19 Dividend Contenders With Good Dividend Growth Potential
Dividend Yield | May 24, 2013 07:49AM ET
When I consider buying a stock, I always look at a company's fundamentals. The current yields and P/Es 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 value.
Today I'm focusing on Dividend Contenders with the highest dividend payout potential.These are my criteria:
- Payout ratio below 30 percent
- Long-Term Debt to equity under 0.2
- Market Capitalization over 300 million
C.H. Robinson Worldwide (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.
Lincoln Electric Holdings (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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A. O. Smith (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.
Ross Stores (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.
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):
Related stock ticker symbols:
ACE, AOS, ATRI, AXS, BMI, CHRW, DGICB, FDS, FDX, HCC, IMO, LECO, LNN, MSM, PB,
PRE, QCOM, RNR, ROST
Disclosure: 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.
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