Another criterion is the debt level. A company with an indebtedness has much more possibilities to grow or to create something special. Companies with a huge debt load must create management teams to handle this debt and look for new finance rounds.
I love it when stocks have a low debt to equity ratio. But it’s only an additional stone in the wall of corporate finance and valuation.
Today I like to highlight the highest dividend paying stocks (over five percent dividend yield) with more than five years of consecutive dividend growth and a debt to equity ratio of less than one. The ratio is not really low but it’s ok for a higher yielding company in my view. What matters in this area is the expected growth. Growth destroys debt. A growing income makes it easier to pay back the loans.
Nineteen companies fulfilled these criteria of which seven have a buy or better rating. Oil and gas pipeline stocks and drilling companies are the dominating industries in this screen.
Here are my favorite stocks:
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Boardwalk Pipeline Partners (NYSE:BWP) has a market capitalization of $6.59 billion. The company employs 1,200 people, generates revenue of $1.185 billion and has a net income of $306.00 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $726.10 million. The EBITDA margin is 61.27 percent (the operating margin is 39.98 percent and the net profit margin 25.82 percent).
Financial Analysis: The total debt represents 45.01 percent of the company’s assets and the total debt in relation to the equity amounts to 91.28 percent. Due to the financial situation, a return on equity of 7.43 percent was realized. Twelve trailing months earnings per share reached a value of $1.28. Last fiscal year, the company paid $2.13 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 22.40, the P/S ratio is 5.56 and the P/B ratio is finally 1.73. The dividend yield amounts to 7.45 percent and the beta ratio has a value of 0.24.
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| Long-Term Stock History Chart Of Boardwalk Pipeline Partners (BWP) |
AstraZeneca (NYSE:AZN) has a market capitalization of $61.29 billion. The company employs 57,200 people, generates revenue of $27.973 billion and has a net income of $6.327 billion. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $10,666.00 million. The EBITDA margin is 38.13 percent (the operating margin is 29.13 percent and the net profit margin 22.62 percent).
Financial Analysis: The total debt represents 19.26 percent of the company’s assets and the total debt in relation to the equity amounts to 43.43 percent. Due to the financial situation, a return on equity of 26.81 percent was realized. Twelve trailing months earnings per share reached a value of $4.98. Last fiscal year, the company paid $2.80 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 9.86, the P/S ratio is 2.19 and the P/B ratio is finally 2.58. The dividend yield amounts to 5.70 percent and the beta ratio has a value of 0.64.
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| Long-Term Stock History Chart Of AstraZeneca (AZN) |
Reynolds American (NYSE:RAI) has a market capitalization of $24.13 billion. The company employs 5,000 people, generates revenue of $8.304 billion and has a net income of $1.272 billion. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $2.366 billion. The EBITDA margin is 28.49 percent (the operating margin is 26.66 percent and the net profit margin 15.32 percent).
Financial Analysis: The total debt represents 30.77 percent of the company’s assets and the total debt in relation to the equity amounts to 96.92 percent. Due to the financial situation, a return on equity of 22.11 percent was realized. Twelve trailing months earnings per share reached a value of $2.24. Last fiscal year, the company paid $2.33 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 19.51, the P/S ratio is 2.91 and the P/B ratio is finally 4.59. The dividend yield amounts to 5.41 percent and the beta ratio has a value of 0.57.
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| Long-Term Stock History Chart Of Reynolds American (RAI) |
Take a closer look at the full list of high yielding dividend growth stocks with low debt ratios. The average P/E ratio amounts to 22.45
and forward P/E ratio is 19.16. The dividend yield has a value of 7.0 percent.
Price to book ratio is 2.07 and price to sales ratio 4.03. The operating margin
amounts to 25.36 percent and the beta ratio is 0.78. Stocks from the list have
an average debt to equity ratio of 0.56.
Here is the full table with
some fundamentals (TTM):
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| 19 Income Growth Stocks With Low Debt (Click to enlarge) |
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Related stock
ticker symbols:
NMM, PNNT, CMLP,
NS, AZN, TCAP, BWP, NSH, WPZ, MCY, TCP, JCS, SNH, EVEP, ORI, RAI, TLP, ODC, BDMS
Selected Articles:
*I am long AZN. 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.
