Dividend investments are often part of a balanced strategy for building personal wealth. Experienced investors know that investments of this nature require patience and vision, and in the long term, there are generally solid rewards for holding fast. Analyzing profits is a helpful indicator for discerning a company's well-being. We scanned specifically for those reporting consistent and strong profits. From there we further reduced the list to only include those that have a recent analyst rating of 'Strong Buy'. We encourage you to take a look at this diverse list of intriguing dividend stocks.
The Net Margin is a profitability metric that illustrates, by percentage, how much of every dollar earned gets turned into a bottom line profit. This is just one of many profitability metrics used by investors and analysts to better understand what the company is being left with at the end of the day. Generally, a firm that can expand its net profit margins over a period of time will see its stock price rise as well due to the trend of increasing profitability. Net Margin = Net Income/Total Revenue
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. We next screened for businesses with strong profitability (Net Margin [TTM] >10%)(ROA [TTM]>10%). From here, we then looked for companies that analysts rate as "Strong Buy" (mean recommendation < 2). We did not screen out any market caps or sectors.
Do you think these stocks have strong enough fundamentals to move higher? Use our list to help with your own analysis.
1) Deluxe Corp. (DLX)
Deluxe Corp. has a Dividend Yield of 3.53%, a Payout Ratio of 31.44%, a Net Margin of 11.08%, a Return on Assets of 11.82%, and a Analysts' Rating of 1.30. The short interest was 14.04% as of 08/15/2012. Deluxe Corporation, together with its subsidiaries, provides printed products, forms, and marketing solutions to small businesses and financial institutions primarily in the United States, Canada, Europe, and South America. The company offers checks; printed forms, including billing forms, work orders, job proposals, purchase orders, invoices, and personnel forms, as well as computer forms, deposit tickets, and check registers; and accessories and other products, such as envelopes, office supplies, stamps, and labels, as well as retail packaging supplies and checkbook covers. It also provides marketing solutions, which include Web design, hosting and other Web services, logo design, search engine marketing, and digital printing services for the sales and marketing needs of small businesses, business cards, greeting cards, brochures, and apparel; and customer acquisition programs and marketing communications services, and package insert programs. In addition, the company offers fraud protection services; payroll services; and financial institution profitability, regulatory, and compliance programs.
2) American Software, Inc. (AMSWA)
American Software, Inc. has a Dividend Yield of 4.35%, a Payout Ratio of 76.17%, a Net Margin of 11.05%, a Return on Assets of 10.25%, and a Analysts' Rating of 1.00. The short interest was 3.63% as of 08/15/2012. American Software, Inc., together with its subsidiaries, engages in the development, marketing, and support a portfolio of software and services that deliver enterprise management and collaborative supply chain solutions worldwide. The company operates in three segments: Supply Chain Management, Enterprise Resource Planning, and Information Technology Consulting. The Supply Chain Management segment provides supply chain solutions, which include supply chain planning, inventory optimization, manufacturing, and transportation and logistics solutions to streamline the market planning, management, production, and distribution of products for manufacturers, suppliers, distributors, and retailers.
3) The Female Health Company (FHCO)
The Female Health Company has a Dividend Yield of 4.12%, a Payout Ratio of 50.32%, a Net Margin of 36.08%, a Return on Assets of 57.00%, and a Analysts' Rating of 1.00. The short interest was 4.68% as of 08/15/2012. The Female Health Company manufactures, markets, and sells consumer health care products in the United States and internationally. It offers the FC2 female condom, which provides dual protection against unintended pregnancy and sexually transmitted diseases, including HIV/AIDS. The Female Health Company sells its products to public health clinics, as well as to not-for-profit organizations.
4) FutureFuel Corp. (FF)
|Industry:||Chemicals - Major Diversified|
FutureFuel Corp. has a Dividend Yield of 4.17%, a Payout Ratio of 42.43%, a Net Margin of 10.56%, a Return on Assets of 10.36%, and a Analysts' Rating of 1.00. The short interest was 2.79% as of 08/15/2012. FutureFuel Corp. engages in the manufacture and sale of diversified chemicals and biobased products in the United States. The company operates in two segments, Chemicals and Biofuels. The Chemicals segment offers custom manufacturing products, including nonanoyloxybenzene-sulfonate, a bleach activator for detergent and consumer products manufacturers; a proprietary herbicide for life sciences companies; and chlorinated polyolefin adhesion promoters and antioxidant precursors for chemical companies, as well as a biocide intermediates for other diversified chemical companies.
*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.