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A-Rated Dividend Stocks with 15% or more Earnings Growth Next Year

For investors wanting to have their cake and eat it too, we have some great stocks to consider.  All of these stocks carry the S&P Quality Rating of A, A+ or A-.  Then, they all pay dividends and have a projected EPS growth of 15% or more for next year.  So what you are getting is a fundamentally strong company that pays dividends and produce great earnings for potential price appreciation in the next year.  All of these stocks are up at least 10% year to date easily beating the S&P 500.  Here is the list of high quality stocks with high earnings growth.

Computer Programs and Systems, Inc., (CPSI) a healthcare information technology company, designs, develops, markets, installs, and supports computerized information technology systems to small and midsize hospitals in the United States.  Total revenues for the first quarter ended March 31, 2012, increased 10.2% to $44.5 million, compared with total revenues of $40.4 million for the prior-year quarter. Net income for the quarter ended March 31, 2012, increased 5.1% to $5.6 million, or $0.51 per diluted share, compared with $5.4 million, or $0.49 per diluted share, for the quarter ended March 31, 2011.   CPSI is projected to increase earnings 19.2% next year.  CPSI has a dividend yield of 3.22% which was increased 28% in the past year.  CPSI has no debt and trades with a beta of 0.87.  CPSI has an equity summary score of 7.5 out of 10 for a Bullish outlook.

The Toro Company (TTC) designs, manufactures, and markets professional turf maintenance equipment and services worldwide.  The company reported Q2 earnings of $2.26 per share, versus the Capital IQ consensus of $2.14. Revenues were $691.5 million, versus the analyst estimate of $676.4 million.  For FY12, the company expects EPS of approximately $4.30, in the lower end of its previously announced guidance range of $4.30 – $4.35.  This compares with the analyst estimate of$4.29.  The company also expects revenue growth of 7% – 8% year-over-year.   TTC is projected to increase earnings 15.9% next year.  TTC has a dividend yield of 1.77% which was increased 10% in the past year.   On May 24, 2012 the board of directors at Toro Co approved a 4 for 2 stock split.  New shares will be granted on June 29, 2012 to shareholders of record on June 15, 2012. Beginning on July 2, 2012, the security’s price will reflect the split adjusted price.  TTC has an equity summary score of 8.4 out of 10 for a Bullish outlook.

Technology giant Microsoft (MSFT) just announced a new tablet device to compete in the portable computing market and the future release of Microsoft Phone 8.  MSFT posts $0.60 Q3 EPS versus Capital IQ consensus forecast of $0.58.   MSFT had solid results driven by outperformance in Windows, Server & Tools, and Microsoft Business Division, as PC demand has started to recover, continued adoption of Office 2010, SharePoint, and strong growth in SQL Server.  MSFT revised operating expense guidance downward, now sees $28.3B-$28.7B for FY 12. MSFT is projected to increase earnings 15.2% next year.  MSFT has a dividend yield of 2.61% which was increased 25% in the past year.  MSFT has an equity summary score of 9.0 out of 10 for a VERY Bullish outlook.

Dividends from High Quality, High Yield Stocks

With so many companies being affected by the financial crisis, it’s important for income investors to find dependable dividend payers that they can count on. With projections for a slower growth economy amid historically low interest rates, it’s now more important than ever to find these solid dividend paying companies as there are fewer places to turn to for high yielding investments without taking on unwelcomed risk.  By screening for stocks with market beating yields, double digit growth rates, above median increasing cash flows and a strong balance sheet, this screen seeks to do just that by finding those companies that could turn into long-term core holdings for an income producing portfolio.

If you have not heard of TWO, then take note as this is a 9 on a 10 point scale.  Two Harbors Investment (TWO) is a holding company. The company operates as a real estate investment trust focused on investing in, financing and managing residential mortgage-backed securities (RMBS), and related investments. The company is externally managed and advised by PRCM Advisers LLC. The company’s target assets include the following: Agency RMBS, Non-Agency RMBS, and Financial assets other than RMBS, which include asset-backed securities and certain hedging transactions.

TWO is trading at $9.23 with a high dividend yield of 17%.  Yes, yields this high are scary but TWO is similar to Annaly as a mortage REIT.  EPS increased from $1.09 to an estimated $1.43 over the past 5 quarters indicating an improving growth rate. Analyst forecasts have recently been raised.  Company recently reported better than expected results.

Screening Criteria:
Dividend Yield Greater than or Equal to 5.00%; EPS Growth (Proj this Yr vs. Last Yr) – Greater than or Equal to 10.00%; P/E (This Year’s Estimate)Less than or Equal to 20.0; Cash Flow Growth Rate (TTM vs. Prior TTM) Greater than or Equal to 0.06%; Interest Coverage (Most Recent Qtr) Greater than or Equal to 3.0x; Security Price Greater than or Equal to $5.00.

 

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List of High Quality, High Yield Dividend Stocks

We have a new list of high yield dividend stocks that are also filtered by being high quailty stocks.  The filters are shown in the table below.  These stock criteria include a buy or hold rating from Zacks Research, a projected EPS of 10% or greater, cashflow growth rate of 0.06% or greater, etc.

 Zachs
Research
Is Rated Buy or Hold
Dividend Yield Greater than or Equal to 5.00%
EPS Growth (Proj this Yr vs. Last Yr) Greater than or Equal to 10.00%
P/E (This Year’s Estimate) Less than or Equal to 20.0
Cash Flow Growth Rate (TTM vs. Prior TTM) Greater than or Equal to 0.06%
Interest Coverage (Most Recent Qtr) Greater than or Equal to 3.0x
Security Price Greater than or Equal to $5.00
Volume (90 day Average) Greater than or Equal to 50.0K

 

The list of stocks passing this hurdle are shown in the graph below.  The most impressive stock is Two Harbors (TWO) which sports an 18% yield due to a recent price decline.  TWO has NO long-term debt which is great for a REIT and is rated a strong buy by many analyst,  Here is a detailed company description:

Two Harbors Investment Corp. (TWO) is an real estate investment trust (REIT), which focuses on investing in, financing and managing residential
mortgage-backed securities (RMBS). The Company focuses on investing in the asset classes, which includes agency RMBS, non-agency RMBS and financial assets other than RMBS, consisting of approximately 5% to 10% of the portfolio. Two Harbors is externally managed and advised by PRCM Advisers LLC. Capitol Acquisition Corp. (Capitol) is a wholly owned indirect subsidiary of Two Harbors. On October 28, 2009, Two Harbors Merger Corp., a wholly owned subsidiary of the Company merged with Capitol.

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