4 High Yield, High Margin, Low Debt Small And Mid Cap Dividend Stocks

Includes: BKT, DNP, GNI, SBR
by: ZetaKap

Dividends that offer very high yields are attractive in themselves. But when these companies are also commanding strong profits it provides further evidence that there is solid management at the helm. When the profits and dividend yields are strong, it adds up to a reliable investment that provides income. In addition, our list of very high yielders all have minimal debt. We think you will find our list quite interesting.

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 Long Term Debt/Equity Ratio is a variation of the traditional debt-to-equity ratio; this value computes the proportion of a company's long-term debt compared to its available capital. By using this ratio, investors can identify the amount of leverage utilized by a specific company and compare it to others to help analyze the company's risk exposure. Generally, companies that finance a greater portion of their capital via debt are considered riskier than those with lower leverage ratios.

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 with a very high yield (more than 5%). From here, we then looked for companies with strong profit margins (1-year operating margin>15%)(Net Margin [TTM]>10%). We next screened for businesses that operate with little to no long term debt (Long Term D/E Ratio<.1). From here, we then looked for companies 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 hold solid value? Use this list as a starting-off point for your own analysis.

1) DNP Select Income Fund Inc. (NYSE:DNP)

Sector Financial
Industry Closed-End Fund - Equity
Market Cap $2.58B
Beta 0.38

DNP stock chart

Key Metrics

Dividend Yield 7.27%
Payout Ratio 65.49%
Operating Profit Margin 73.19%
Net Margin 209.96%
Long Term Debt/Equity Ratio 0.00
Debt/Equity Ratio 0.00
Short Interest 0.49%

DNP Select Income Fund Inc. is a closed ended balanced mutual fund launched and managed by Duff & Phelps Investment Management Co. The fund invests in the public equity and fixed income markets of the United States. For the fixed income portion, it invests in bonds. The fund seeks to invest in stocks of companies operating in the Utility sector. It invests in stocks of companies across all market capitalizations. The fund benchmarks the performance of its portfolio against the S&P 500 Utilities Index and Barclays Capital U.S. Utility Bond Index. DNP Select Income Fund Inc. was formed on November 26, 1986 and is domiciled in the United States.

2) BlackRock Income Trust, Inc. (NYSE:BKT)

Sector Financial
Industry Closed-End Fund - Debt
Market Cap $487.22M
Beta 0.09

BKT stock chart

Key Metrics

Dividend Yield 6.38%
Payout Ratio 66.90%
Operating Profit Margin 82.66%
Net Margin 135.00%
Long Term Debt/Equity Ratio 0.00
Debt/Equity Ratio 0.04
Short Interest 0.11%

BlackRock Income Trust, Inc. is a closed-ended fixed income mutual fund launched by BlackRock, Inc. The fund is co-managed by BlackRock Advisors, LLC and BlackRock Financial Management, Inc. It invests in the fixed income markets of the United States. The fund invests in securities of companies that operate across diversified sectors. It invests in securities such as U.S. government sponsored agency securities, non-agency mortgage-backed securities, asset-backed securities and U.S. treasury obligations. BlackRock Income Trust, Inc. was formed on July 22, 1988 and is domiciled in the United States.

3) Great Northern Iron Ore Properties (NYSE:GNI)

Sector Basic Materials
Industry Steel & Iron
Market Cap $111.88M
Beta 0.44

GNI stock chart

Key Metrics

Dividend Yield 20.11%
Payout Ratio 89.47%
Operating Profit Margin 86.49%
Net Margin 86.49%
Long Term Debt/Equity Ratio 0.00
Debt/Equity Ratio 0.00
Short Interest 3.20%

Great Northern Iron Ore Properties, a conventional nonvoting trust, owns and leases mineral and non-mineral lands on the Mesabi Iron Range in northeastern Minnesota. It owns mineral interests in approximately 12,033 acres on the Mesabi Iron Range Formation, including approximately 9,895 acres of leased and 2,138 acres of unleased mineral interests. The company was founded in 1906 and is based in Saint Paul, Minnesota.

4) Sabine Royalty Trust (NYSE:SBR)

Sector Financial
Industry Diversified Investments
Market Cap $747.81M
Beta 0.73

SBR stock chart

Key Metrics

Dividend Yield 7.72%
Payout Ratio 98.75%
Operating Profit Margin 96.20%
Net Margin 96.20%
Long Term Debt/Equity Ratio 0.00
Debt/Equity Ratio 0.00
Short Interest 0.14%

Sabine Royalty Trust holds royalty and mineral interests in various oil and gas properties in the United States. It is entitled to receive a distribution from Sabine Corporation of royalty and mineral interests, including landowner's royalties, overriding royalty interests, minerals, production payments, and any other similar non-participatory interests in various producing and proved undeveloped oil and gas properties located in Florida, Louisiana, Mississippi, New Mexico, Oklahoma, and Texas. The company was founded in 1982 and is based in Dallas, Texas.

*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 08/30/2012.

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.