3 High-Profit, High-Yield Dividend Micro Caps With Manageable Debt

Includes: FNLC, HCLP, PWOD
by: ZetaKap

Defining our goals helps us identify what we want most in life. When we have a clear vision, then it becomes easier to make a plan to achieve our goals. When our goals include long term financial well being, many people investigate investing in dividend stocks as a method for supplementing income and building wealth. Understandably, investing in dividend stocks with reliably high yields is where many people gravitate. To find companies that appear well positioned to continue to offer attractive yields, we narrowed our focus to those that have strong earnings and minimal debt. These traits point to management that places priority on profit and fiscal prudence. See the short list below to begin your own analysis of these high yield dividend stocks.

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.

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 Debt/Equity Ratio illustrates how aggressively a company is financing its growth via debt. The more debt financing that is used in a capital structure, the more volatile earnings can become due to the additional interest expense. Should a company's potentially enhanced earnings fail to exceed the cost associated with debt financing over time, this can lead the company toward substantial trouble.

We first looked for stocks that have a high dividend yield (Div. Yield > 5%). We next screened for businesses with strong profit margins (1-year operating margin>15%)(Net Margin [TTM]>10%). We then looked for businesses that have maintained a sound capital structure (D/E Ratio<.1). We did not screen out any market caps or sectors.

Do you think these stocks deserve to trade higher? Please use our list to assist with your own analysis.

1) Penns Woods Bancorp Inc. (NASDAQ:PWOD)

Sector Financial
Industry Regional - Mid-Atlantic Banks
Market Cap $143.46M
Beta 0.56

PWOD stock chart

Key Metrics

Dividend Yield 5.03%
Payout Ratio 50.72%
Operating Profit Margin 41.00%
Net Margin 34.61%
Debt/Equity Ratio 0.00
Short Interest 2.22%

Penns Woods Bancorp, Inc. operates as the holding company for Jersey Shore State Bank that provides commercial and retail banking services to individuals, partnerships, non-profit organizations, and corporations in Pennsylvania. The company was founded in 1934 and is based in Williamsport, Pennsylvania.

2) The First Bancorp, Inc. (NASDAQ:FNLC)

Sector Financial
Industry Regional - Northeast Banks
Market Cap $146.57M
Beta 1.06

FNLC stock chart

Key Metrics

Dividend Yield 5.24%
Payout Ratio 64.28%
Operating Profit Margin 30.16%
Net Margin 23.48%
Debt/Equity Ratio 0.00
Short Interest 3.21%

The First Bancorp, Inc. operates as the holding company for The First, N.A., which is a chartered national bank that provides various banking services to individual and corporate customers in coastal Maine. The company offers various deposit products, including demand, NOW, money market, savings, and certificate of deposit accounts. The First Bancorp, Inc. was formerly known as First National Lincoln Corporation and changed its name to The First Bancorp, Inc. in April 2008. The company was founded in 1864 and is headquartered in Damariscotta, Maine.

3) Hi-Crush Partners LP (NYSE:HCLP)

Sector Basic Materials
Industry Industrial Metals & Minerals
Market Cap $451.48M
Beta -

HCLP stock chart

Key Metrics

Dividend Yield 11.48%
Operating Profit Margin 62.01%
Net Margin 55.85%
Debt/Equity Ratio 0.00
Short Interest 1.32%

Hi-Crush Proppants LLC engages in the mining and processing of raw sands for use in hydraulic fracturing operations in oil and gas wells. Hi-Crush Proppants LLC was incorporated in 2010 and is based in Houston, Texas.

*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 11/19/2012.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Business relationship disclosure: 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.