MILLBURN, N.J. (Stockpickr) -- I like companies with strong cash flow. I like companies that pay above-market dividends. I like companies with strong balance sheets. I like companies that generate cash.
Recognizing this, I decided to try to create a portfolio of stocks that combines these factors.
I used two criteria in my analysis:1. Dividend Payout Ratio: This represents the amount of earnings that are paid out in the form of dividends to shareholders. We care about this because it shows that the company is focused on returning capital to shareholders. This is important if you subscribe to the dividend discount model of stock valuation. 2. Debt to Market Capitalization: This is a measure of leverage as well as a measure of the strength of the balance sheet. I prefer that a company uses its operational cash flow rather than debt to pay dividends to shareholders. Hence, I sought out companies with low debt-to-market-capitalization ratios. Here are six stocks that received high marks in these categories.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV