Dividend Challengers with very low debt to equity ratios and great initial yields originally published at long-term-investments.blogspot.com. If you read my blog for a longer time you should have noticed that dividend growth is one of the most important wealth drivers for long-term dividend investors.
I also talked about the difference between high dividend yields at a low growth and low yielding stocks with a high dividend growth.
The answer of this question is a between solution: Look at good initial yields with growing dividends over the longer period. I talk about mentionable yields and growth rates above the inflation level.
Today I would like to combine both, good growth with an acceptable initial dividend yield. In addition I love it to find stocks with low or no long-term debt. This increases the chance for further big dividend hikes or an accelerated growth.
Only a low leveraged company has more flexibility to grow sales and income much easier. Let's take a look into the third dividend growth stock category - Dividend Challengers.
Thirteen stocks of the Dividend Challengers list (stocks with dividend growth between 5 to 10 consecutive years) fulfilled my above mentioned criteria. One stock has a high yield close to the double-digit range and five got a buy or better rating by brokerage firms. Most of the companies from the screening results are low capitalized; eight of them have a market capitalization under USD 2 billion.
Here is the full table with some fundamentals:
Take a closer look at the full list. The average P/E ratio amounts to 18.16 and forward P/E ratio is 16.16. The dividend yield has a value of 3.68 percent. Price to book ratio is 4.31 and price to sales ratio 4.31. The operating margin amounts to 22.77 percent and the beta ratio is 0.82. Stocks from the list have an average debt to equity ratio of 0.04.
Related Stock Ticker Symbols:
NSH, RGR, PETS, ORIT, CHL, ASEI, UG, SNN, COH, DAKT, ACN, BOBE, WSM