For dividend investors, high yields are always nice, but they're even better when they're coming from a company that can sustain them over time. Reasonable payout ratios are part of dividend sustainability, but so is having plenty of cash in the bank. Today we focus on dividend stocks offering decent yields for all the right reasons, homing in on those companies that have received positive 'Buy' ratings from analysts. We think you'll find our list of companies pretty interesting.
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 dividend stocks. We then screened for businesses that have a substantial amount of cash on hand (Current Ratio>2)(Quick Ratio>2). We then looked for companies that analysts rate as "Buy" or "Strong Buy" (mean recommendation < 3). We did not screen out any market caps or sectors.
Do you think these stocks should be trading higher? Use our list along with your own analysis.
1) Met-Pro Corp. (MPR)
Met-Pro Corp. has a Dividend Yield of 3.08%, a Payout Ratio of 58.65%, a Current Ratio of 4.85, a Quick Ratio of 3.54, and a Analysts' Rating of 1.80. The short interest was 3.31% as of 07/01/2012. Met-Pro Corporation manufactures and sells product recovery and pollution control equipment for the purification of air and liquids, fluid handling equipment, and filtration and purification products. The company's Product Recovery/Pollution Control Technologies segment provides solutions and products for product recovery and pollution control applications in metal finishing and plating, wastewater treatment, composting, food processing, ethanol production, chemical, petrochemical, printed circuit, semiconductor, steel pickling, battery manufacturing, groundwater remediation, automotive, aerospace, furniture, painting, electronics, printing, and pharmaceutical industries. Its Fluid Handling Technologies segment manufactures horizontal, vertical, and in-tank centrifugal pumps used for the pumping of acids, brines, caustics, bleaches, seawater, waste liquids, and high temperature liquids for industrial and commercial applications. This segment serves various industrial markets, including the chemical, petrochemical, refinery, pharmaceutical, plastics, pulp and paper, and food processing industries, as well as commercial users, such as hospitals, universities, and laboratories.
2) Kaydon Corporation (KDN)
|Industry:||Machine Tools & Accessories|
Kaydon Corporation has a Dividend Yield of 3.74%, a Payout Ratio of 51.46%, a Current Ratio of 4.40, a Quick Ratio of 2.40, and a Analysts' Rating of 2.40. The short interest was 7.08% as of 07/01/2012. Kaydon Corporation engages in the design, manufacture, and sale of custom engineered, performance-critical products in the United States, Germany, and internationally. The company's Friction Control Products segment offers anti-friction bearings, split roller bearings, and specialty balls that are used in alternative energy, specialized robotics, medical, aerospace, defense, security, electronic, material handling, construction, and other industrial applications. Its Velocity Control Products segment provides industrial shock absorbers, safety shock absorbers, velocity controls, gas springs, and rotary dampers for use in specialized robotics, material handling, machine tool, medical, amusement, and other industrial applications.
3) Microchip Technology Inc. (MCHP)
|Industry:||Semiconductor - Specialized|
Microchip Technology Inc. has a Dividend Yield of 4.23%, a Payout Ratio of 79.21%, a Current Ratio of 8.13, a Quick Ratio of 7.26, and a Analysts' Rating of 2.40. The short interest was 10.49% as of 07/01/2012. Microchip Technology Incorporated engages in the development, manufacture, and sale of semiconductor products for embedded control applications. The company offers microcontrollers, such as 8-bit, 16-bit, and 32-bit microcontrollers marketed under the PIC brand name, as well as 16-bit dsPIC digital signal controllers (DSC); and development tools that enable system designers to program a PIC microcontroller and dsPIC DSC for specific applications. It also provides analog and interface products, including power management, linear, mixed-signal, thermal management, RF Linear drivers, safety and security, and interface products; and memory products consisting of serial electrically erasable programmable read-only memory, serial flash memories, parallel flash memories, and serial SRAM memories for production of very small footprint devices. In addition, the company licenses its SuperFlash technology to foundries, integrated device manufacturers, and design partners for use in the manufacture of their advanced microcontroller products, gate array, RF, and analog products that require embedded flash; and provides engineering services.
4) Hooker Furniture Corp. (HOFT)
|Industry:||Home Furnishings & Fixtures|
Hooker Furniture Corp. has a Dividend Yield of 3.39%, a Payout Ratio of 77.90%, a Current Ratio of 5.70, a Quick Ratio of 4.06, and a Analysts' Rating of 2.00. The short interest was 1.55% as of 07/01/2012. Hooker Furniture Corporation, a home furnishings marketing and logistics company, together with its subsidiaries, designs, develops, imports, manufactures, and markets residential wood, metal, and upholstered furniture products in North America. The company offers casegoods products, including home entertainment, home office, accent, dining, and bedroom furniture under the Hooker Furniture, Envision, and Opus Designs by Hooker brand names; upholstered furniture under the Bradington-Young, Seven Seas, and Sam Moore brand names; upscale motion and stationary leather furniture; youth furniture under the Opus Designs by Hooker brand name; and private label products. It also offers various residential leather and fabric upholstered furniture under the Bradington-Young and Seven Seas upholstery brand; specializes in leather reclining and motion chairs, sofas, club chairs, and executive desk chairs; and offers upscale occasional chairs and other seating under the Sam Moore upholstery brand. The company serves retailers of residential home furnishings, including independent furniture stores, specialty retailers, department stores, catalog and Internet merchants, interior designers, and national and regional retail chains.
*Company profiles were sourced from Finviz. Financial data was sourced from Finviz and Google Finance.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.