When looking for a stock that provides a dividend income, be sure to check a company's free cash flow to gauge whether they can continue to fund their dividend payment.
Below we report 10 dividend stocks that have had high dividend growth over the past 10 years, as well as an increase in the current year's dividend estimate.
Furthermore, all of the names have positive operating cash flows and significant assets vs. current liabilities. Market caps over $150M.
Lastly, all the names are rallying above their 20, 50, and 200-day moving averages (MA).
Don't fully understand these terms? Have no fear! Everyone starts from the beginning. Let's take a look at what each of these metrics mean and why they are important.
Dividends/Share: Dividends are a payment made by a company to its shareholders. The money is a portion of the company's profits. Cash dividends are paid as a % of the share value. That percentage is called the "dividend yield." In this article, all stock dividends per share have been increasing with the five-year growth rate higher than the 10-year, and the three-year growth rate higher than the five-year rate.
Assets vs. Liabilities: In accounting terms, assets are anything owned by the company that generates income and is of value. This includes cash and inventory. Liabilities are the opposite -- the total of all debts, loans, mortgages, etc. It is an obligation to transfer something of value away from the company. All of the stocks on our list have assets that outweigh their liabilities.
Rallying: When a stock is rallying, it means it is performing above its market average for a given time period. It is presented as a % of performance relative to the average. When a stock is performing above its 20-day moving average (MA) as well as its 50 and 200 day market averages, it signals bullish momentum. All the stocks in this list are rallying above their 20, 50, and 200-day MA.
Payout Ratio: It is the amount of earnings paid out to shareholders represented as a percentage. It is calculated as the dividends per share / earnings per share. A low payout indicates a company is keeping its earnings, while a high payout ratio indicates the company uses its earnings for dividend purposes. This ratio also gives an investor an idea of how well the company's earnings can support its dividend payments (generally, the higher, the better).
Operating Cash Flow/Revenue: Free operating cash flow (FOCF) is the total operating cash flow minus all operating expenditures, such as wages, repairs, and depreciation. Strong free cash flow signals a company's ability to pay debt, dividends, and invest in their business growth. For this list, all stocks have a positive operating cash flow/revenue.
Data sorted by market cap. (Click here to access free, interactive tools to analyze these ideas.)
1. Novo Nordisk (NYSE: NVO ) : Drug Manufacturers Industry. Market cap at $86.53B. Current price at $127.27. Dividend yield at 1.48%. Payout ratio (TTM) at 8.77%. Current year dividend/share estimate at $2.31 vs. its recent fiscal year's dividend/share at $1.95. Dividend growth rate over 3, 5, 10 years respectively at 0.30%, 0.27%, 0.22%. Recent quarter assets at $6.9B vs. recent quarter liabilities at $3.55B.
2. Abbott Laboratories (NYSE: ABT ) : Drug Manufacturers Industry. Market cap at $82.62B. Current price at $53.16. Dividend yield at 3.61%. Payout ratio (TTM) at 62.10%. Current year dividend/share estimate at $1.97 vs. its recent fiscal year's dividend/share at $1.76. Dividend growth rate over 3, 5, 10 years respectively at 0.11%, 0.10%, 0.09%. Recent quarter assets at $23.65B vs. recent quarter liabilities at $17.23B.
3. Union Pacific (NYSE: UNP ) : Railroads Industry. Market cap at $51.85B. Current price at $105.72. Dividend yield at 1.8%. Payout ratio (TTM) at 24.18%. Current year dividend/share estimate at $1.65 vs. its recent fiscal year's dividend/share at $1.31. Dividend growth rate over 3, 5, 10 years respectively at 0.21%, 0.17%, 0.13%. Recent quarter assets at $3.67B vs. recent quarter liabilities at $2.95B.
4. Lockheed Martin (NYSE: LMT ) : Aerospace/Defense Products & Services Industry. Market cap at $28.12B. Current price at $80.97. Dividend yield at 3.71%. Payout ratio (TTM) at 37.48%. Current year dividend/share estimate at $3.03 vs. its recent fiscal year's dividend/share at $2.64. Dividend growth rate over 3, 5, 10 years respectively at 0.22%, 0.20%, 0.20%. Recent quarter assets at $12.74B vs. recent quarter liabilities at $12.43B.
5. Cummins (NYSE: CMI ) : Diversified Machinery Industry. Market cap at $20.73B. Current price at $105.65. Dividend yield at 0.99%. Payout ratio (TTM) at 15.24%. Current year dividend/share estimate at $1.05 vs. its recent fiscal year's dividend/share at $0.88. Dividend growth rate over 3, 5, 10 years respectively at 0.27%, 0.24%, 0.11%. Recent quarter assets at $6.94B vs. recent quarter liabilities at $3.45B.
6. Ross Stores (Nasdaq: ROST ) : Apparel Stores Industry. Market cap at $9.50B. Current price at $81.2. Dividend yield at 1.08%. Payout ratio (TTM) at 14.21%. Current year dividend/share estimate at $0.83 vs. its recent fiscal year's dividend/share at $0.70. Dividend growth rate over 3, 5, 10 years respectively at 0.30%, 0.26%, 0.25%. Recent quarter assets at $1.99B vs. recent quarter liabilities at $1.24B.
7. Lubrizol (NYSE: LZ ) : Specialty Chemicals Industry. Market cap at $8.64B. Current price at $134.43. Dividend yield at 1.07%. Payout ratio (TTM) at 12.73%. Current year dividend/share estimate at $1.64 vs. its recent fiscal year's dividend/share at $1.39. Dividend growth rate over 3, 5, 10 years respectively at 0.06%, 0.06%, 0.03%. Recent quarter assets at $2.58B vs. recent quarter liabilities at $725.90M.
8. Hormel Foods (NYSE: HRL ) : Meat Products Industry. Market cap at $8.03B. Current price at $30.06. Dividend yield at 1.7%. Payout ratio (TTM) at 27.23%. Current year dividend/share estimate at $0.63 vs. its recent fiscal year's dividend/share at $0.42. Dividend growth rate over 3, 5, 10 years respectively at 0.12%, 0.10%, 0.09%. Recent quarter assets at $2.28B vs. recent quarter liabilities at $1.01B.
9. Church & Dwight (NYSE: CHD ) : Cleaning Products Industry. Market cap at $5.84B. Current price at $40.89. Dividend yield at 1.66%. Payout ratio (TTM) at 21.30%. Current year dividend/share estimate at $0.80 vs. its recent fiscal year's dividend/share at $0.31. Dividend growth rate over 3, 5, 10 years respectively at 0.27%, 0.21%, 0.13%. Recent quarter assets at $663.2M vs. recent quarter liabilities at $360.50M.
10. Tupperware Brands (NYSE: TUP ) : Packaging & Containers Industry. Market cap at $4.32B. Current price at $69.33. Dividend yield at 1.73%. Payout ratio (TTM) at 29.83%. Current year dividend/share estimate at $1.21 vs. its recent fiscal year's dividend/share at $1.05. Dividend growth rate over 3, 5, 10 years respectively at 0.06%, 0.04%, 0.02%. Recent quarter assets at $824.4M vs. recent quarter liabilities at $463.60M.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Becca Lipman does not own any of the shares mentioned above.
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