Dividend investments, especially those earning moderate to high yields, can be viewed as a balanced approach to building wealth. When these companies are steadily increasing their profits, the investor receives the reward of larger yields. In our screen today we focused on an interesting combination, profitable dividend stocks in the small cap arena. At this level, companies have a considerable amount of room to grow and continue to increase their profitability. Additionally, the companies listed today have all been closely reviewed and rated 'Strong Buy' by industry analysts. We think you will find our list rather interesting.
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 dividend stocks. We then looked for businesses with strong profit margins (1-year operating margin>15%)(1-year fiscal EPS growth rate>10%). We next screened for businesses that analysts rate as "Strong Buy" (mean recommendation < 2). We did not screen out any sectors.
Do you think these small-cap stocks will offer healthy returns? Use our screened list as a starting point for your own analysis.
1) W. P. Carey & Co. LLC (WPC)
|Industry:||Real Estate Development|
W. P. Carey & Co. LLC has a Dividend Yield of 4.86%, a Payout Ratio of 67.64%, a Operating Profit Margin of 49.96%, a Earnings Per Share Growth Rate of 62.35%, and a Analysts' Rating of 1.00. The short interest was 0.17% as of 08/10/2012. W. P. Carey & Co. LLC, together with its subsidiaries, provides long-term sale-leaseback and build-to-suit transactions for companies worldwide and manages a global investment portfolio. It invests primarily in commercial properties that are each triple-net leased to single corporate tenants, which requires each tenant to pay substantially all of the costs associated with operating and maintaining the property. The company also operates as an advisor to publicly owned, non-actively traded real estate investment trusts, which are sponsored by it under the Corporate Property Associates brand name, as well as invests in similar properties.
2) Colony Financial, Inc. (CLNY)
|Industry:||REIT - Diversified|
Colony Financial, Inc. has a Dividend Yield of 7.64%, a Payout Ratio of 93.06%, a Operating Profit Margin of 66.66%, a Earnings Per Share Growth Rate of 23.35%, and a Analysts' Rating of 1.50. The short interest was 3.62% as of 08/10/2012. 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.
3) Mid-Con Energy Partners, LP (MCEP)
|Industry:||Independent Oil & Gas|
Mid-Con Energy Partners, LP has a Dividend Yield of 9.10%, a Operating Profit Margin of 39.47%, a Earnings Per Share Growth Rate of 1624.43%, and a Analysts' Rating of 1.50. The short interest was 0.37% as of 08/10/2012. Mid-Con Energy Partners, LP engages in the acquisition, exploitation, development, and production of oil and natural gas properties in North America. Its 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 Google Finance and Yahoo Finance. Financial data was sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.