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Do you like to rely on a stock's dividend income? If so, we ran a screen to find dividend stocks with encouraging signs.

We began by screening for highly liquid dividend stocks: those paying dividend yields above 2%, sustainable payout ratios below 50%, and those with current ratios above 3. The current ratio is current assets/current liabilities, so ratios above 3 indicate the company has at least 3 times the liquid assets to cover its short-term liabilities.

We then screened for stocks that appear undervalued relative to their cash flows, indicated by high ratios of levered free cash flow/enterprise value.

Levered free cash flow is the free cash flow after deducting interest payments on outstanding debt. Enterprise value is the sum of the company's value from all ownership sources: market cap, outstanding debt, and preferred shares. When a company has the ratio of levered free cash flow/enterprise value in excess of 10%, it may indicate that the company as a whole is being undervalued.

For an interactive version of this chart, click on the image below. Analyst ratings are sourced from Zacks Investment Research.

Tool provided by Kapitall (kapitall.com).

Do you think these dividend stocks should be trading higher? Use this list as a starting point for your own analysis.

The list sorted by LFCF/EV.

1. Schnitzer Steel Industries, Inc. (SCHN): Engages in recycling ferrous and nonferrous scrap metals, and used and salvaged vehicles; and manufacturing finished steel products. Market cap at $775.88M, most recent closing price at $28.94. Dividend yield at 2.59%, payout ratio at 10.06%. Current ratio at 3.16. Levered free cash flow at $206.13M versus enterprise value at $1.13B (implies a LFCF/EV ratio at 18.24%).

2. Brooks Automation, Inc. (BRKS): Provides automation, vacuum, and instrumentation solutions primarily to the semiconductor manufacturing industry worldwide. Market cap at $589.5M, most recent closing price at $8.89. Dividend yield at 3.60%, payout ratio at 17.53%. Current ratio at 3.73. Levered free cash flow at $80.09M versus enterprise value at $441.37M (implies a LFCF/EV ratio at 18.15%).

3. Janus Capital Group Inc. (JNS): Asset management holding company. Market cap at $1.36B, most recent closing price at $7.22. Dividend yield at 3.32%, payout ratio at 22.02%. Current ratio at 8.44. Levered free cash flow at $225.54M versus enterprise value at $1.28B (implies a LFCF/EV ratio at 17.62%).

4. Css Industries Inc. (CSS): Engages in the design, manufacture, procurement, distribution, and sale of seasonal and occasion social expression products to mass market retailers in the United States and Canada. Market cap at $188.74M, most recent closing price at $19.62. Dividend yield at 3.06%, payout ratio at 35.94%. Current ratio at 5.21. Levered free cash flow at $22.45M versus enterprise value at $132.92M (implies a LFCF/EV ratio at 16.89%).

5. R.G. Barry Corporation (DFZ): Engages in designing, sourcing, marketing, and distributing footwear, foot- and shoe-care products and hand bags, tote bags, and other travel accessories primarily in North America. Market cap at $146.12M, most recent closing price at $13.07. Dividend yield at 2.45%, payout ratio at 24.56%. Current ratio at 4.43. Levered free cash flow at $20.96M versus enterprise value at $130.53M (implies a LFCF/EV ratio at 16.06%).

6. Superior Industries International Inc. (SUP): Designs, develops, manufactures, sells, and supplies cast aluminum road wheels to automobile and light truck manufacturers primarily in North America. Market cap at $469.82M, most recent closing price at $17.26. Dividend yield at 3.71%, payout ratio at 26.41%. Current ratio at 5.71. Levered free cash flow at $37.14M versus enterprise value at $261.57M (implies a LFCF/EV ratio at 14.2%).

7. Ceradyne, Inc. (CRDN): Engages in the development, manufacture, and marketing of technical ceramic products, powders, and components for defense, industrial, automotive/diesel, and commercial applications in the U.S. Market cap at $556.5M, most recent closing price at $22.92. Dividend yield at 2.62%, payout ratio at 5.62%. Current ratio at 3.5. Levered free cash flow at $57.22M versus enterprise value at $412.85M (implies a LFCF/EV ratio at 13.86%).

8. MKS Instruments, Inc. (MKSI): Provides instruments, subsystems, and process control solutions that measure, control, power, monitor, and analyze parameters of manufacturing processes worldwide. Market cap at $1.38B, most recent closing price at $26.32. Dividend yield at 2.28%, payout ratio at 27.51%. Current ratio at 10.11. Levered free cash flow at $116.03M versus enterprise value at $869.39M (implies a LFCF/EV ratio at 13.35%).

9. KLA-Tencor Corporation (KLAC): Engages in the design, manufacture, and marketing of process control and yield management solutions for the semiconductor and related nanoelectronics industries. Market cap at $8.24B, most recent closing price at $49.22. Dividend yield at 2.84%, payout ratio at 28.81%. Current ratio at 4.57. Levered free cash flow at $723.67M versus enterprise value at $5.99B (implies a LFCF/EV ratio at 12.08%).

10. J2 Global Communications Inc (JCOM): Provides outsourced, value-added communication, messaging, and data backup services to businesses of all sizes, from individuals to enterprises worldwide. Market cap at $1.36B, most recent closing price at $29.41. Dividend yield at 2.92%, payout ratio at 26.32%. Current ratio at 3.31. Levered free cash flow at $118.17M versus enterprise value at $1.04B (implies a LFCF/EV ratio at 11.36%).

*LFCF/EV data sourced from Yahoo! Finance, all other data sourced from Finviz.

Source: 10 Highly Liquid Dividend Stocks Undervalued By Levered Free Cash Flows