For dividend investors, moderate to high yields are a great attribute. But for those looking for reliable income from dividend yields it is important to know that the stock has solid fundamentals such as flush reserves on top of low debt. Today we developed a list of dividend stocks with great liquidity and minimal long term debt. We think these characteristics add up to a company that is well positioned for both growth as well as overcoming challenges. Take a look at the list below to start your own analysis.
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 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. We then screened for businesses that operate with little to no debt (D/E Ratio<.1). We then looked for businesses that have strong liquidity (Current Ratio>2)(Quick Ratio>2). We did not screen out any market caps or sectors.
Do you think these stocks offer both value and growth? Use our list along with your own analysis.
1) PetMed Express Inc. (PETS)
PetMed Express, Inc. and its subsidiaries, doing business as 1-800-PetMeds, market prescription and non-prescription pet medications, health products, and supplies for dogs and cats in the United States. The company's non-prescription medications include flea and tick control products, bone and joint care products, vitamins, treats, nutritional supplements, hygiene products, and supplies. Its prescription medications consist of heartworm preventatives, arthritis, thyroid, diabetes, pain medications, antibiotics, and other specialty medications, as well as generic substitutes. In addition, the company, through its Website, sells beds, crates, stairs, strollers, and other pet supplies. PetMed Express, Inc. offers its products under the Frontline Plus, K9 Advantix II, Advantage II, Heartgard Plus, Sentinel, Interceptor, Program, Revolution, Deramaxx, and Rimadyl brands. The company markets its products through national television, online, and direct mail/print advertising campaigns, as well as through telephone contact center, catalogs, brochures, and postcards. It primarily serves retail customers. PetMed Express, Inc. was founded in 1996 and is headquartered in Pompano Beach, Florida.
2) Consolidated Water Co. Ltd. (CWCO)
Consolidated Water Co. Ltd., through its subsidiaries, develops and operates seawater desalination plants and water distribution systems. It uses reverse osmosis technology to produce fresh water from seawater. The company operates approximately 14 reverse osmosis desalination plants. It processes and supplies water to various customers, including public utilities, commercial and tourist properties, residential properties, and government facilities, as well as to government-owned distributors in the Cayman Islands, Belize, and the Bahamas. The company also provides engineering and management services, including designing and constructing desalination plants, and managing and operating desalination plants owned by other companies. Consolidated Water Co. Ltd. was founded in 1973 and is headquartered in Grand Cayman, the Cayman Islands.
3) Meridian Bioscience Inc. (VIVO)
Meridian Bioscience, Inc., a life science company, engages in the development, manufacture, sale, and distribution of diagnostic test kits primarily for gastrointestinal, foodborne, viral, respiratory, and parasitic infectious diseases. The company's diagnostic products primarily consist of C. difficile for the detection of gastrointestinal diseases; Rotavirus and Adenovirus products for pediatric diarrhea detection; H. pylori for stomach ulcers; Enterohemorrhagic E. coli infection and Campylobacter jejuni used in the detection of foodborne diseases; Varicella-Zoster for viral diseases; and Cytomegalovirus for organ transplant infections. Its products also include transport media that store and preserve specimen samples from patient collection to laboratory testing. The company's diagnostic test kits utilize immunodiagnostic and molecular technologies, which test samples of stool, blood, urine, and other body fluids or tissue for the presence of specific infectious diseases. In addition, Meridian Bioscience, Inc. manufactures and distributes bulk antigens, antibodies, PCR/qPCR reagents, nucleotides, competent cells, and bioresearch reagents used by researchers and other diagnostic manufacturers. Further, it involved in the contract development and manufacture of proteins and other biologicals under cGMP conditions for use by biopharmaceutical and biotechnology companies engaged in research for new drugs and vaccines. The company sells its diagnostic test kits through direct sales force and independent distributors to reference laboratories and hospitals, principally in the United States, Canada, Belgium, France, Holland, Italy, the United Kingdom, Africa, the Middle East, and other European countries. The company was founded in 1976 and is headquartered in Cincinnati, Ohio.
*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 08/28/2012.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.