5 Low-Debt Dividend Stocks Killing It On Profits

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 |  Includes: ASR, CZNC, FISI, PFS, RCKB
by: ZetaKap

On the road to building wealth, there are a variety of paths for investors to take. Investing in dividends, especially those that offer moderate to high yields, is a path that can take more time, but can also provide the same end goal. To find companies with reliable long-term yields, today we looked for stocks that have strong track records of generating profits. But profits aren't enough to ensure long-term yields; we also screened for companies that have managed to hold down their debt, as a sign of managerial prudence and foresight. To find the cream of the crop, we then narrowed our list of dividend stocks to include those that have a recent 'Buy' rating from analysts. The list below provides you with a place to start your research process.

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.

The debt/equity ratio illustrates how aggressively a company is financing its growth via debt. The more debt financing that is used in a capital structure, the more volatile earnings can become due to the additional interest expense. Should a company's potentially enhanced earnings fail to exceed the cost associated with debt financing over time, this can lead the company toward substantial trouble.

The long-term debt/equity ratio is a variation of the traditional debt-to-equity ratio; this value computes the proportion of a company's long-term debt compared to its available capital. By using this ratio, investors can identify the amount of leverage utilized by a specific company and compare it to others to help analyze the company's risk exposure. Generally, companies that finance a greater portion of their capital via debt are considered riskier than those with lower leverage ratios.

We first looked for dividend stocks. Next, we screened for businesses with strong profitability (Net Margin [TTM] >10%). Then we looked for businesses that operate with little to no debt (D/E Ratio<.3). From here, we looked for companies that operate with little to no long-term debt (Long Term D/E Ratio<.1). Next, screened for businesses that analysts rate as "Buy" or "Strong Buy" (mean recommendation < 3). We did not screen out any market caps or sectors.

Do you think these stocks will outperform? Use our screened list as a starting point for your own analysis.

1) Grupo Aeroportuario Del Sureste SA de CV (NYSE:ASR)

Sector Services
Industry Air Services, Other
Market Cap $2.57B
Beta 1.32
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ASR stock chart

Financials

Dividend Yield 3.04%
Payout Ratio 50.37%
Net Margin 35.90%
Debt/Equity Ratio 0.03
Long Term Debt/Equity Ratio 0.01
Analysts' Rating 2.10
Short Interest 1.76%
Click to enlarge

Grupo Aeroportuario del Sureste, S. A. B. de C. V., through its subsidiaries, holds concessions to operate, maintain, and develop airports in the southeast region of Mexico. The company operates nine airports located in the cities of Cancn, Cozumel, Mrida, Huatulco, Oaxaca, Veracruz, Villahermosa, Tapachula, and Minatitln. It also provides aeronautical services, which include aircraft landing and parking, passenger walkway, and airport security services. The company is also involved in leasing space at its airports to retailers, restaurants, airlines, banks, retail outlets, currency exchange bureaus, car rental agencies, and other commercial tenants; and offering automobile parking and ground transporting services, as well as construction services. Grupo Aeroportuario del Sureste, S. A. B. de C. V. was founded in 1998 and is headquartered in Mexico City, Mexico.

2) Provident Financial Services, Inc. (NYSE:PFS)

Sector Financial
Industry Savings & Loans
Market Cap $930.97M
Beta 1.00
Click to enlarge

PFS stock chart

Financials

Dividend Yield 3.36%
Payout Ratio 45.39%
Net Margin 25.22%
Debt/Equity Ratio 0.00
Long Term Debt/Equity Ratio 0.00
Analysts' Rating 2.50
Short Interest 3.33%
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Provident Financial Services, Inc. operates as the holding company for The Provident Bank that provides banking services to individuals, families, and businesses in New Jersey. The company accepts various deposit products, including savings, checking, interest-bearing checking, money market deposit, certificate of deposit, and KEOGH accounts, as well as IRAs. It also originates commercial real estate loans that are secured by income-producing properties, such as multifamily residences, office buildings, and retail and industrial properties; commercial business loans; construction loans for single family and condominium projects; fixed-rate and adjustable-rate mortgage loans collateralized by one- to four-family residential real estate; and other consumer loans consisting of home equity loans and home equity lines of credit.

3) Citizens & Northern Corporation (NASDAQ:CZNC)

Sector Financial
Industry Regional - Mid-Atlantic Banks
Market Cap $232.19M
Beta 0.55
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CZNC stock chart

Financials

Dividend Yield 4.64%
Payout Ratio 35.92%
Net Margin 36.01%
Debt/Equity Ratio 0.02
Long Term Debt/Equity Ratio 0.00
Analysts' Rating 2.00
Short Interest 2.79%
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Citizens & Northern Corporation operates as the bank holding company for Citizens & Northern Bank that provides various banking and mortgage services to individual and corporate customers in north central Pennsylvania and southern New York. The company's deposit products include various checking accounts, passbook and statement savings, money market accounts, interest checking accounts, individual retirement accounts, and certificates of deposits, as well as non-insured Repo Sweep accounts. Its loan portfolio comprises mortgage loans, commercial loans, and consumer loans, as well as specialized instruments, such as commercial letters-of-credit.

4) Financial Institutions Inc. (NASDAQ:FISI)

Sector Financial
Industry Regional - Mid-Atlantic Banks
Market Cap $247.20M
Beta 2.07
Click to enlarge

FISI stock chart

Financials

Dividend Yield 3.13%
Payout Ratio 31.75%
Net Margin 21.91%
Debt/Equity Ratio 0.00
Long Term Debt/Equity Ratio 0.00
Analysts' Rating 2.00
Short Interest 2.97%
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Financial Institutions, Inc. operates as the holding company for Five Star Bank that provides consumer and commercial banking, and financial services to individuals, municipalities, and businesses in central and western New York. The company provides checking and savings account programs, including money market accounts, certificates of deposit, and sweep investment capabilities, as well as individual retirement accounts and other qualified plan accounts.

Its loan portfolio comprises commercial loans for businesses for working capital, business expansion, and purchase of equipment; commercial business loans to the agricultural industry for short-term crop production, farm equipment, and livestock financing; and commercial real estate loans, one-to-four family residential mortgages, consumer automobile loans, recreational vehicle loans, boat loans, home improvement loans, closed-end home equity loans, home equity lines of credit, collateralized and uncollateralized personal loans, deposit account collateralized loans, revolving lines of credit, and commercial mortgages.

5) Rockville Financial Inc. (NASDAQ:RCKB)

Sector Financial
Industry Savings & Loans
Market Cap $342.31M
Beta 0.81
Click to enlarge

RCKB stock chart

Financials

Dividend Yield 3.00%
Payout Ratio 60.61%
Net Margin 20.06%
Debt/Equity Ratio 0.00
Long Term Debt/Equity Ratio 0.00
Analysts' Rating 2.00
Short Interest 3.07%
Click to enlarge

Rockville Financial, Inc. operates as the holding company for Rockville Bank that provides a range of banking services to consumer and commercial customers. The company offers deposit instruments, including checking, savings, money market savings accounts, negotiable order of withdrawal accounts, and fixed-rate time deposits. Its loan portfolio comprises commercial and industrial loans, commercial real estate loans, consumer loans, residential mortgage loans, and installment and collateral loans.

*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on August 20, 2012.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.