For income investors, a key strategy is finding dividend stocks with reliable yields. To maintain attractive yields though, a company must have strong profits. Otherwise those dividends could dry up. To help you find smart dividend stocks, today we searched for companies that have a strong 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. With these ideas in mind, we think you will find our short list of dividend stocks 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. 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.
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.
We first looked for dividend stocks. We then looked for businesses that have expected earnings per share growth of more than 25 percent for next year(1-year projected EPS Growth Rate>25%). From here, we then looked for companies with strong profit margins (1-year operating margin>15%)(1-year fiscal EPS growth rate>10%). We did not screen out any market caps or sectors.
Do you think these stocks have strong fundamentals? Use this list as a starting-off point for your own analysis.
1) Linn Energy, LLC (LINE)
|Industry||Independent Oil & Gas|
|1-Year Projected Earnings Per Share Growth Rate||45.08%|
|Operating Profit Margin||50.48%|
|Earnings Per Share Growth Rate||413.15%|
Linn Energy, LLC, an independent oil and natural gas company, engages in the acquisition and development of oil and gas properties. The company's properties are primarily located in the Mid-Continent, the Permian Basin, Michigan, California, and the Williston Basin in the United States. As of December 31, 2011, it had proved reserves of 3,370 billion cubic feet equivalent of oil and gas, and natural gas liquids, as well as operated 7,759 gross productive wells. The company was founded in 2003 and is headquartered in Houston, Texas.
2) Golar LNG Partners (GMLP)
|1-Year Projected Earnings Per Share Growth Rate||44.67%|
|Operating Profit Margin||63.63%|
|Earnings Per Share Growth Rate||10.16%|
Golar LNG Partners LP owns and operates floating storage and regasification units (FSRUs) and liquefied natural gas [LNG] carriers. Its fleet consists of two FSRUs and two LNG carriers. Golar GP LLC serves as the general partner of Golar LNG Partners LP. The company was founded in 2007 and is based in Hamilton, Bermuda. Golar LNG Partners LP is a subsidiary of Golar LNG Limited.
3) Capital Product Partners L.P. (CPLP)
|1-Year Projected Earnings Per Share Growth Rate||133.33%|
|Operating Profit Margin||70.46%|
|Earnings Per Share Growth Rate||234.25%|
Capital Product Partners L.P., a shipping company, provides seaborne transportation services of crude oil, refined petroleum products, edible oils, and soft chemicals. The company provides marine transportation services under short-term voyage charters and medium to long-term time and bareboat charters. Its vessels carry crude oil, and refined oil products, such as gasoline, diesel, fuel oil, and jet fuel, as well as edible oils and chemicals comprising ethanol. As of January 31, 2012, the company's fleet consisted of 27 vessels, including 2 very large crude carriers, 4 Suezmax crude oil tankers, 18 modern medium range tankers, 2 small product tankers, and 1 Capesize bulk carrier. Capital GP L.L.C. serves as a general partner of the company. Capital Product Partners L.P. was founded in 2007 and is headquartered in Piraeus, Greece.
*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 09/03/2012.
Business Relationship Disclaimer: 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.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.