Even in the more reliable category of basic materials, it is never safe to assume that a dividend stock that is earning moderate to high yields will be able to keep this up ad infinitum. There must be additional indicators that lend confidence and creditability to a company's ability to maintain the attractive yields. Strong profits are essential to a company that wants to keep investors happy. For our scan today we developed a quick list of basic materials dividends stocks with moderate to high yields. In addition, they passed our screen for generating strong earnings in the past year. For the coming year they have projected EPS growth rates of over 25%. If you are an income investor, we think you will like what we uncovered.
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 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.
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.
We first looked for basic materials dividend stocks. Next, we then screened for businesses that have been able to retain strong profit margins on the bottom line (Net Margin [TTM]>10%) (1-year operating margin>15%). From here, we then looked for companies with projected high growth, measured by 1-year projected EPS growth above 25%. We did not screen out any market caps.
Do you think these stocks should be trading higher? Use our list along with your own analysis.
1) Oiltanking Partners, L.P. (OILT)
|Industry||Oil & Gas Pipelines|
|Operating Profit Margin||42.67%|
|1-Year Projected Earnings Per Share Growth Rate||46.07%|
Oiltanking Partners, L.P. provides storage, terminaling and transportation services for third-party companies engaged in the production, distribution, and marketing of crude oil, refined petroleum products, and liquefied petroleum gas. The company operates a crude oil and refined petroleum products terminal on the Houston Ship Channel with an aggregate active storage capacity of approximately 11.7 million barrels (mmbbls); and Beaumont terminal on the Neches River with an aggregate active storage capacity of approximately 5.6 mmbbls, which serves as a regional strategic and trading hub for refined petroleum products for refineries located in the Gulf Coast region. It serves integrated oil companies, distributors, marketers, and chemical and petrochemical companies. OTLP GP, LLC serves as the general partner of Oiltanking Partners, L.P. The company was founded in 2011 and its headquarters is in Houston, Texas. Oiltanking Partners, L.P. is a subsidiary of Oiltanking Holding Americas, Inc.
2) Tesoro Logistics LP (TLLP)
|Industry||Oil & Gas Pipelines|
|Operating Profit Margin||44.80%|
|1-Year Projected Earnings Per Share Growth Rate||34.43%|
Tesoro Logistics LP engages in the ownership, operation, development and acquisition of crude oil and refined products logistics assets in the United States. The company is involved in the gathering, terminalling, transportation and storage of crude oil and refined products. Its assets consist of a crude oil gathering system in the Bakken Shale/Williston Basin area of North Dakota and Montana; eight refined products terminals in the midwestern and western United States; a crude oil and refined products storage facility; and five related short-haul pipelines. The company was founded in 2010 and is based in San Antonio, Texas. Tesoro Logistics LP is a subsidiary of Tesoro Corporation.
3) Vanguard Natural Resources, LLC (VNR)
|Industry||Oil & Gas Drilling & Exploration|
|Operating Profit Margin||54.31%|
|1-Year Projected Earnings Per Share Growth Rate||40.88%|
Vanguard Natural Resources, LLC, through its subsidiaries, engages in the acquisition and development of oil and natural gas properties in the United States. It owns properties and oil and natural gas reserves primarily located in six operating areas: the Permian Basin in west Texas and New Mexico; the Big Horn Basin in Wyoming and Montana; south Texas; the Williston Basin in North Dakota and Montana; Mississippi; and the Arkoma Basin in Arkansas and Oklahoma. As of March 31, 2012, the company had total proved reserves of 71.9 million barrels of oil equivalent, as well as owned working interests in 1,459 net productive wells. Vanguard Natural Resources, LLC was founded in 2006 and its headquarters is in Houston, Texas.
Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 09/14/2012.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.