Mid-cap companies are always an interesting play: they can offer growth potential similar to that of smaller-cap companies, yet they can lack the stability of larger-cap alternatives. To hone in on smart mid-cap dividend stocks, today we focused on companies offering sustainable yields due to their strong track records of profitability, and that have also earned analyst recommendations. We arrived at a list of companies that merit more research and analysis.
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.
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.
We first looked for mid-cap dividend stocks. We then looked for companies that analysts rate as "Buy" (2 < mean recommendation < 3). We then looked for businesses with strong profit margins (1-year operating margin>15%)(1-year fiscal EPS growth rate>10%). We did not screen out any sectors.
Do you think these mid-cap stocks have strong fundamentals? Use this list as a starting-off point for your own analysis.
1) Alliance Holdings GP, L.P. (AHGP)
|Industry:||Nonmetallic Mineral Mining|
Alliance Holdings GP, L.P. has a Dividend Yield of 6.22%, a Payout Ratio of 67.36%, an Analysts' Rating of 2.00, an Operating Profit Margin of 21.39%, and an Earnings Per Share Growth Rate of 22.83%. The short interest was 1.25% as of 07/03/2012. Alliance Holdings GP, L.P., through its subsidiaries, produces and markets coal primarily to utilities and industrial users in the United States. It produces a range of steam coals with varying sulfur and heat contents. The company also operates 10 underground mining complexes in Illinois, Indiana, Kentucky, Maryland, and West Virginia.
2) National Fuel Gas Co. (NFG)
National Fuel Gas Co. has a Dividend Yield of 3.04%, a Payout Ratio of 55.46%, an Analysts' Rating of 2.40, an Operating Profit Margin of 25.46%, and an Earnings Per Share Growth Rate of 16.50%. The short interest was 2.18% as of 07/03/2012. National Fuel Gas Company operates as a diversified energy company in the United States. The company's Utility segment sells natural gas or provides natural gas transportation services to approximately 731,600 customers in Buffalo, Niagara Falls, and Jamestown, New York; and Erie and Sharon, Pennsylvania. Its Pipeline and Storage segment provides interstate natural gas transportation and storage services through an integrated gas pipeline system extending from southwestern Pennsylvania to the New York-Canadian border, and eastward to Ellisburg and Leidy, Pennsylvania; and owns and operates 27 underground natural gas storage fields, as well as operates 4 other underground natural gas storage fields jointly with other interstate gas pipeline companies. This segment also transports natural gas for distribution corporation and other utilities, industrial customers, and power producers in New York state.
3) Brookfield Properties Corporation (BPO)
Brookfield Properties Corporation has a Dividend Yield of 3.14%, a Payout Ratio of 17.00%, an Analysts' Rating of 2.40, an Operating Profit Margin of 26.17%, and an Earnings Per Share Growth Rate of 10.71%. The short interest was 1.43% as of 07/03/2012. Brookfield Properties Corporation is a publicly owned real estate investment firm. The firm engages in the ownership, development, and management of premier commercial properties. It also provides ancillary real estate service businesses, such as tenant service and amenities.
4) Rayonier Inc. (RYN)
Rayonier Inc. has a Dividend Yield of 3.51%, a Payout Ratio of 70.74%, an Analysts' Rating of 2.00, an Operating Profit Margin of 23.72%, and an Earnings Per Share Growth Rate of 23.28%. The short interest was 4.13% as of 07/03/2012. Rayonier, Inc. engages in the sale and development of real estate and timberland management, as well as in the production and sale of cellulose fibers in the United States, New Zealand and Australia. The company operates in four segments: Timber, Real Estate, Performance Fibers and Wood Products. Timber segment owns, leases, or manages timberlands and sells standing timber at auction to third parties, as well as sells delivered logs.
*Company profiles were sourced from Finviz. Financial data was sourced from Finviz and Yahoo Finance.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.