6 Smart Pick Dividend Stocks With Strong Cash Coverage

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Includes: BCS, KT, MANT, MDP, MDT, MGA
by: Kapitall

When considering dividend stocks, one way to check whether company dividend payments appear sustainable is by looking at operating cash flow. Companies with high operating cash flow relative to dividend payments likely have more sustainable dividends.

We ran a screen on dividend stocks that have seen significant net institutional purchases over the current quarter. We screened these stocks for those with operating cash flow far exceeding dividends over the last 12 months.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.‬



We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.

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Do you think these stocks pay reliable dividends? Use this list as a starting point for your own analysis.

List sorted by net institutional shares purchased as a percent of share float.

1. Meredith Corp. (NYSE:MDP):
Engages in magazine publishing and related brand licensing, television broadcasting, integrated marketing, interactive media and video production businesses in the United States. Market cap of $1.10B. Dividend yield at 4.23%, payout ratio at 33.61%. TTM dividend per share at $0.97 vs. TTM total operating cash flow per share at $4.68. Net institutional shares purchased over the current quarter at 3.9M, which is 10.71% of the company's 36.40M share float. The stock is a short squeeze candidate, with a short float at 22.17% (equivalent to 10.97 days of average volume). The stock has had a couple of great days, gaining 12.48% over the last week.

2. Magna International, Inc. (NYSE:MGA):
Operates as an automotive supplier in North America, Europe and internationally. Market cap of $9.07B. Dividend yield at 2.67%, payout ratio at 18.94%. TTM dividend per share at $0.83 vs. TTM total operating cash flow per share at $6.13. Net institutional shares purchased over the current quarter at 20.2M, which is 8.76% of the company's 230.58M share float. The stock has had a couple of great days, gaining 19.66% over the last week.

3. Medtronic, Inc. (NYSE:MDT):
Manufactures and sells device-based medical therapies worldwide. Market cap of $35.46B. Dividend yield at 2.90%, payout ratio at 31.71%. TTM dividend per share at $0.92 vs. TTM total operating cash flow per share at $3.76. Net institutional shares purchased over the current quarter at 80.5M, which is 7.67% of the company's 1.05B share float. The stock has had a couple of great days, gaining 6.43% over the last week.

4. KT Corp. (NYSE:KT):
Provides integrated telecommunications services in Korea. Market cap of $8.08B. Dividend yield at 5.51%, payout ratio at 31.01%. TTM dividend per share at $0.85 vs. TTM total operating cash flow per share at $6.54. Net institutional shares purchased over the current quarter at 15.8M, which is 7.02% of the company's 225.09M share float. The stock has had a couple of great days, gaining 6.76% over the last week.

5. ManTech International Corporation (NASDAQ:MANT):
Provides technologies and solutions for national security programs in the United States and internationally. Market cap of $1.23B. Dividend yield at 5.02%, payout ratio at 11.52%. TTM dividend per share at $0.42 vs. TTM total operating cash flow per share at $6.71. Net institutional shares purchased over the current quarter at 1.4M, which is 6.02% of the company's 23.27M share float. The stock is a short squeeze candidate, with a short float at 12.89% (equivalent to 10.66 days of average volume). The stock has had a couple of great days, gaining 10.95% over the last week.

6. Barclays PLC (NYSE:BCS):
Provides various financial products and services in Europe, the United States, Africa and Asia. Market cap of $33.29B. Dividend yield at 2.29%, payout ratio at 25.47%. TTM dividend per share at $0.34 vs. TTM total operating cash flow per share at $12.92. Net institutional shares purchased over the current quarter at 100.9M, which is 4.28% of the company's 2.36B share float. This is a risky stock that is significantly more volatile than the overall market (beta = 2.54). The stock has had a couple of great days, gaining 17.42% over the last week.

*Dividend per share and operating cash flow per share data sourced from Screener.co, institutional data sourced from Fidelity, all other data sourced from Finviz. Data sourced Oct 12.

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