grow its dividend in the future and pay you handsomely now? The yield is not the only thing you need to focus on. You will also need to check the stock's Free Cash Flow Payout. This tells you how much cash the stock has left over after paying the normal operating expenses. This is the cash used to pay for acquisitions, debt obligations and dividends!
This week I am screening my database for stocks with a free cash flow payout below 35% and a dividend yield over 3%. The formula for Free Cash Flow Payout is simply Annual Dividend Per Share divided by Free Cash Flow Per Share. Free Cash Flow is Operating Cash Flow less normal capital expenditures (normally the first line in the investing section). Obviously, this is not a buy list but a potential idea list that will require additional due diligence.
Below are 8 stocks with debt that have a low Free Cash Flow Payout and a dividend yield over 3%:
ConocoPhillips Co. (COP)
FCF Payout: 17.1% | Yield: 3.6%
ConocoPhillips Co. was formed in 2002 when Phillips Petroleum and Conoco merged and is now is the fourth largest integrated oil company in the world.
Meredith Corp. (MDP)
FCF Payout: 20.2% | Yield: 3.2%
Meredith Corp. derives its earnings mainly from magazine publishing (primarily Better Homes and Gardens and Ladies' Home Journal) and ownership of 12 TV stations.
Essex Property Trust, Inc. (ESS)
FCF Payout: 22.1% | Yield: 3.1%
Essex Property Trust Inc. is a real estate investment trust that primarily owns and operates multi-family properties in California and the Pacific Northwest.
Cullen/Frost Bankers, Inc. (CFR)
FCF Payout: 28.3% | Yield: 3.3%
Cullen/Frost Bankers, Inc., is one of the largest multi-bank holding company headquartered in Texas, has more than 110 offices in various cities in the state.
Southside Bancshares Inc. (SBSI)
FCF Payout: 28.5% | Yield: 3.5%
Southside Bancshares Inc. primarily provides financial services to individuals, businesses, municipal entities, and non-profit organizations.
UniSource Energy (UNS)
FCF Payout: 30.6% | Yield: 4.6%
Unisource Energy, through Tucson Electric Power Co., provides regulated electric service to over 392,000 retail customers in Southeastern Arizona.
Community Trust Bank Corp. (CTBI)
FCF Payout: 31.6% | Yield: 4.6%
Community Trust Bank Corp. owns and operates Community Trust Bank, Inc. of Pikeville, KY, which provides commercial banking services in Kentucky and West Virginia; and a trust company.
Verizon Communications Inc. (VZ)
FCF Payout: 32.1% | Yield: 5.5%
Verizon Communications Inc. offers wireline, wireless and broadband services primarily in the northeastern United States.
The data present above is in its raw form. Some of the the companies would be disqualified for poor dividend fundamentals. However some of the others may be worth some additional probing.
My database, D4L-Data, is an Open Office spreadsheet containing more than 20 columns of information on the 200+ companies that I track. The data is sortable and has built-in buttons and macros to make it easy to use. Companies included in the list are those that have had a history of dividend growth. The D4L-Data spreadsheet is a part of D4L-Premium Services and is updated each Saturday for subscribers.
Full Disclosure: Long COP. See a list of all my income holdings here.
- We Were Dividends, Before Dividends Were Cool
- 12 Dividend Stocks Delivering The Secret To Success
- 12 Dividend Stocks For A Rainy Day
- 9 High-Yield Managed Distribution Policy Funds
- The Elite Dividend Stocks List
- Dividend Stocks Poised To Beat Inflation
Tags: [COP] [MDP] [ESS] [CFR] [SBSI] [UNS] [CTBI] [VZ]
Popular Posts - Last 7 days
Presented below are my dividend stock and ETF/CEF holdings. This is not a recommendation to buy these securities. I have classified some of...
Every investor wants to earn more. It is how we define "more" and how we go about earning it that defines the type of investor we ...
In every field there are winners and there are champions. The difference is subtle, but very real. A champion is driven for success and will...
In 1993, State Street Global Advisors launched the first exchange-traded fund (ETF). Now there are literally hundreds of ETFs out there cove...
In the U.S. and Canada, most companies pay dividends quarterly . In other parts of the world, it is not uncommon for companies to pay an ann...
Once again it is time for a goals/progress update. I am pleased to report that annualized dividend income increased in January, extending t...
Monday, October 31, 2011 will mark my fourth full year of writing as Dividends4Life . It is hard to believe another year has passed. Like th...
Linked here is a detailed quantitative analysis of 3M Company (MMM). Below are some highlights from the above linked analysis: Company De...
Like many that came before me, I am on a journey to construct a portfolio that will provide me... Dividends 4 Life
Linked here is a detailed quantitative analysis of Verizon Communications Inc. (VZ). Below are some highlights from the above linked analys...