If you read my blog for a longer time you should have noticed that dividend growth is one of the most important wealth drivers for long-term dividend investors.
I also talked about the difference between high dividend yields at a low growth and low yielding stocks with a high dividend growth.
The answer of this question is a between solution: Look at good initial yields with growing dividends over the longer period. I talk about mentionable yields and growth rates above the inflation level.
Today I would like to combine both, good growth with an acceptable initial dividend yield. In addition I love it to find stocks with low or no long-term debt. This increases the chance for further big dividend hikes or an accelerated growth.
Only a low leveraged company has more flexibility to grow sales and income much easier. Let’s take a look into the third dividend growth stock category - Dividend Challengers.
Thirteen stocks from the Dividend Challengers list (stocks with dividend growth between 5 to 10 consecutive years) fulfilled my above mentioned criteria. One stock has a high yield close to the double-digit yield ratio and five got a buy or better rating by brokerage firms. Most of the companies from the screening results are low capitalized; eight of them have a market capitalization under USD 2 billion.
Here are the biggest stocks from the screen:
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China Mobile (NYSE:CHL) has a market capitalization of $214.35 billion. The company employs 188,000 people, generates revenue of $91.567 billion and has a net income of $21.140 billion. China Mobile’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $41.543 billion. The EBITDA margin is 45.37 percent (the operating margin is 26.86 percent and the net profit margin 23.09 percent).
Financial Analysis: The total debt represents 0.48 percent of China Mobile’s assets and the total debt in relation to the equity amounts to 0.70 percent. Due to the financial situation, a return on equity of 18.84 percent was realized by China Mobile. Twelve trailing months earnings per share reached a value of $5.23. Last fiscal year, China Mobile paid $2.79 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 10.20, the P/S ratio is 2.35 and the P/B ratio is finally 1.81. The dividend yield amounts to 4.12 percent and the beta ratio has a value of 0.35.
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| Long-Term Stock Price Chart Of China Mobile (CHL) |
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| Long-Term Dividend Payment History of China Mobile (CHL) |
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| Long-Term Dividend Yield History of China Mobile (CHL) |
Accenture (NYSE:ACN) has a market capitalization of $57.77 billion. The company employs 257,000 people, generates revenue of $29.777 billion and has a net income of $2.824 billion. Accenture’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $4.466 billion. The EBITDA margin is 15.00 percent (the operating margin is 13.00 percent and the net profit margin 9.49 percent).
Financial Analysis: The total debt represents 0.00 percent of Accenture’s assets and the total debt in relation to the equity amounts to 0.00 percent. Due to the financial situation, a return on equity of 63.64 percent was realized by Accenture. Twelve trailing months earnings per share reached a value of $4.79. Last fiscal year, Accenture paid $1.35 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 15.07, the P/S ratio is 1.71 and the P/B ratio is finally 12.04. The dividend yield amounts to 2.20 percent and the beta ratio has a value of 0.91.
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| Long-Term Stock Price Chart Of Accenture (ACN) |
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| Long-Term Dividend Payment History of Accenture (ACN) |
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| Long-Term Dividend Yield History of Accenture (ACN) |
Coach (NYSE:COH) has a market capitalization of $14.66 billion. The company employs 17,200 people, generates revenue of $5.075 billion and has a net income of $1.034 billion. Coach’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $1.687 billion. The EBITDA margin is 33.25 percent (the operating margin is 30.04 percent and the net profit margin 20.38 percent).
Financial Analysis: The total debt represents 0.03 percent of Coach’s assets and the total debt in relation to the equity amounts to 0.04 percent. Due to the financial situation, a return on equity of 47.00 percent was realized by Coach. Twelve trailing months earnings per share reached a value of $3.61. Last fiscal year, Coach paid $1.24 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 14.38, the P/S ratio is 2.92 and the P/B ratio is finally 6.15. The dividend yield amounts to 2.57 percent and the beta ratio has a value of 1.47.
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| Long-Term Stock Price Chart Of Coach (COH) |
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| Long-Term Dividend Payment History of Coach (COH) |
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| Long-Term Dividend Yield History of Coach (COH) |
Smith & Nephew (NYSE:SNN) has a market capitalization of $10.75 billion. The company employs 11,000 people, generates revenue of $4.137 billion and has a net income of $729.00 million. Smith & Nephew’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $1.242 billion. The EBITDA margin is 30.02 percent (the operating margin is 20.45 percent and the net profit margin 17.62 percent).
Financial Analysis: The total debt represents 8.29 percent of Smith & Nephew’s assets and the total debt in relation to the equity amounts to 12.05 percent. Due to the financial situation, a return on equity of 20.62 percent was realized by Smith & Nephew. Twelve trailing months earnings per share reached a value of $3.03. Last fiscal year, Smith & Nephew paid $1.30 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 19.70, the P/S ratio is 2.66 and the P/B ratio is finally 2.84. The dividend yield amounts to 2.14 percent and the beta ratio has a value of 0.69.
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| Long-Term Stock Price Chart Of Smith & Nephew (SNN) |
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| Long-Term Dividend Payment History of Smith & Nephew (SNN) |
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| Long-Term Dividend Yield History of Smith & Nephew (SNN) |
Take a closer look at the full list of Dividend Challengers with low debt-to-equity ratios and great inital dividend yields. The average P/E ratio amounts to 18.16
and forward P/E ratio is 16.16. The dividend yield has a value of 3.68 percent.
Price to book ratio is 4.31 and price to sales ratio 4.31. The operating margin
amounts to 22.77 percent and the beta ratio is 0.82. Stocks from the list have
an average debt to equity ratio of 0.04.
Here is the full table with
some fundamentals (TTM):
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| 13 Low Debt Dividend Challengers (Click to enlarge) |
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Related Stock Ticker Symbols:
NSH, RGR, PETS,
ORIT, CHL, ASEI, UG, SNN, COH, DAKT, ACN, BOBE, WSM
Selected Articles:
*I am long ACN, CHL, SNN. 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.
