Dividend investments are a great choice for the investor who wants to build wealth over time, especially when the dividend yields range from moderate to high. Of course, as the companies grow, the investor receives the benefit of increased payouts. To find the dividend stocks that appear to be well positioned for future growth, we focused on liquidity. When a company has substantial cash reserves and uses them responsibly, expansion and increased earnings are likely. Our list below includes dividend stocks with yields of 3% or better that have received a 'Buy' rating from analysts.
The Current ratio is a liquidity ratio used to determine a company's financial health. The metric illustrates how easily a firm can pay back its short obligations all at once through current assets. A company that has a current ratio of one or less is generally a liquidity red flag. Now this doesn't mean the company will go bankrupt tomorrow, but it also doesn't bode well for the company, and may indicate that it could have an issue paying back upcoming obligations.
The Quick ratio measures a company's ability to use its cash or assets to extinguish its current liabilities immediately. Quick assets include assets that presumably can be converted to cash at close to their book values. A company with a Quick Ratio of less than 1 cannot currently pay back its current liabilities. The quick ratio is more conservative than the Current Ratio because it excludes inventory from current assets, since some companies have difficulty turning their inventory into cash. If short-term obligations need to be paid off immediately, sometimes the current ratio would overestimate a company's short-term financial strength. In general, the higher the ratio, the greater the company's liquidity (i.e., the better able to meet current obligations using liquid assets).
We first looked for dividend stocks. From here, we then looked for companies that analysts rate as "Buy" (2 < mean recommendation < 3). Next, we then screened for businesses with a large amount of cash on hand (Current Ratio>2)(Quick Ratio>2). We did not screen out any market caps or sectors.
Do you think these stocks will outperform? Please use our list to assist with your own analysis.
1) CSS Industries Inc. (CSS)
CSS Industries Inc. has a Dividend Yield of 3.07%, a Payout Ratio of 30.92%, a Analysts' Rating of 2.00, a Current Ratio of 4.66, and a Quick Ratio of 2.62. The short interest was 3.57% as of 08/16/2012. CSS Industries, Inc., a consumer products company, engages in the design, manufacture, procurement, distribution, and sale of seasonal and occasion social expression products principally to mass market retailers in the United States and Canada. Its seasonal and occasion products include decorative ribbons and bows, boxed greeting cards, gift tags, gift wrap, gift bags, gift boxes, gift card holders, decorative and waxed tissue paper, decorative films and foils, decorations, classroom exchange Valentines, floral accessories, Halloween masks, costumes, make-up and novelties, Easter egg dyes and novelties, craft and educational products, stickers, memory books, stationery, journals, notecards, infant and wedding photo albums, scrapbooks, and other gift items that commemorate life's celebrations, as well as teachers' aids and other learning oriented products.
2) True Religion Apparel Inc. (TRLG)
|:Industry||- Textile ApparelClothing|
True Religion Apparel Inc. has a Dividend Yield of 3.50%, a Payout Ratio of 22.06%, a Analysts' Rating of 2.40, a Current Ratio of 7.80, and a Quick Ratio of 6.10. The short interest was 11.43% as of 08/16/2012. True Religion Apparel, Inc. designs, develops, manufactures, markets, distributes, and sells apparel in North America, Europe, Asia, Australia, Africa, and South America. It offers fashion jeans and related sportswear apparel. The company provides various products for men, women, and children, including denim jeans; corduroy pants and jackets; cotton, twill, linen, and velvet pants and jackets; fleece sweat suits and hooded sweatshirts; sweaters; skirts; knit shirts; T-shirts; shorts; and sportswear.
3) Cinemark Holdings Inc. (CNK)
Cinemark Holdings Inc. has a Dividend Yield of 3.53%, a Payout Ratio of 61.17%, a Analysts' Rating of 2.20, a Current Ratio of 2.16, and a Quick Ratio of 2.12. The short interest was 3.01% as of 08/16/2012. Cinemark Holdings, Inc., together with its subsidiaries, engages in motion picture exhibition business. As of March 31, 2012, it operated 459 theatres with 5,181 screens in the United States, Brazil, Mexico, Argentina, and rest of Latin America. The company was founded in 1984 and is headquartered in Plano, Texas.
4) Kaydon Corporation (KDN)
|:Industry||Machine & ToolsAccessories|
Kaydon Corporation has a Dividend Yield of 3.63%, a Payout Ratio of 54.65%, a Analysts' Rating of 2.40, a Current Ratio of 4.27, and a Quick Ratio of 2.46. The short interest was 6.40% as of 08/16/2012. Kaydon Corporation engages in the design, manufacture, and sale of custom engineered, performance-critical products in the United States, Germany, and internationally. The company's Friction Control Products segment offers anti-friction bearings, split roller bearings, and specialty balls that are used in alternative energy, specialized robotics, medical, aerospace, defense, security, electronic, material handling, construction, and other industrial applications. Its Velocity Control Products segment provides industrial shock absorbers, safety shock absorbers, velocity controls, gas springs, and rotary dampers for use in specialized robotics, material handling, machine tool, medical, amusement, and other industrial applications.
5) KLA-Tencor Corporation (KLAC)
|:Industry||Semiconductor & EquipmentMaterials|
KLA-Tencor Corporation has a Dividend Yield of 3.04%, a Payout Ratio of 30.89%, a Analysts' Rating of 2.20, a Current Ratio of 4.83, and a Quick Ratio of 4.07. The short interest was 3.14% as of 08/16/2012. KLA-Tencor Corporation designs, manufactures, and markets process control and yield management solutions for the semiconductor and related nanoelectronics industries. It offers equipment comprising wafer and integrated circuit (IC) defect monitoring, review, and classification; reticle defect inspection and metrology; packaging and interconnect inspection; critical dimension metrology; pattern overlay metrology; film thickness, surface topography, and composition measurements; measurement of in-chamber process conditions, wafer shape, and stress metrology; computational lithography tools; and yield and fab-wide data management and analysis systems. The company also provides products that serve the high brightness light emitting diode, data storage, and photovoltaic industries, as well as general materials research.
6) Computer Programs & Systems Inc. (CPSI)
Computer Programs & Systems Inc. has a Dividend Yield of 3.84%, a Payout Ratio of 72.77%, a Analysts' Rating of 2.00, a Current Ratio of 3.24, and a Quick Ratio of 3.13. The short interest was 8.17% as of 08/16/2012. Computer Programs and Systems, Inc., a healthcare information technology company, designs, develops, markets, installs, and supports computerized information technology systems to small and midsize hospitals in the United States. Its enterprise-wide system automates the management of clinical and financial data across the primary functional areas of a hospital. The company offers services that enable customers to outsource certain data-related business processes in the areas of clinical care, revenue cycle management, cost control, and regulatory compliance.
7) Microchip Technology Inc. (MCHP)
Microchip Technology Inc. has a Dividend Yield of 3.97%, a Payout Ratio of 85.01%, a Analysts' Rating of 2.40, a Current Ratio of 8.92, and a Quick Ratio of 8.03. The short interest was 9.33% as of 08/16/2012. Microchip Technology Incorporated engages in the development, manufacture, and sale of semiconductor products for embedded control applications. The company offers microcontrollers, such as 8-bit, 16-bit, and 32-bit microcontrollers marketed under the PIC brand name, as well as 16-bit dsPIC digital signal controllers (DSC); and development tools that enable system designers to program a PIC microcontroller and dsPIC DSC for specific applications. It also provides analog and interface products, including power management, linear, mixed-signal, thermal management, RF Linear drivers, safety and security, and interface products; and memory products consisting of serial electrically erasable programmable read-only memory, serial flash memories, parallel flash memories, and serial SRAM memories for production of very small footprint devices. In addition, the company licenses its SuperFlash technology to foundries, integrated device manufacturers, and design partners for use in the manufacture of their advanced microcontroller products, gate array, RF, and analog products that require embedded flash; and provides engineering services.
*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.