Do you consider yourself a dividend investor, looking for strong yields with sustainable payouts? One place to search is among the sometimes overlooked small cap stocks. Today we focused on small cap stocks with commendable dividends, fueled by strong company profitability. To only keep the best of the best, we took only those stocks that have been given positive analyst ratings. Our screen produced a short but diverse list of companies - we hope you enjoy.
The Operating Profit Margin is a profitability ratio that measures the effectiveness of the company's operating efficiency. This metric allows investors to see how much profit is left after all variable costs are covered. If the company's margin is increasing over time this means that it's earning more per dollar of sales. Finding trends in the Operating Profit Margin helps investors identify companies that are improving profitability over time and managing the economic landscape better than competitors.
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 small cap stocks that have a high dividend yield (Div. Yield > 5%). We next screened for businesses with strong profit margins (1-year operating margin>15%)(Net Margin [TTM]>10%). From here, we then looked for companies that analysts rate as "Buy" (2 < mean recommendation < 3). We did not screen out any sectors.
Do you think these small-cap stocks have strong enough fundamentals to move higher? Use this list as a starting-off point for your own analysis.
1) Belo Corp. (NYSE:BLC)
|Industry:||Broadcasting - TV|
Belo Corp. has a Dividend Yield of 5.22%, a Payout Ratio of 31.57%, a Operating Profit Margin of 27.60%, a Net Margin of 11.70%, and a Analysts' Rating of 2.00. The short interest was 9.07% as of 06/24/2012. Belo Corp. operates as a television company in the United States. The company owns 20 television stations, including ABC, CBS, NBC, FOX, CW, and MyNetwork TV affiliates, as well as their associated Web sites in 15 markets. It also owns two regional cable news operations, including Texas Cable News in Dallas/Fort Worth, Texas; and Northwest Cable News in Seattle/Tacoma, Washington.
2) SeaCube Container Leasing Ltd. (NYSE:BOX-OLD)
|Industry:||Rental & Leasing Services|
SeaCube Container Leasing Ltd. has a Dividend Yield of 6.56%, a Payout Ratio of 47.00%, a Operating Profit Margin of 22.45%, a Net Margin of 22.97%, and a Analysts' Rating of 2.20. The short interest was 2.28% as of 06/24/2012. SeaCube Container Leasing Ltd. operates as a container leasing company worldwide. It principally engages in the acquisition, leasing, re-leasing, and subsequent sale of refrigerated and dry containers, and generator sets. The company's containers are used to ship products internationally and facilitate movement of goods via multiple transportation modes, including ships, rail, and trucks.
3) Ellington Financial LLC (NYSE:EFC)
Ellington Financial LLC has a Dividend Yield of 13.31%, a Payout Ratio of 86.32%, a Operating Profit Margin of 71.04%, a Net Margin of 49.31%, and a Analysts' Rating of 2.00. The short interest was 0.07% as of 06/24/2012. Ellington Financial LLC is based in United States.
*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.