New Mountain Finance Named Top Dividend Stock With Insider Buying and 9.02% Yield (NMFC)

In this series, we look through the most recent Dividend Channel ''DividendRank'' report, and then we cherry pick only those companies that have experienced insider buying within the past six months. The officers and directors of a company tend to have a unique insider's view of the business, and presumably the only reason an insider would choose to take their hard-earned cash and use it to buy stock in the open market, is that they expect to make money — maybe they find the stock very undervalued, or maybe they see exciting progress within the company, or maybe both. So when stocks turn up that see insider buying, and are also top ranked, investors are wise to take notice. One such company is New Mountain Finance Corp (NMFC), which saw buying by Director Steven B. Klinsky.

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The Top DividendRank'ed Stocks With Insider Buying »

Back on August 15, Klinsky invested $1,791,413.72 into 117,940 shares of NMFC, for a cost per share of $15.19. In trading on Wednesday, bargain hunters could buy shares of New Mountain Finance Corp ( NMFC) and achieve a cost basis 0.9% cheaper than Klinsky, with shares changing hands as low as $15.06 per share. It should be noted that Klinsky has collected $0.12/share in dividends since the time of their purchase, so they are currently down 0.1% on their purchase from a total return basis. New Mountain Finance Corp shares are currently trading -0.13% on the day. The chart below shows the one year performance of NMFC shares, versus its 200 day moving average:

New Mountain Finance Corp Chart

Looking at the chart above, NMFC's low point in its 52 week range is $13.86 per share, with $15.31 as the 52 week high point — that compares with a last trade of $15.07. By comparison, below is a table showing the prices at which insider buying was recorded over the last six months:

Purchased Insider Title Shares Price/Share Value
03/07/2014 Robert Hamwee CEO, President and Director 12,000 $14.75 $176,984.40
03/07/2014 John Kline COO and EVP 540 $14.70 $7,938.00
03/12/2014 David M. Cordova CFO and Treasurer 1,500 $14.81 $22,215.00
04/16/2014 James Stone Section 16 Officer 1,500 $14.24 $21,355.44
04/16/2014 David Malpass Director 10,000 $14.25 $142,512.00
04/28/2014 Robert Hamwee CEO, President and Director 15,000 $14.31 $214,692.00
04/29/2014 Paula Bosco Chief Compliance Officer 2,125 $14.26 $30,302.22
06/11/2014 Paula Bosco Chief Compliance Officer 623 $14.34 $8,933.76
06/11/2014 Alfred F. Hurley Jr. Director 7,000 $14.43 $101,010.00
06/16/2014 Adam Weinstein EVP, CAO and Director 3,500 $14.35 $50,224.65
08/12/2014 David Ogens Director 10,000 $14.98 $149,800.00
08/13/2014 Steven B. Klinsky Director 212,060 $15.10 $3,203,024.98
08/15/2014 Steven B. Klinsky Director 117,940 $15.19 $1,791,413.72

The DividendRank report noted that among the coverage universe, NMFC shares displayed both attractive valuation metrics and strong profitability metrics. For example, the recent NMFC share price of $15.08 represents a price-to-book ratio of 1.0 and an annual dividend yield of 9.02% — by comparison, the average company in Dividend Channel's coverage universe yields 3.7% and trades at a price-to-book ratio of 2.2. The report also cited the strong quarterly dividend history at New Mountain Finance Corp, and favorable long-term multi-year growth rates in key fundamental data points.

The report stated, '' Dividend investors approaching investing from a value standpoint are generally most interested in researching the strongest most profitable companies, that also happen to be trading at an attractive valuation. That's what we aim to find using our proprietary DividendRank formula, which ranks the coverage universe based upon our various criteria for both profitability and valuation, to generate a list of the top most 'interesting' stocks, meant for investors as a source of ideas that merit further research.''

The annualized dividend paid by New Mountain Finance Corp is $1.36/share, currently paid in quarterly installments, and its most recent dividend ex-date was on 09/12/2014. Below is a long-term dividend history chart for NMFC, which the report stressed as being of key importance. Indeed, studying a company's past dividend history can be of good help in judging whether the most recent dividend is likely to continue.

NMFC+Dividend+History+Chart

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