Dividend companies that offer moderate to high yields are a practical and effective path for building personal wealth over time. To find stocks that provide reliable yields, we looked to mid-cap companies with the following traits: minimal debt but strong and steady profits. This is a combination that typically points to a company that has effective management in place, smart business strategies, and is not hindered by paying off debt. We think you will be intrigued by what we found.
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.
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.
We first looked for mid cap dividend stocks. Next, we then screened for businesses with strong profit margins (1-year operating margin>15%)(Net Margin [TTM]>10%). From here, we then looked for companies that operate with little to no debt (D/E Ratio<.1). We did not screen out any sectors.
Do you think these mid-cap stocks failed to price their value accurately? Use our screened list as a starting point for your own analysis.
1) Reed Elsevier NV (NYSE:ENL)
|Industry||Publishing - Periodicals|
|Operating Profit Margin||21.09%|
Reed Elsevier NV provides professional information solutions to the science and medical, legal, risk management, and business to business sectors primarily in North America and Europe. Its Elsevier segment publishes scientific information books and journals in print and electronic forms for scientists, academic institutions, research leaders and administrators, corporations, and governments; publishes bibliographic data, indexes, and abstracts, as well as review and reference works; and provides abstract and citation database of research literature. This segment also publishes medical journals, books, major reference works, databases, and online information tools to health professionals and healthcare facilities; and offers marketing services to the pharmaceutical industry. The company's LexisNexis Risk Solutions segment provides data and analytics services to property and casualty personal and commercial insurance carriers; risk management, identity verification, fraud detection, credit risk management, and compliance solutions to financial institutions and corporate customers; and identity verification and risk related solutions to the legal industry. Its LexisNexis Legal & Professional segment offers content and information solutions for legal and other corporate markets; legal and business information, and analysis to law firms, corporations, and government; and litigation services. The company's Reed Exhibitions segment organizes trade exhibitions and conferences in 44 industrial sectors. Its Reed Business Information segment provides data services, and information and marketing solutions to business professionals; produces industry critical data services, lead generation tools, and online community and job sites; and publishes business magazines in various sectors. The company was founded in 1903 and is based in Amsterdam, the Netherlands.
2) Grupo Aeroportuario del Pacifico S.A.B. de CV (NYSE:PAC)
|Industry||Air Services, Other|
|Operating Profit Margin||34.19%|
Grupo Aeroportuario del Pacfico, S.A.B. de C.V. engages in the development, operation, and management of airports in Mexico's Pacific region. It operates 12 airport facilities in the cities of Guadalajara, Puerto Vallarta, Tijuana, Los Cabos, Silao (Guanajuato), Hermosillo, Mexicali, Los Mochis, La Paz, Manzanillo, Morelia, and Aguascalientes. The company is also involved in leasing space to restaurants, retailers, and service providers. It serves airlines; providers of baggage handling services; and retail store operators, duty-free store operators, food and beverage providers, time share developers, financial services providers, car rental companies, telecommunications providers, VIP lounges, advertising, travel agencies, and tourist information and promotion service providers. The company was incorporated in 1998 and is headquartered in Guadalajara, Mexico.
3) AllianceBernstein Income Fund, Inc. (NYSE:ACG)
|Industry||Closed-End Fund - Debt|
|Operating Profit Margin||88.68%|
AllianceBernstein Income Fund, Inc. operates as a close-ended fixed income mutual fund launched and managed by AllianceBernstein L.P. It invests in the fixed income markets of the United States. The fund invests in fixed income securities like securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities, and repurchase agreements pertaining to U.S. Government securities. It benchmarks the performance of its portfolio against the Lehman Brothers (LB) U.S. Aggregate Index. The fund was previously known as ACM Income Fund, Inc. AllianceBernstein Income Fund, Inc. was founded in 1987 and is domiciled in the United States.
*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 08/24/2012.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Business relationship disclosure: This article was prepared for ZetaKap Media by one of our full-time analysts. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article.