6 Mid-Cap Dividend Growth Stocks With Return Potential

When investors consider financial ratios individually, they may put their money in stocks that do not really fit in their profile. 

For instance, a high EPS alone doesn’t say too much about a company, if one doesn’t look into the company’s revenues, net income, and sustained dividend payments and so on.

Conversely, a high EPS combined with a good dividend yield above 3% and consistency in good, strong financial results, may suggest a great investment.

The article introduces 6 mid-capitalized stocks with fast growing earnings while price multiples for 2015 earnings are still low. The main focus is on smaller capitalized stocks, companies with a market cap below 2 billion and a consistent dividend growth history of more than a decade.

Here are the top results, sorted by yield...

My 11 Pearls From The Dividend Aristocrats Index

Dividend growth investing is gaining popularity in the investment community for those wanting the compounding growth effect on income.

The Dividend Aristocrat index is made up of 50 stocks from the SP 500 that have at least 25 years of increasing dividends.

Investing in Dividend Growth companies is an appealing strategy for many investors. When we look at the performance of stocks that grow dividends, stocks that pay dividends, stocks that do not pay dividends, and stocks that have cut dividends, the results are fairly dramatic.

Investing in Dividend Growth companies is an appealing strategy for many investors. When we look at the performance of stocks that grow dividends, stocks that pay dividends, stocks that do not pay dividends, and stocks that have cut dividends, the results are fairly dramatic.

Today I stay focused on the best dividend growth category on the market, the Dividend Aristocrats. Attached you can find my pearls from the index.

I've screened the index by stocks with a P/E under 20 that should grow earnings per share by more than 10% yearly for the next five years. In addition, the debt-to-equity should be normal at 1 or less.

11 stocksfulfilled my criteria. Check out the porfolio statistics below.

These are the highest yielding in detail...

These 20 Stocks Could Benefit From Higher Rates

The current problem on the market could be descried with the following sentence: Rising rates could let to a falling dollar. 

In contraction, Investors expect the US Dollar to rally, undermining equities and furthering headwinds to S&P 500 EPS and also amplified stress for EM borrowers (USD denom. debt). 

History says that the consensus is wrong and counters intuitively, when the Fed moves to neutral from easy (11 most recent cycles), USD weakened 55% of the time, with a median decline of 7% in the first year.

Below I've implemented screen results of stocks that might benefit from rising rate hikes. Stocks from the screen have fulfilled the following criteria:

Stock selection criteria...

(i) Stock’s price correlation to the USD (DXY Index) from 5/2014 – 3/2015 is less than -0.40

(ii) Mean implied upside based on analyst target prices is positive

(iii) P/E (‘15E and ‘16E) is below 25X but consensus EPS is positive

(iv) FCF yield is above 3%

(v) Company beat consensus EPS expectations the last 2 quarters.

Here are the 20 best yielding results in detail....

The Best Portfolio Of Cloud Storage Stocks And Which The Best Dividends Pay

The forecasts for burgeoning industries including the cloud and the Internet of Things (IoT) vary, but the common theme is undeniable: We are in the early stages of what are quickly becoming game-changing markets. The two cutting-edge technologies share a common thread: IoT amasses almost unfathomable amounts of data, while the cloud is the primary means of storing it.

If you are interested in technology stocks with focus on modern themes like cloud computing or social media, you should look at the following selection of stocks from the cloud storage industry.

Over the past decade, stocks from the portfolio generated a total return of 18.83% yearly. In 2014 alone, the return of the dividend paying stocks was 27.2%. Today it would deliver an inital yield of 2.77%. In 2005, the inital yield was only at 0.56%.

Even as cloud technologies and services remain in their early stages, it has become abundantly clear that revenue -- at least significant revenue -- is not going to come from hosting. Many of the big-time cloud providers have essentially made cloud data hosting a commodity, which is ideal for Microsoft and other companies from the field.

Here are the top yielding stocks...

These 7 Dividend Growth Stocks Pay Your Investment In 9 To 13 Years Back

Companies with a very short payback are often troubled or have been highly discounted due to the market’s lack of faith in them. At the other extreme, do you really want to wait 30, 40 or 50 years to earn back your initial investment?

As a compromise, a 9 to 13 year payback should be acceptable for most long-term investors. Once you earn back your investment, some might say you are in a no-lose situation. I wouldn’t go quite that far, but you have found an investment that that has provided you a good historical revenue stream, and hopefully it will continue to do so in the future.

Attached you can find 7 dividend growth stocks with a 9 to 13 year payback (at the current yield and dividend growth rate) and a yield between 2.5% to 6.0%.

A combined portfolio delivered a total return of 25% in 2014. At the end of the article, you can find more about this fact.

Here are the results....