7 Dividend Stocks With Excellent Profit Margins And Growth Expectations

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Includes: ADI, CA, CSCO, INTC, JNJ, MSFT, PAYX
by: Dividendinvestr

The companies which have long-term competitive advantages tend to have higher gross margins than those that don't. Gross margin shows the percentage of surplus generated per unit of the product or service sold. To have a high gross margin, a company should be efficient enough not only to recover the costs of the product or service sold, but also to provide extra income to cover costs of acceptance of risk, operating expenses, and the costs of debt.

We believe one of the best alternatives for conservative income investors is selecting dividend stocks with high gross margin. Below we complied a list of 7 stocks that have a gross margin of higher than 60%, market cap of over $10 billion, dividend yields of higher than 3%, and their EPS are expected to grow by over 6% over the next five years. We obtained market data from Finviz and Morningstar.

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Stock

Market Cap
(Billion $)

Sector

Dividend Yield

P/E

Beta

Gross Margin

Profit Margin

Analog Devices (NYSE:ADI)

11.7

Technology

3.1%

18.3

1.11

64.6%

24.1%

CA Technologies (NASDAQ:CA)

11.7

Technology

4.0%

12.7

1.04

86.6%

19.8%

Cisco Systems (NASDAQ:CSCO)

98.7

Technology

3.0%

12.5

1.25

61.2%

17.5%

Intel (NASDAQ:INTC)

108.4

Technology

4.2%

9.2

1.07

63.8%

22.7%

Johnson & Johnson (NYSE:JNJ)

199.9

Healthcare

3.4%

23.1

0.54

68.5%

13.5%

Microsoft (NASDAQ:MSFT)

248.7

Technology

3.1%

14.8

0.99

76.2%

23.0%

Paychex (NASDAQ:PAYX)

12.0

Services

3.9%

21.7

0.87

69.2%

24.6%

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Analog Devices provides integrated circuits used in industrial, automotive, consumer, and communication applications. ADI recently traded at $38.45 and has a 3.1% dividend yield. ADI gained 16.2% during the past 12 months. The stock has a market cap of $11.7 billion, P/E ratio of 18.3 and Total Debt/Equity ratio of 0.21. ADI also had an EPS growth rate of 14.8% during the last five years.

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CA Technologies provides enterprise information technology software and solutions worldwide. CA gained 19.8% during the past 12 months. The stock has a market cap of $11.7 billion, P/E ratio of 12.7 and Total Debt/Equity ratio of 0.24. CA also had an EPS growth rate of 53.8% during the last five years.

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Cisco Systems provides networking and other products related to the communications and information technology industries worldwide. CSCO recently traded at $18.04 and has a 3% dividend yield. CSCO gained 10.6% during the past 12 months. The stock has a market cap of $98.7 billion, P/E ratio of 12.5 and Total Debt/Equity ratio of 0.32. CSCO also had an EPS growth rate of 4.9% during the last five years.

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Intel Corporation provides integrated digital technology platforms worldwide. INTC recently traded at $21.26 and has a 4.2% dividend yield. INTC lost 7.6% during the past 12 months. The stock has a market cap of $108.4 billion, P/E ratio of 9.2 and Total Debt/Equity ratio of 0.15. INTC also had an EPS growth rate of 22.8% during the last five years.

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Johnson & Johnson provides various products in the healthcare field worldwide. JNJ recently traded at $71.86 and has a 3.4% dividend yield. JNJ gained 20.1% during the past 12 months. The stock has a market cap of $199.9 billion, P/E ratio of 23.1 and Total Debt/Equity ratio of 0.29. JNJ also had an EPS growth rate of -1.4% during the last five years.

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Microsoft provides software products and services; and hardware products worldwide. MSFT recently traded at $28.64 and has a 3.1% dividend yield. MSFT gained 11.7% during the past 12 months. The stock has a market cap of $248.7 billion, P/E ratio of 14.8 and Total Debt/Equity ratio of 0.18. MSFT also had an EPS growth rate of 7% during the last five years.

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Paychex provides payroll, human resource, and benefits outsourcing solutions. PAYX recently traded at $32.55 and has a 3.9% dividend yield. PAYX gained 22.2% during the past 12 months. The stock has a market cap of $12 billion, P/E ratio of 21.7 and Total Debt/Equity ratio of 0. PAYX also had an EPS growth rate of 2.3% during the last five years.

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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Dividendinvestr is a team of analysts. This article was written by Serkan Unal, one of our writers. 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.