Do you prefer stocks that pay reliable dividend income? For ideas on how to start your own dividend stock search, we ran a screen.
We began by screening the S&P 500 for stocks paying dividend yields above 1%.
Then to analyze these companies’ profitability, we ran DuPont analysis on the names. DuPont analyzes profitability by breaking up return on equity (net income/equity) into three components:
Return on Equity (ROE) = (Net Profit/Equity) = (Net profit/Sales)*(Sales/Assets)*(Assets/Equity) = (Net Profit margin)*(Asset turnover)*(Leverage ratio)
EXCLUSIVE OFFER: Jim Cramer’s Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he’s trading today with a 14-day FREE pass.Because increases in net margin and asset turnover are considered good things, DuPont focuses on companies with these positive characteristics: Increasing ROE along with,
- Decreasing leverage, (i.e. decreasing Asset/Equity ratio)
- Improving asset use efficiency (i.e. increasing Sales/Assets ratio) and improving net profit margin (i.e. increasing Net Income/Sales ratio)
Do you think these stocks pay reliable dividends? Use this list as a starting point for your own analysis. Analyze These Ideas: Access a performance overview for all stocks in the list 1. Avalonbay Communities Inc. ( AVB): Engages in the development, redevelopment, acquisition, ownership, and operation of multifamily communities in the United States. Market cap at $14.93B, most recent closing price at $133.07. MRQ net profit margin at 31.94% vs. 18.39% y/y. MRQ sales/assets at 0.03 vs. 0.029 y/y. MRQ assets/equity at 1.901 vs. 2.046 y/y. 2. CBS Corporation ( CBS): Operates as a mass media company in the United States and internationally. Market cap at $22.77B, most recent closing price at $35.84. MRQ net profit margin at 11.44% vs. 10.04% y/y. MRQ sales/assets at 0.13 vs. 0.129 y/y. MRQ assets/equity at 2.565 vs. 2.638 y/y.