Do you prefer stocks that pay handsome dividend income? We ran a screen with this idea in mind.
We began by screening for high dividend yield stocks: those paying dividend yields above 4% and sustainable payout ratios below 50%.
Then to analyze these companies' profitability, we ran DuPont analysis on the names. DuPont analyzes profitability by breaking up return on equity (net income/equity) into three components:
= (Net Profit/Equity)
= (Net profit/Sales)*(Sales/Assets)*(Assets/Equity)
= (Net Profit margin)*(Asset turnover)*(Leverage ratio)
Because increases in net margin and asset turnover are considered good things, DuPont focuses on companies with these positive characteristics: Increasing ROE along with,
- Decreasing leverage, (i.e. decreasing Asset/Equity ratio)
- Improving asset use efficiency (i.e. increasing Sales/Assets ratio) and improving net profit margin (i.e. increasing Net Income/Sales ratio)
Those companies that pass DuPont are seeing positive trends in the sources of their increasing profitability, which adds further weight to the idea that the names are profitable.
For an interactive version of this chart, click on the image below. Analyst ratings sourced from Zacks Investment Research.
click for interactive chart
Tool provided by Kapitall (www.kapitall.com).
Do you think these stocks pay reliable dividends? Use this list as a starting point for your own analysis.
List sorted by dividend yield.
1. Belo Corp. (BLC): Operates as a television company. Market cap at $742.61M, most recent closing price at $7.19. Dividend yield at 4.39%, payout ratio at 32.30%. MRQ net profit margin at 14.6% vs. 10.87% y/y. MRQ sales/assets at 0.109 vs. 0.106 y/y. MRQ assets/equity at 5.484 vs. 5.896 y/y.
2. Sunoco Logistics Partners L.P. (SXL): Engages in the transport, terminalling, and storage of refined products and crude oil, as well as the purchase and sale of crude oil in the United States. Market cap at $4.62B, most recent closing price at $44.34. Dividend yield at 4.22%, payout ratio at 47.75%. MRQ net profit margin at 4.58% vs. 3.87% y/y. MRQ sales/assets at 0.64 vs. 0.496 y/y. MRQ assets/equity at 4.232 vs. 4.869 y/y.
3. Oiltanking Partners, L.P. (OILT): Provides integrated terminaling, storage, pipeline, and related services for third-party companies engaged in the production, distribution, and marketing of crude oil, refined petroleum products, and liquefied petroleum gas. Market cap at $1.37B, most recent closing price at $35.78. Dividend yield at 4.04%, payout ratio at 48.05%. MRQ net profit margin at 46.49% vs. 25.44% y/y. MRQ sales/assets at 0.109 vs. 0.101 y/y. MRQ assets/equity at 1.119 vs. 1.145 y/y.
4. FutureFuel Corp. (FF): Engages in the manufacture and sale of specialty chemicals and bio-based products primarily in the United States. Market cap at $414.85M, most recent closing price at $9.97. Dividend yield at 4.02%, payout ratio at 42.43%. MRQ net profit margin at 8.29% vs. 4.92% y/y. MRQ sales/assets at 0.218 vs. 0.162 y/y. MRQ assets/equity at 1.343 vs. 1.352 y/y.
*Accounting data sourced from Google Finance, all other data sourced from Finviz.