Do you prefer stocks that offer both value and the opportunity for growth? For a closer look at some interesting dividend stocks, we ran a screen.
We began by screening for stocks paying dividend yields above 2% and sustainable payout ratios below 50%. We then screened for stocks with strong liquidity, with current ratios above 3. The current ratio is current assets/current liabilities, so ratios above 3 indicate the company has at least 3 times the liquid assets to cover their short-term liabilities.
We then screened for stocks that appear undervalued relative to their cash flows, indicated by high ratios of levered free cash flow/enterprise value.
Levered free cash flow is the free cash flow after deducting interest payments on outstanding debt. Enterprise value is the sum of the firm’s value from all ownership sources: market cap, outstanding debt, and preferred shares. When companies have ratios of levered free cash flow/enterprise value in excess of 10%, it may indicate that the company as a whole is being undervalued.
For an interactive version of this chart, click on the image below. Analyst ratings sourced from Zacks Investment Research.
Do you think these stocks pay attractive dividends? Use this list as a starting point for your own analysis.
List sorted by dividend yield. List average 1-year return: 8%.
1. FutureFuel Corp. (FF, Earnings, Analysts, Financials): Engages in the manufacture and sale of specialty chemicals and bio-based products primarily in the United States. Market cap at $472.7M, most recent closing price at $11.44. Dividend yield at 3.39%. Payout ratio at 42.43%. Current ratio: 7.31. Levered free cash flow at $43.33M vs. enterprise value at $244.55M (implies a LFCF/EV ratio at 17.72%).
2. KLA-Tencor Corporation (KLAC, Earnings, Analysts, Financials): Engages in the design, manufacture, and marketing of process control and yield management solutions for the semiconductor and related nanoelectronics industries. Market cap at $8.47B, most recent closing price at $50.85. Dividend yield at 3.3%. Payout ratio at 30.89%. Current ratio: 4.83. Levered free cash flow at $710.44M vs. enterprise value at $6.95B (implies a LFCF/EV ratio at 10.22%).
3. Freeport-McMoRan Copper & Gold Inc. (FCX, Earnings, Analysts, Financials): Engages in the exploration, mining, and production of mineral resources. Market cap at $39.37B, most recent closing price at $41.48. Dividend yield at 3.01%. Payout ratio at 33.75%. Current ratio: 3.46. Levered free cash flow at $4.00B vs. enterprise value at $33.91B (implies a LFCF/EV ratio at 11.8%).
4. Cisco Systems, Inc. (CSCO, Earnings, Analysts, Financials): Designs, manufactures, and sells Internet protocol (IP)-based networking and other products related to the communications and information technology industry worldwide. Market cap at $100.78B, most recent closing price at $19.05. Dividend yield at 2.93%. Payout ratio at 18.67%. Current ratio: 3.49. Levered free cash flow at $9.30B vs. enterprise value at $71.53B (implies a LFCF/EV ratio at 13.%).
5. Cal-Maine Foods, Inc. (CALM, Earnings, Analysts, Financials): Engages in the production, grading, packaging, marketing, and distribution of shell eggs primarily in the southeastern, southwestern, mid-western, and mid-Atlantic regions of the United States. Market cap at $1.01B, most recent closing price at $42.27. Dividend yield at 2.91%. Payout ratio at 33.36%. Current ratio: 3.14. Levered free cash flow at $85.08M vs. enterprise value at $805.81M (implies a LFCF/EV ratio at 10.56%).
6. Janus Capital Group, Inc. (JNS, Earnings, Analysts, Financials): A publicly owned asset management holding company. Market cap at $1.71B, most recent closing price at $9.15. Dividend yield at 2.59%. Payout ratio at 36.11%. Current ratio: 7.6. Levered free cash flow at $197.99M vs. enterprise value at $1.66B (implies a LFCF/EV ratio at 11.93%).
7. Schnitzer Steel Industries Inc. (SCHN, Earnings, Analysts, Financials): Engages in recycling ferrous and nonferrous scrap metals, and used and salvaged vehicles; and manufacturing finished steel products. Market cap at $799.21M, most recent closing price at $29.81. Dividend yield at 2.52%. Payout ratio at 10.06%. Current ratio: 3.16. Levered free cash flow at $206.13M vs. enterprise value at $1.17B (implies a LFCF/EV ratio at 17.62%).
8. MKS Instruments Inc. (MKSI, Earnings, Analysts, Financials): Provides instruments, subsystems, and process control solutions that measure, control, power, monitor, and analyze parameters of manufacturing processes worldwide. Market cap at $1.44B, most recent closing price at $27.29. Dividend yield at 2.44%. Payout ratio at 33.41%. Current ratio: 10.54. Levered free cash flow at $141.36M vs. enterprise value at $877.04M (implies a LFCF/EV ratio at 16.12%).
9. Marvell Technology Group Ltd. (MRVL, Earnings, Analysts, Financials): Designs, develops, and markets analog, mixed-signal, digital signal processing, and embedded and standalone ARM-based microprocessor integrated circuits. Market cap at $5.72B, most recent closing price at $10.25. Dividend yield at 2.38%. Payout ratio at 14.52%. Current ratio: 4.68. Levered free cash flow at $448.31M vs. enterprise value at $3.63B (implies a LFCF/EV ratio at 12.35%).
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Analyze These Ideas: Getting Started
Dig Deeper: Access Company Snapshots, Charts, Filings
- FutureFuel Corp. (FF, Chart, Download SEC Filings)
- KLA-Tencor Corporation (KLAC, Chart, Download SEC Filings)
- Freeport-McMoRan Copper & Gold Inc. (FCX, Chart, Download SEC Filings)
- Cisco Systems, Inc. (CSCO, Chart, Download SEC Filings)
- Cal-Maine Foods, Inc. (CALM, Chart, Download SEC Filings)
- Janus Capital Group, Inc. (JNS, Chart, Download SEC Filings)
- Schnitzer Steel Industries Inc. (SCHN, Chart, Download SEC Filings)
- MKS Instruments Inc. (MKSI, Chart, Download SEC Filings)
- Marvell Technology Group Ltd. (MRVL, Chart, Download SEC Filings)
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