3 Low-Debt Dividends Raking In Profits

Includes: NCA, NKSH, SPOXF
by: ZetaKap

Dividends that offer moderate to high yields are a practical and effective route to creating personal wealth over time. To find stocks that provide reliable yields, we looked for companies with the following traits: minimal debt and strong profits. This is a combination that typically points to a company that has effective management in place and is not hindered by paying off debt. We think you will be intrigued by what we found.

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.

EPS growth (earnings per share growth) illustrates the growth of earnings per share over time. EPS growth rates help investors identify stocks that are increasing or decreasing in profitability. This profitability metric is generally a key driver in the price of the stock as it directly correlates to the profitability of the company as a whole.

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 dividend stocks. Then we screened for businesses with strong profit margins (1-year operating margin>15%)(1-year fiscal EPS growth rate>10%). Next, we looked for companies that operate with little to no debt (D/E Ratio<.1). We did not screen out any market caps or sectors.

Do you think these stocks have a strong outlook? Use our list along with your own analysis.

1) Nuveen California Municipal Value Fund, Inc. (NYSE:NCA)

Sector Financial
Industry Closed-End Fund - Debt
Market Cap $258.31M
Beta 0.15

NCA stock chart

Key Metrics

Dividend Yield 4.57%
Payout Ratio 31.16%
Operating Profit Margin 88.47%
Earnings Per Share Growth Rate 58796.41%
Debt/Equity Ratio 0.02
Short Interest 0.11%

Nuveen California Municipal Value Fund, Inc. is a closed-ended fixed income mutual fund launched by Nuveen Investments, Inc. The fund is managed by Nuveen Asset Management. It invests in the fixed income markets of California. The fund invests primarily in municipal securities rated Baa/BBB or better. It invests in securities that provide income exempt from federal and California income tax. The fund employs fundamental analysis with bottom-up stock picking approach to create its portfolio. It benchmarks the performance of its portfolio against the S&P California Municipal Bond Index and the S&P National Municipal Bond Index. Nuveen California Municipal Value Fund, Inc. was formed on October 7, 1987 and is domiciled in the United States.

2) National Bankshares Inc. (NASDAQ:NKSH)

Sector Financial
Industry Regional - Mid-Atlantic Banks
Market Cap $214.72M
Beta 0.42

NKSH stock chart

Key Metrics

Dividend Yield 3.43%
Payout Ratio 40.11%
Operating Profit Margin 47.82%
Earnings Per Share Growth Rate 13.28%
Debt/Equity Ratio 0.00
Short Interest 5.25%

National Bankshares, Inc. operates as the bank holding company for the National Bank of Blacksburg, which provides a range of retail and commercial banking services to individuals, businesses, non-profits, and local governments in Virginia. It offers demand deposit accounts, money market deposit accounts, savings accounts and certificates of deposit; commercial, agricultural, real estate, home equity, and consumer loans; merchant credit card services, and business and consumer debit and credit cards; letters of credit, night depository, safe deposit boxes, travelers checks, utility payment services, and automatic funds transfer; and telephone and Internet banking services.

The company operates 25 office locations and 25 automated teller machines in southwest Virginia. It also conducts a general trust business that provides wealth management, and trust and estate services for individual and business customers. In addition, the company, through its subsidiary, National Bankshares Financial Services, Inc., offers non-deposit investment products and insurance products. National Bankshares, Inc. was founded in 1891 and is headquartered in Blacksburg, Virginia.

3) Sprott Resource Lending Corp. (SILU)

Sector Financial
Industry Mortgage Investment
Market Cap $218.88M
Beta 1.10

SILU stock chart

Key Metrics

Dividend Yield 4.18%
Payout Ratio 48.42%
Operating Profit Margin 50.74%
Earnings Per Share Growth Rate 106.52%
Debt/Equity Ratio 0.00
Short Interest 0.02%

Sprott Resource Lending Corp., a natural resource lender, provides bridge and mezzanine financing to precious and base metal mining, exploration, and development companies, as well as to oil and gas companies and other resource related businesses worldwide. The company was formerly known as Quest Capital Corp. and changed its name to Sprott Resource Lending Corp. in September 2010. Sprott Resource Lending Corp. was founded in 1984 and is headquartered in Toronto, Canada.

*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on August 23, 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.