Do you prefer stocks that pay reliable dividend income? For ideas on how to start your own dividend stock search, we ran a screen.
We began by screening the S&P 500 for stocks paying dividend yields above 1%. We then screened for high volume trading activity. Specifically, the current volume to 3 month average volume ratio is above 1.5. High volume indicates many investors are paying close attention to these names.
Then to analyze these companies' profitability, we ran DuPont analysis on the names. DuPont analyzes profitability by breaking up return on equity (net income/equity) into three components:
= (Net Profit/Equity)
= (Net profit/Sales)*(Sales/Assets)*(Assets/Equity)
= (Net Profit margin)*(Asset turnover)*(Leverage ratio)
Because increases in net margin and asset turnover are considered good things, DuPont focuses on companies with these positive characteristics: Increasing ROE along with,
- Decreasing leverage, (i.e. decreasing Asset/Equity ratio)
- Improving asset use efficiency (i.e. increasing Sales/Assets ratio) and improving net profit margin (i.e. increasing Net Income/Sales ratio)
Tool provided by Kapitall
Investors are giving increased attention to these profitable dividend stocks. Do you think these stocks pay reliable dividends? Use this list as a starting point for your own analysis. List Average 1-Year Return: 22%.
1. Nasdaq OMX Group Inc. (NDAQ): Provides trading, clearing, exchange technology, securities listing, and public company services worldwide. Market cap at $3.82B, most recent closing price at $22.91. Current yield at 2.22%. Relative volume ratio at 1.06. MRQ net profit margin at 11.3% vs. 10.99% y/y. MRQ sales/assets at 0.092 vs. 0.059 y/y. MRQ assets/equity at 1.799 vs. 2.761 y/y.
2. Host Hotels & Resorts Inc. (HST): A publicly owned real estate investment trust (REIT). Market cap at $11.59B, most recent closing price at $16.04. Current yield at 1.99%. Relative volume ratio at 1.11. MRQ net profit margin at 5.99% vs. 4.83% y/y. MRQ sales/assets at 0.107 vs. 0.098 y/y. MRQ assets/equity at 1.835 vs. 1.981 y/y.
3. Monsanto Co. (MON): Provides agricultural products for farmers in the United States and internationally. Market cap at $47.69B, most recent closing price at $89.49. Current yield at 1.64%. Relative volume ratio at 1.1. MRQ net profit margin at 22.21% vs. 19.18% y/y. MRQ sales/assets at 0.211 vs. 0.18 y/y. MRQ assets/equity at 1.636 vs. 1.689 y/y.
4. Family Dollar Stores Inc. (FDO): Operates a chain of self-service retail discount stores primarily for low and middle income consumers in the United States. Market cap at $7.5B, most recent closing price at $64.21. Current yield at 1.28%. Relative volume ratio at 1.38. MRQ net profit margin at 5.28% vs. 5.16% y/y. MRQ sales/assets at 0.721 vs. 0.721 y/y. MRQ assets/equity at 2.494 vs. 2.528 y/y.
5. Costco Wholesale Corporation (COST): Operates membership warehouses that offer a selection of branded and private label products in a range of merchandise categories in no-frills, self-service warehouse facilities. Market cap at $43.67B, most recent closing price at $101.0. Current yield at 1.1%. Relative volume ratio at 1.11. MRQ net profit margin at 1.73% vs. 1.57% y/y. MRQ sales/assets at 0.802 vs. 0.765 y/y. MRQ assets/equity at 2.212 vs. 2.255 y/y.
*Accounting data sourced from Google Finance, all other data sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.