by: Kapitall

Do you prefer stocks that pay reliable dividend income? For a closer look at some interesting dividend stocks, we ran a screen.

We began by screening the S&P 500 for stocks 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.

Finally, we screened for those with strong positive correlations to the volatility (VIX) index over the last two months. This indicates that these stocks have tended to outperform when market uncertainty and volatility spiked. This may bode well if the market sees more volatility in the future. Of course, past performance is no guarantee of future returns.

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 the market will see greater volatility moving forward? Use this list as a starting point for your own analysis.

List sorted by correlation with VIX index.

1. NextEra Energy, Inc. (NYSE:NEE): Engages in the generation, transmission, distribution, and sale of electric energy in the United States and Canada. Market cap at $28.16B, most recent closing price at $67.51.Dividend yield at 3.56%, payout ratio at 44.60%. TTM gross margin at 34.66% vs. industry average at 26.9%. TTM operating margin at 24.68% vs. industry average at 17.88%. TTM pretax margin at 18.19% vs. industry average at 12.29%. Correlation with the VIX index at 0.774 over the last 60 days.

2. Hershey Co. (NYSE:HSY): Engages in manufacturing, marketing, selling, and distributing various chocolate and confectionery products, pantry items, and gum and mint refreshment products worldwide. Market cap at $15.41B, most recent closing price at $68.92.Dividend yield at 2.21%, payout ratio at 46.53%. TTM gross margin at 46.4% vs. industry average at 31.85%. TTM operating margin at 18.71% vs. industry average at 11.31%. TTM pretax margin at 16.34% vs. industry average at 8.27%. Correlation with the VIX index at 0.657 over the last 60 days.

3. Public Service Enterprise Group Inc. (NYSE:PEG): Operates in the energy industry primarily in the northeastern and mid Atlantic United States. Market cap at $16.22B, most recent closing price at $32.06.Dividend yield at 4.43%, payout ratio at 48.61%. TTM gross margin at 36.12% vs. industry average at 28.46%. TTM operating margin at 27.% vs. industry average at 18.91%. TTM pretax margin at 21.15% vs. industry average at 12.41%. Correlation with the VIX index at 0.504 over the last 60 days.

*Profitability data sourced from Fidelity, price data sourced from Yahoo! Finance, 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.