By
Russ Krull
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More Articles
September 6, 2011
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When most people think about defensive stocks, they think dividend-paying, stable large caps. That's fine, but many mid-cap stocks -- defined as a market cap between $1 billion and $10 billion here -- offer the same characteristics without being as high-profile.
I ran the CAPS Screener to look for defensive stocks in the mid-cap universe. Specific search parameters I ran included:
- Market capitalization between $1 billion and $10 billion.
- CAPS rating of four or five stars (out of five).
- Price-to-earnings positive and less than 15.
- Long-term debt-to-equity ratio of 1 or less (manageable debt levels to deal with trouble).
- Current dividend yield between 2.5% and 6% (a reasonable dividend provides price support and income, while a high dividend can be unsustainable or a sign of trouble).
- Earnings growth greater than 5% over the past three years.
- Beta -- a measure of volatility relative to the market -- less than 1.0.
The screen returned 15 stocks across a number of sectors, including the following seven.
|
Company Name
|
Debt-to-Equity Ratio
|
Dividend Yield
|
Beta
(3-Year)
|
PE (TTM)
|
CAPS Rating (out of 5)
|
Sector
|
| Cleco (NYSE: CNL ) |
1.00
|
3.2%
|
0.41
|
12.4
|
*****
|
Utilities |
| Hanover Insurance Group (NYSE: THG ) |
0.35
|
3.2%
|
0.46
|
14.4
|
****
|
Financial |
| j2 Global Communications (Nasdaq: JCOM ) |
0
|
2.6%
|
0.77
|
13.6
|
****
|
Technology |
| Mattel (Nasdaq: MAT ) |
0.39
|
3.5%
|
0.98
|
13.5
|
****
|
Consumer Goods |
| Molson Coors Brewing (NYSE: TAP ) |
0.24
|
3%
|
0.73
|
11.9
|
*****
|
Consumer Goods |
| Rent-A-Center (Nasdaq: RCII ) |
0.48
|
2.5%
|
0.83
|
10.7
|
****
|
Services |
| Teleflex (NYSE: TFX ) |
0.49
|
2.5
|
0.73
|
10.3
|
****
|
Health Care |
*Source: Motley Fool Stock Screener. As of Sept. 5.
These stocks represent a variety of sectors and business models, but all share strong balance sheets, good dividend yields, less than market volatility, reasonable valuations, and high ratings from our CAPS community. I also checked out dividend-payout ratios, and Mattel's ratio of 66% was the only one over 50%.
Don't forget the mid-cap world when exploring for stable, dividend paying stocks. There are plenty of quality stocks outside large-cap land, including some well-known names. As a bonus, smaller companies don't have the coverage of the big names, so there's a better chance of finding an underfollowed bargain.
Like any screen, these results should be considered a starting point for further research and not an outright buy recommendation.
You can follow any of the stocks mentioned here using our free watchlist service, My Watchlist.
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