Are you a dividend investor looking for stocks that pay out high yields at a sustainable pace? If so, one place to look is in the small-cap space, particularly for companies that have solid track records of profitability. After all, you can't sustain dividends unless you're consistently generating cash. Today, we focus on companies that suit this profile, and have also received strong votes of confidence from analysts, as a way to hone in on the absolute best in class. We came up with a pretty interesting list.
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 small cap stocks that have a high dividend yield (Div. Yield > 5%). We then screened for businesses with strong profit margins (1-year operating margin>15%)(1-year fiscal EPS Growth Rate>10%). Next, we then screened for businesses that analysts rate as "Buy" or "Strong Buy" (mean recommendation < 3). We did not screen out any sectors.
Do you think these small-cap stocks have what it takes to grow? Use our list along with your own analysis.
1) Colony Financial, Inc. (CLNY)
|Industry:||REIT - Diversified|
Colony Financial, Inc. has a Dividend Yield of 7.87%, a Payout Ratio of 93.06%, a Operating Profit Margin of 66.66%, a Earnings Per Share Growth Rate of 23.35%, and Analysts' Rating of 1.50. The short interest was 3.90% as of 07/05/2012.
Colony Financial, Inc. operates as a real estate finance and investment company that focuses primarily on acquiring, originating, and managing commercial mortgage loans, and other commercial real estate-related debt investments.
The company has elected to be taxed as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders.
2) Cedar Fair, L.P. (FUN)
Cedar Fair, L.P. has a Dividend Yield of 5.26%, a Payout Ratio of 79.73%, a Operating Profit Margin of 23.01%, a Earnings Per Share Growth Rate of 326.25%, and Analysts' Rating of 1.30. The short interest was 0.41% as of 07/05/2012. Cedar Fair, L.P. owns and operates amusement and water parks in the United States and Canada.
The company's amusement parks include Cedar Point located on Lake Erie between Cleveland and Toledo in Sandusky, Ohio; Kings Island near Cincinnati, Ohio; Canada's Wonderland near Toronto, Canada; Dorney Park & Wildwater Kingdom located near Allentown in South Whitehall Township, Pennsylvania; Valleyfair located near Minneapolis/St. Paul in Shakopee, Minnesota; Michigan's Adventure located near Muskegon, Michigan; Kings Dominion near Richmond, Virginia; Carowinds in Charlotte, North Carolina; Worlds of Fun located in Kansas City, Missouri; Knott's Berry Farm located near Los Angeles in Buena Park, California; and California's Great America located in Santa Clara, California, as well as manages and operates Gilroy Gardens Family Theme Park in Gilroy, California.
3) Mid-Con Energy Partners, LP (MCEP)
|Industry:||Independent Oil & Gas|
Mid-Con Energy Partners, LP has a Dividend Yield of 8.68%, a Operating Profit Margin of 39.47%, a Earnings Per Share Growth Rate of 1624.43%, and Analysts' Rating of 1.40. The short interest was 0.14% as of 07/05/2012. Mid-Con Energy Partners, LP engages in the acquisition, exploitation, development, and production of oil and natural gas properties in North America.
The company's principal areas of operation are located in southern Oklahoma, northeastern Oklahoma, and parts of Oklahoma and Colorado within the Hugoton basin in the Mid-Continent region of the United States. The company owns a 68% average working interest in 296 gross producing (195 net) wells; 141 gross injection (93 net) wells; and 33 gross (29 net) wells shut-in or waiting on completion.
*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.