Are you a dividend investor searching for stocks with solid yields of 3% and greater? One great place to search is among those that can sustain their payouts due to strong sources of profitability, matched by analyst recommendation. Today we screened for stocks of this nature, and came up with a short but interesting list.
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.
Return on Assets [ROA] illustrates how much a company is generating in earnings from its assets alone. This metric gives investors a picture of how profitable the company is relative to the assets in current possession. As well, it lets investors see how efficient and effective management is at generating earnings from the company's assets. While most management teams can probably make money by throwing money at an issue very few can make very large profits with little investment.
We first looked for dividend stocks. Next, we then screened for businesses that analysts rate as "Buy" (2 < mean recommendation < 3). We then looked for companies that have shown strong bottom line growth over the last year (1-year fiscal EPS growth rate>10%)(ROA [TTM]>10%). We did not screen out any market caps or sectors.
Do you think these stocks hold value that has yet to be priced in? Use our list to help with your own analysis.
1) Bristol-Myers Squibb Company (BMY)
|Industry:||Drug Manufacturers - Major|
Bristol-Myers Squibb Company has a Dividend Yield of 3.91%, a Payout Ratio of 59.82%, a Analysts' Rating of 2.30, a Earnings Per Share Growth Rate of 20.47%, and a Return on Assets of 16.99%. The short interest was 2.23% as of 07/06/2012. Bristol-Myers Squibb Company, a biopharmaceutical company, engages in the discovery, development, licensing, manufacturing, marketing, distribution, and sale of biopharmaceutical products that help patients prevail over serious diseases worldwide. Its principal products include PLAVIX for protection against fatal or non-fatal heart attack or stroke; AVAPRO/AVALIDE for the treatment of hypertension and diabetic nephropathy; ELIQUIS to prevent and treat venous thromboembolic disorders and stroke prevention in atrial fibrillation; ABILIFY, an agent for adult patients with schizophrenia, bipolar mania disorder, and depressive disorder; and REYATAZ for the treatment of HIV. The company's principal products also comprise SUSTIVA for the treatment of HIV; BARACLUDE, an inhibitor of hepatitis B virus; ERBITUX to target and block the epidermal growth factor receptor; SPRYCEL for treatment of chronic myeloid leukemia in adults; YERVOY to treat metastatic melanoma; ORENCIA to treat moderate to severe rheumatoid arthritis in adults; NULOJIX to prevent solid organ transplant rejection; and ONGLYZA for the treatment of type 2 diabetes.
2) Emerson Electric Co. (EMR)
|Industry:||Industrial Equipment & Components|
Emerson Electric Co. has a Dividend Yield of 3.49%, a Payout Ratio of 47.34%, a Analysts' Rating of 2.30, a Earnings Per Share Growth Rate of 25.18%, and a Return on Assets of 10.00%. The short interest was 1.34% as of 07/06/2012. Emerson Electric Co. operates as a diversified technology company worldwide. It engages in designing and supplying products and technology, and delivering engineering services and solutions to industrial, commercial, and consumer markets. The company's Process Management segment offers customers products and technology, and engineering and project management services for precision measurement, control, monitoring, and asset optimization of oil and gas reservoirs and power generating plants, as well as for food and beverage, pulp and paper, pharmaceutical, and municipal water supply industries.
3) Watsco Inc. (WSO)
Watsco Inc. has a Dividend Yield of 3.19%, a Payout Ratio of 91.32%, a Analysts' Rating of 2.40, a Earnings Per Share Growth Rate of 10.45%, and a Return on Assets of 10.83%. The short interest was 5.87% as of 07/06/2012. Watsco, Inc., together with its subsidiaries, engages in the distribution of air conditioning, heating, and refrigeration equipment in the United States. It distributes residential central air conditioners; gas, electric, and oil furnaces; commercial air conditioning and heating equipment and systems; and other specialized equipments. The company also distributes various parts, including replacement compressors, evaporator coils, motors, and other component parts; and supplies comprising thermostats, insulation material, refrigerants, ductwork, grills, registers, sheet metal, tools, copper tubing, concrete pads, tape, adhesives, and other ancillary supplies.
*Company profiles were sourced from Finviz. Financial data was sourced from Google Finance and Yahoo Finance.