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3/12/2012

The Best Dividend Stocks From The Service Sector

Services Dividend Stocks With High Return On Investments And Big Operating Margins Researched By Dividend Yield - Stock, Capital, Investment. Service is characterized by hard work and low margins but there are some companies with wonderful business models that generate double digit margins within the service sector. I think about McDonalds or Starbucks. They created a huge shareholder value due to the global expansion of the brand and realized big economies of scale.

I screened the service sector by stocks with an operating margin and return on investment over 15 percent, a dividend yield over two percent and finally a market capitalization over USD 300 million. Thirteen companies fulfilled these criteria of which four are high yields and six are recommended to buy or better.

Here are my favorite stocks:
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McDonald's Corporation (NYSE:MCD) has a market capitalization of $98.64 billion. The company employs 420,000 people, generates revenues of $27,006.00 million and has a net income of $5,503.10 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $9,766.70 million. Because of these figures, the EBITDA margin is 36.16 percent (operating margin 31.58 percent and the net profit margin finally 20.38 percent).


Financial Analysis:
The total debt representing 37.89 percent of the company’s assets and the total debt in relation to the equity amounts to 86.87 percent. Due to the financial situation, a return on equity of 37.92 percent was realized. Twelve trailing months earnings per share reached a value of $5.27. Last fiscal year, the company paid $2.53 in form of dividends to shareholders.


Market Valuation:
Here are the price ratios of the company: The P/E ratio is 18.37, P/S ratio 3.65 and P/B ratio 6.87. Dividend Yield: 2.89 percent. The beta ratio is 0.44.


Long-Term Stock History Chart Of McDonald's Corporation (Click to enlarge)


Long-Term Dividends History of McDonald's Corporation (MCD) (Click to enlarge)


Long-Term Dividend Yield History of McDonald's Corporation (NYSE: MCD) (Click to enlarge)


Guess? (NYSE:GES) has a market capitalization of $3.33 billion. The company employs 15,000 people, generates revenues of $2,487.29 million and has a net income of $294.50 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $472.12 million. Because of these figures, the EBITDA margin is 18.98 percent (operating margin 16.27 percent and the net profit margin finally 11.84 percent).


Financial Analysis:
The total debt representing 0.85 percent of the company’s assets and the total debt in relation to the equity amounts to 1.36 percent. Due to the financial situation, a return on equity of 27.63 percent was realized. Twelve trailing months earnings per share reached a value of $2.94. Last fiscal year, the company paid $0.68 in form of dividends to shareholders.


Market Valuation:
Here are the price ratios of the company: The P/E ratio is 12.24, P/S ratio 1.34 and P/B ratio 3.14. Dividend Yield: 2.23 percent. The beta ratio is 1.66.


Long-Term Stock History Chart Of Guess?, Inc. (Click to enlarge)


Long-Term Dividends History of Guess?, Inc. (GES) (Click to enlarge)


Long-Term Dividend Yield History of Guess?, Inc. (NYSE: GES) (Click to enlarge)


The McGraw-Hill Companies (NYSE:MHP) has a market capitalization of $12.95 billion. The company employs 22,700 people, generates revenues of $6,246.00 million and has a net income of $858.00 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $1,807.00 million. Because of these figures, the EBITDA margin is 28.93 percent (operating margin 22.77 percent and the net profit margin finally 13.74 percent).


Financial Analysis:
The total debt representing 18.64 percent of the company’s assets and the total debt in relation to the equity amounts to 79.44 percent. Due to the financial situation, a return on equity of 44.90 percent was realized. Twelve trailing months earnings per share reached a value of $2.75. Last fiscal year, the company paid $1.00 in form of dividends to shareholders.


Market Valuation:
Here are the price ratios of the company: The P/E ratio is 16.96, P/S ratio 2.07 and P/B ratio 8.53. Dividend Yield: 2.19 percent. The beta ratio is 1.06.


Long-Term Stock History Chart Of The McGraw-Hill Compan... (Click to enlarge)


Long-Term Dividends History of The McGraw-Hill Compan... (MHP) (Click to enlarge)


Long-Term Dividend Yield History of The McGraw-Hill Compan... (NYSE: MHP) (Click to enlarge)

Take a closer look at the full table. The average price to earnings ratio (P/E ratio) amounts to 15.09 and forward P/E ratio is 12.96. The dividend yield has a value of 4.17 percent. Price to book ratio is 8.33 and price to sales ratio 2.57. The operating margin amounts to 29.22 percent. Finally, the return on equity has a fantastic margin of 56.15 percent and the return on investment follows with a value of 26.80 percent.

Here is the full table with some fundamentals (TTM):

The Best Dividend Stocks From The Service Sector (Click to enlarge)

Related stock ticker symbols:
ITRN, GA, NCMI, HRB, ENL, STRA, PAYX, RUK, MCD, IHG, WU, GES, MHP

Selected Articles:


I am long MCD. I receive no compensation to write about these specific stocks, sector or theme. I don't plan to increase or decrease positions or obligations within the next 72 hours.

For the other stocks: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I receive no compensation to write about any specific stock, sector or theme.

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