Many people view investments in dividend stocks as a reliable, yet slower way to build wealth. However, there are ways to accelerate earnings that derive from these types of investments. One method is to select moderate to high yielding dividend stocks that are projected to grow. To find this type of dividend stock, we first searched for companies that have a track record of generating profits, which is a helpful indicator that a company will be able to produce consistent yields. In addition, these profitable dividend stocks all have EPS growth rates of 25% or better in the next year. We think you will find our short list worthy of more research.
EPS growth (earnings per share growth) illustrates the growth of earnings per share over time. The 1-Year Expected EPS Growth Rate is an annual growth estimate, where the growth projections are made by analysts, the company or other credible sources.
Return on Assets [ROA] illustrates how much a company is generating in earnings from its assets alone. This metric gives investors a picture of how profitable the company is relative to the assets in its current possession. As well, it lets investors see how efficient and effective management is at generating earnings from the company's assets. While most management teams can probably make money by throwing money at an issue, very few can make very large profits with little investment.
EPS growth (earnings per share growth) illustrates the growth of earnings per share over time. EPS growth rates help investors identify stocks that are increasing or decreasing in profitability. This profitability metric is generally a key driver in the price of the stock as it directly correlates to the profitability of the company as a whole.
We first looked for dividend stocks. We then screened for businesses with projected high growth, measured by 1-year projected EPS growth above 25%. Next, we then screened for businesses that have strong profitability relative to their asset base (ROA [TTM]>10%)(1-year fiscal EPS Growth Rate>10%). We did not screen out any market caps or sectors.
Do you think these stocks have strong operations? Use our list along with your own analysis.
1) Cal-Maine Foods, Inc. (CALM)
|Industry||Food - Major Diversified|
|1-Year Projected Earnings Per Share Growth Rate||27.17%|
|Return on Assets||13.16%|
|Earnings Per Share Growth Rate||47.50%|
Cal-Maine Foods, Inc. engages in producing, grading, packaging, marketing, and distributing shell eggs. It also produces and markets specialty shell eggs, including nutritionally enhanced, cage free, and organic eggs under the Egg-Land's Best, Farmhouse, and 4-Grain brand names; and private label specialty shell eggs. The company markets its shell eggs to various customers comprising national and regional grocery store chains, club stores, foodservice distributors, and egg product manufacturers. Cal-Maine Foods, Inc. sells its products primarily in approximately 29 states in the southeastern, southwestern, mid-western, and mid-Atlantic regions of the United States. The company was founded in 1969 and is headquartered in Jackson, Mississippi.
2) Cliffs Natural Resources Inc. (CLF)
|Industry||Steel & Iron|
|1-Year Projected Earnings Per Share Growth Rate||33.11%|
|Return on Assets||11.33%|
|Earnings Per Share Growth Rate||54.55%|
Cliffs Natural Resources Inc., a mining and natural resources company, engages in the production of iron ore pellets, fines and lump ore, and metallurgical coal. It operates five iron ore mines located in Michigan and Minnesota; five metallurgical coal mines located in West Virginia and Alabama; and one thermal coal mine located in West Virginia. The company also operates two iron ore mines in eastern Canada that primarily provide iron ore to steel producers in Asia; and two iron ore mining complexes in Western Australia. In addition, it holds a 45% economic interest in a coking and thermal coal mine located in Queensland, Australia; 30% interest in Amap, an iron ore project in Brazil; and interest in a chromite project in Ontario, Canada. The company, formerly known as Cleveland-Cliffs Inc, was founded in 1847 and is headquartered in Cleveland, Ohio.
3) James Hardie Industries SE (JHX)
|1-Year Projected Earnings Per Share Growth Rate||38.53%|
|Return on Assets||31.42%|
|Earnings Per Share Growth Rate||273.24%|
James Hardie Industries SE, together with its subsidiaries, manufactures and sells fiber cement products for interior and exterior building construction applications primarily in the United States, Canada, Australia, New Zealand, the Philippines, and Europe. Its products principally include fiber cement interior linings, exterior siding products, and related accessories products. The company offers fiber cement products with various patterned profiles and surface finishes for a range of applications, including external siding and soffit lining, internal linings, facades, floor and tile underlay, lattice, fencing, decorative columns, flooring, and ceiling applications; and manufactures and sells fiber reinforced concrete pipes.
Its products are used in various markets, such as new residential construction, which include single and multi-family housing; manufactured housing that comprise mobile and pre-fabricated homes; repair and remodeling; and various commercial and industrial applications, such as stores, warehouses, offices, hotels, motels, schools, libraries, museums, dormitories, hospitals, detention facilities, religious buildings, and gymnasiums.
The company markets its fiber cement products and systems under various Hardie brand names and other brand names, such as Artisan Lap and Artisan Accent Trim by James Hardie, Cemplank and Prevail siding, Scyon, Stria siding, and HardieBacker. James Hardie Industries SE sells its products directly, as well as through distributors, large home center retailers, small to medium size dealer outlets, and specialist distributors to dealers or lumber yards, consumers, builders, real estate developers, and distributor/hardware stores. The company was formerly known as James Hardie Industries N.V. and changed its name to James Hardie Industries SE in February 2010. James Hardie Industries SE was founded in 1888 and is headquartered in Dublin, the Republic of Ireland.
*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 09/01/2012.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.