7 Profitable Dividend Stocks With Institutional Buying Trends

7 Profitable Dividend Stocks With Institutional Buying Trends

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Do you prefer stocks that pay part of their return in dividend income? For ideas on how to start your search, we ran a screen on dividend-paying names. (STAY AHEAD OF THE CURVE: Follow Kapitall on Twitter)

Dividend Strength

We began with stocks paying dividend yields above 1% and sustainable payout ratios below 50%. Since company profits fund the dividend, we then screened for those with strong sources of profitability. To do this we ran the DuPont analysis.

DuPont analyzes return on equity (net income/equity) profitability by breaking ROE up into three components:

ROE

= (Net Profit/Equity)
= (Net profit/Sales)*(Sales/Assets)*(Assets/Equity)
= (Net Profit margin)*(Asset turnover)*(Leverage ratio)

It therefore focuses on companies with the following 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)

Companies with all of these characteristics are experiencing increasing profits due to operations and not to increased use of financial leverage.

Institutional Buying

Lastly, we looked for names with significant net purchases from institutional buyers in the current quarter.

This means institutions, such as hedge funds and pension funds, have bought a significant amount of shares. Because these firms use a lot of money to establish these positions, and often have much more sophisticated market research on hand than Main Street investors, we can assume they have done their due diligence and have good cause to feel bullish about these stocks.

Business Section: Investing Ideas

These are the results of the screen listed below – these dividend stocks have strong trends in sources of  profitability. They also have the confidence of institutional buyers.

List sorted alphabetically by ticker. List Average 1-Year Return: 25%.

1. Hersha Hospitality Trust (HT, Earnings, Analysts, Financials): Engages in the ownership and operation of mid scale limited service hotels in the Eastern United States. Market cap at $939.09M, most recent closing price at $4.73. Dividend yield: 4.98%. Net institutional purchases in the current quarter at 17.2M shares, which represents about 9.7% of the company's float of 177.38M shares. MRQ net profit margin at 17.15% vs. 11.28% y/y. MRQ sales/assets at 0.058 vs. 0.049 y/y. MRQ assets/equity at 1.978 vs. 2.063 y/y.

 

2. Inter Parfums Inc. (IPAR, Earnings, Analysts, Financials): Engages in the manufacture, marketing, and distribution of various fragrances and fragrance related products primarily in the United States and Europe. Market cap at $565.24M, most recent closing price at $18.49. Dividend yield: 1.71%. Net institutional purchases in the current quarter at 1.7M shares, which represents about 10.47% of the company's float of 16.24M shares. MRQ net profit margin at 4.13% vs. 4.12% y/y. MRQ sales/assets at 0.304 vs. 0.241 y/y. MRQ assets/equity at 1.807 vs. 1.892 y/y.

 

3. National Research Corp. (NRCI, Earnings, Analysts, Financials): Provides performance measurement and improvement services, healthcare analytics, and governance education to the healthcare industry in the United States and Canada. Market cap at $342.92M, most recent closing price at $50.43. Dividend yield: 2.06%. Net institutional purchases in the current quarter at 137.9K shares, which represents about 5.58% of the company's float of 2.47M shares. MRQ net profit margin at 19.1% vs. 12.72% y/y. MRQ sales/assets at 0.195 vs. 0.183 y/y. MRQ assets/equity at 1.729 vs. 1.909 y/y.

 

4. Pebblebrook Hotel Trust (PEB, Earnings, Analysts, Financials): Operates as a real estate investment trust. Market cap at $1.35B, most recent closing price at $22.83. Dividend yield: 2.08%. Net institutional purchases in the current quarter at 3.1M shares, which represents about 5.29% of the company's float of 58.59M shares. MRQ net profit margin at 10.47% vs. 5.76% y/y. MRQ sales/assets at 0.06 vs. 0.055 y/y. MRQ assets/equity at 1.256 vs. 1.292 y/y.

 

5. Resources Connection Inc. (RECN, Earnings, Analysts, Financials): Provides professional services in provides finance, accounting, risk management and internal audit, corporate advisory, strategic communications and restructuring, information management, human capital, supply chain management, actuarial, and legal and regulatory services in support of client-led projects and initiatives. Market cap at $542.43M, most recent closing price at $13.08. Dividend yield: 1.85%. Net institutional purchases in the current quarter at 3.0M shares, which represents about 7.5% of the company's float of 40.01M shares. MRQ net profit margin at 3.53% vs. 1.88% y/y. MRQ sales/assets at 0.322 vs. 0.302 y/y. MRQ assets/equity at 1.17 vs. 1.264 y/y.

 

6. Trinity Industries Inc. (TRN, Earnings, Analysts, Financials): Provides products and services to the industrial, energy, transportation, and construction sectors primarily in the United States, Canada, Mexico, the United Kingdom, Singapore, and Sweden. Market cap at $2.44B, most recent closing price at $30.93. Dividend yield: 1.39%. Net institutional purchases in the current quarter at 31.7M shares, which represents about 41.05% of the company's float of 77.23M shares. MRQ net profit margin at 6.59% vs. 4.24% y/y. MRQ sales/assets at 0.166 vs. 0.121 y/y. MRQ assets/equity at 3.188 vs. 3.246 y/y.

 

7. Monotype Imaging Holdings Inc. (TYPE, Earnings, Analysts, Financials): Provides text imaging solutions worldwide. Market cap at $525.4M, most recent closing price at $14.32. Dividend yield: 1.09%. Net institutional purchases in the current quarter at 3.0M shares, which represents about 8.61% of the company's float of 34.84M shares. MRQ net profit margin at 19.27% vs. 18.02% y/y. MRQ sales/assets at 0.123 vs. 0.107 y/y. MRQ assets/equity at 1.455 vs. 1.584 y/y.

 

 

 

Institutional and profitability data sourced from Fidelity, all other data sourced from Finviz.

 

 

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