Dividend growth stocks with low payout and debt
ratios originally published at "long-term-investments.blogspot.com". When I consider
buying a stock, I always look at the fundamentals of a company. The current
yields and P/E’s are a first step but both are only two of hundreds criteria.
If you like to evaluate the future dividend
growth you should definitely look at the debt situation and the payout ratio.
Also important is the expected growth. Only a growing company can hike its
dividends in the long-run without paying out capital assets and destroying
shareholder values.
Today I like to present Dividend Contenders with
the highest dividend payout potential. If they succeed to hike further
dividends over the next few years, they can become a Dividend Champion very
soon. These are my criteria:
- Payout ratio below 30 percent
- Long-Term Debt to equity under 0.2
- Market Capitalization over 300 million
Nineteen companies fulfill the above mentioned
criteria. Ten have a current buy or better rating.
Here are my favorite stocks:
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C.H. Robinson Worldwide (NASDAQ:CHRW) has a market capitalization of $9.55 billion. The company employs 10,929 people, generates revenue of $11.359 billion and has a net income of $593.80 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $719.72 million. The EBITDA margin is 6.34 percent (the operating margin is 5.95 percent and the net profit margin 5.23 percent).
Financial Analysis:
The total debt represents 11.47 percent of the company’s assets and the total debt in relation to the equity amounts to 21.38 percent. Due to the financial situation, a return on equity of 43.14 percent was realized. Twelve trailing months earnings per share reached a value of $3.66. Last fiscal year, the company paid $1.34 in the form of dividends to shareholders.
Market Valuation:
Here are the price ratios of the company: The P/E ratio is 16.26, the P/S ratio is 0.84 and the P/B ratio is finally 6.34. The dividend yield amounts to 2.37 percent and the beta ratio has a value of 0.65.
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Long-Term Stock Price Chart Of C.H. Robinson Worldwide (CHRW) |
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Long-Term Dividend Payment History of C.H. Robinson Worldwide (CHRW) |
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Long-Term Dividend Yield History of C.H. Robinson Worldwide (CHRW) |
Lincoln Electric Holdings (NASDAQ:LECO) has a market capitalization of $4.90 billion. The company employs 10,000 people, generates revenue of $2.853 billion and has a net income of $257.22 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $448.31 million. The EBITDA margin is 15.71 percent (the operating margin is 12.69 percent and the net profit margin 9.01 percent).
Financial Analysis:
The total debt represents 0.97 percent of the company’s assets and the total debt in relation to the equity amounts to 1.51 percent. Due to the financial situation, a return on equity of 20.43 percent was realized. Twelve trailing months earnings per share reached a value of $3.10. Last fiscal year, the company paid $0.71 in the form of dividends to shareholders.
Market Valuation:
Here are the price ratios of the company: The P/E ratio is 19.04, the P/S ratio is 1.71 and the P/B ratio is finally 3.63. The dividend yield amounts to 1.36 percent and the beta ratio has a value of 1.59.
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Long-Term Stock Price Chart Of Lincoln Electric Holdings (LECO) |
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Long-Term Dividend Payment History of Lincoln Electric Holdings (LECO) |
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Long-Term Dividend Yield History of Lincoln Electric Holdings (LECO) |
A. O. Smith (NYSE:AOS) has a market capitalization of $3.87 billion. The company employs 10,900 people, generates revenue of $1.939 billion and has a net income of $162.60 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $266.50 million. The EBITDA margin is 13.74 percent (the operating margin is 12.06 percent and the net profit margin 8.38 percent).
Financial Analysis:
The total debt represents 10.76 percent of the company’s assets and the total debt in relation to the equity amounts to 20.41 percent. Due to the financial situation, a return on equity of 14.26 percent was realized. Twelve trailing months earnings per share reached a value of $1.65. Last fiscal year, the company paid $0.36 in the form of dividends to shareholders.
Market Valuation:
Here are the price ratios of the company: The P/E ratio is 23.54, the P/S ratio is 1.86 and the P/B ratio is finally 2.79. The dividend yield amounts to 1.24 percent and the beta ratio has a value of 1.00.
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Long-Term Stock Price Chart Of A. O. Smith (AOS) |
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Long-Term Dividend Payment History of A. O. Smith (AOS) |
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Long-Term Dividend Yield History of A. O. Smith (AOS) |
Ross Stores (NASDAQ:ROST) has a market capitalization of $14.32 billion. The company employs 16,000 people, generates revenue of $9.721 billion and has a net income of $786.76 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $1.457 billion. The EBITDA margin is 14.99 percent (the operating margin is 13.01 percent and the net profit margin 8.09 percent).
Financial Analysis:
The total debt represents 4.09 percent of the company’s assets and the total debt in relation to the equity amounts to 8.49 percent. Due to the financial situation, a return on equity of 48.27 percent was realized. Twelve trailing months earnings per share reached a value of $3.53. Last fiscal year, the company paid $0.56 in the form of dividends to shareholders.
Market Valuation:
Here are the price ratios of the company: The P/E ratio is 18.42, the P/S ratio is 1.47 and the P/B ratio is finally 8.14. The dividend yield amounts to 1.04 percent and the beta ratio has a value of 0.73.
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Long-Term Stock Price Chart Of Ross Stores (ROST) |
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Long-Term Dividend Payment History of Ross Stores (ROST) |
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Long-Term Dividend Yield History of Ross Stores (ROST) |
Take a closer look at the full list of Dividend Contenders with big potential to hike future dividends. The average P/E ratio amounts to 15.64
and forward P/E ratio is 14.22. The dividend yield has a value of 1.59 percent.
Price to book ratio is 3.01 and price to sales ratio 2.31. The operating margin
amounts to 21.10 percent and the beta ratio is 0.93. Stocks from the list have
an average debt to equity ratio of 0.13.
Here is the full table with
some fundamentals (TTM):
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Dividend Contenders With High Dividend Growth Potential (Click to enlarge) |
Related stock
ticker symbols:
ACE, AOS, ATRI, AXS, BMI, CHRW, DGICB, FDS, FDX, HCC, IMO, LECO, LNN, MSM,
PB, PRE, QCOM, RNR, ROST
Selected Articles:
*I am long QCOM, FDS. 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.