By Mary-Lynn Cesar for Kapitall.
Investors are on the hunt for yields, and
are offering payouts that federal bonds have yet to match or
The Wall Street Journal
that dividend stocks, along with utilities and real-estate
investment trusts (REIT), have posted bigger gains than the major
indexes so far this year, boosting the
Dow Jones Industrial Average (
to record highs. Just last Thursday, the DJIA broke 17,000 for
the first time in history.
And that's not the only record being broken. In 2013,
S&P 500 (
companies made all-time high dividend payments of $34.99 per
share; as of June 30th, on a trailing twelve month (
) basis, S&P 500 companies were paying $37.38 a share.
Furthermore, 423 of the stocks on the index pay dividends, a
sixteen-year high for the index.
If you haven't yet, now may still be a good time to start
watching dividend stocks, considering
1078 companies raised their dividends
in the first quarter of the year-a new record. According to S&P
Dow Jones Indices, this increase, which was 14.2% higher than the
first quarter of 2013, was the largest since 1979.
Now that the second quarter is done, we decided to run a screen
for dividend stocks, specifically focusing on those that appear to
pay reliable dividend income. We began with a group of
stocks with upcoming ex-dividend dates
over the next two weeks. An ex-dividend date is the date by which
investors must own shares of a particular stock in order to be
eligible for a dividend payment.
Next, we narrowed down that group to stocks with a
dividend yield higher than 2%
. We frequently use 2% as a benchmark, but the number is especially
fitting in this context given that the S&P 500 and DJIA have
dividend yields of 1.98% and 2.29%, respectively.
And for our final screen, we ran the remaining stocks through
to find those with signs of encouraging profitability. The DuPont
analysis, which was developed by the
Dupont Corporation (
almost 100 years ago, assesses a company's return on equity (ROE)
by examining its profit margin, total asset turnover, and financial
leverage from the most recent quarter (MRQ).
It lets investors see whether a company's profitability
stems from an increase in leverage ratio or an increase in net
profit margin and/or asset turnover. The former is viewed as a
potentially negative source of growth while the latter is
considered a more positive one.
We looked at ROE because, as
, companies with high ROE are better equipped to continue
paying and increase their dividends than those with low
ROE. This revelation is particularly useful for income investors
since a company can halt or cut its dividends whenever it sees
We were left with three stocks on our list. Do you think these
stocks with upcoming ex-dividend dates will increase their
dividends anytime soon? Use this list as a starting point for your
own analysis, and let us know what you think in the comments.
Click on the interactive chart to view data over
1. Saul Centers Inc.
): Operates as a real estate investment trust in the United States.
Market cap at $1.01B, most recent closing price at $48.94.
The company offers a dividend yield of 3.27%. Its ex-dividend
date is Tuesday, July 15th.
MRQ net profit margin at 19.43% vs. 10.12% y/y. MRQ sales/assets
at 0.044 vs. 0.041 y/y. MRQ assets/equity at 4.329 vs. 4.528
MRQ, annualized ROE at 28.83% vs. an industry average of 9.09%.
ROE on a TTM basis at 24.76% vs. an industry average of
2. Caterpillar Inc.
): Manufactures and sells construction and mining equipment, diesel
and natural gas engines, industrial gas turbines, and
diesel-electric locomotives worldwide. Market cap at $69.48B, most
recent closing price at $111.08.
The company offers a dividend yield of 2.52%. Its ex-dividend
date is Thursday, July 17th.
MRQ net profit margin at 6.96% vs. 6.66% y/y. MRQ sales/assets
at 0.157 vs. 0.149 y/y. MRQ assets/equity at 4.156 vs. 4.856
MRQ, annualized ROE at 18.16% vs. an industry average of 28.35%.
ROE on a TTM basis at 19.94% vs. an industry average of 17.11%.
3. Consolidated Communications Holdings Inc.
): Provides telecommunications services to residential and business
customers in Illinois, Texas, and Pennsylvania. Market cap at
$905.49M, most recent closing price at $22.48.
The company offers a dividend yield of 6.90%. Its ex-dividend
date is Friday, July 11th.
MRQ net profit margin at 5.56% vs. 4.47% y/y. MRQ sales/assets
at 0.086 vs. 0.086 y/y. MRQ assets/equity at 12.238 vs. 13.998
MRQ, annualized ROE at 23.51% vs. an industry average of 21.53%.
ROE on a TTM basis at 23.28% vs. an industry average of -2.84%.
(List compiled by Mary-Lynn Cesar. Accounting data sourced
from Google Finance. Dividend yield data sourced from Zacks
Investment Research. Ex-dividend data sourced from The
Street. ROE data sourced from Fidelity. All other data
sourced from finviz.)
Kapitall Wire is a division of New Kapitall Holdings, LLC.
Kapitall Generation, LLC is a wholly owned subsidiary of New
Kapitall Holdings, LLC. Kapitall Wire offers free investing
ideas, intended for educational information purposes only. It
should not be construed as an offer to buy or sell securities, or
any other product or service provided by New Kapitall Holdings,
LLC, and its affiliate companies.