Liquidity is a very important consideration for dividend stocks. Companies with higher liquidity are considered more able to continue paying dividends if profits fall. That's because the company can use its sources of liquidity such as cash and marketable securities to bridge the gap and maintain payment.
Measuring liquidity
The current ratio is a measure of company's ability to pay its short-term obligations. It's calculated as current assets over current liabilities, where current assets include cash and accounts receivable, while current liabilities include accounts payable and short-term debt.
In general, a current ratio under 1 suggests that the company would be unable to pay off its obligations if profits fell. With this in mind, we ran a screen on dividend stocks (yields over 1%) with high liquidity, with current ratios over 3.
The list
To improve the quality of our list, we further screened these stocks for those with the highest net buying from institutional investors over the current quarter. Institutions include mutual funds, hedge funds, pensions, and bank trust departments, and they often have access to more sophisticated research than the average investor.
The smart money seems optimistic about these names. Do you think they'll move higher? Use this list as a starting point for your own analysis.
List sorted alphabetically. (Click here to access free, interactive tools to analyze these ideas.)
1. Acorn Energy (Nasdaq: ACFN ) : Provides energy infrastructure management solutions worldwide. Market cap of $95.48M. Net institutional shares purchased over the current quarter at 1.2M, which is 7.36% of the company's 16.30M share float.
2. Cognex (Nasdaq: CGNX ) : Provides machine vision products that capture and analyze visual information to automate tasks, primarily in manufacturing processes. Market cap of $1.46B. Net institutional shares purchased over the current quarter at 2.3M, which is 5.91% of the company's 38.90M share float.
3. EV Energy Partners (Nasdaq: EVEP ) : Engages in the acquisition, development, and production of oil and natural gas properties in the United States. Market cap of $2.31B. Net institutional shares purchased over the current quarter at 3.1M, which is 9.58% of the company's 32.37M share float.
4. Keynote Systems (Nasdaq: KEYN ) : Provides Internet and mobile cloud monitoring solutions worldwide. Market cap of $316.12M. Net institutional shares purchased over the current quarter at 1.0M, which is 7.58% of the company's 13.19M share float.
5. LeMaitre Vascular (Nasdaq: LMAT ) : Develops, manufactures, and markets vascular devices for the treatment of peripheral vascular disease worldwide. Market cap of $84.76M. Net institutional shares purchased over the current quarter at 641.9K, which is 7.73% of the company's 8.30M share float.
6. Mueller Industries (NYSE: MLI ) : Mueller Industries, manufactures copper, brass, plastic, and aluminum products. It operates in two segments, Plumbing & Refrigeration, and Original Equipment Manufacturers (OEM). Market cap of $1.48B. Net institutional shares purchased over the current quarter at 2.0M, which is 5.33% of the company's 37.52M share float.
7. Sun Hydraulics (Nasdaq: SNHY ) : Designs and manufactures screw-in hydraulic cartridge valves and manifolds, components of fluid-power systems that control force, speed, and motion. Market cap of $607.65M. Net institutional shares purchased over the current quarter at 5.4M, which is 22.10% of the company's 24.43M share float.
8. Universal Forest Products (Nasdaq: UFPI ) : Distributes, and installs lumber, composite wood, plastic, and other building products for the DIY/retail, site-built construction, manufactured housing, and industrial markets. Market cap of $538.49M. Net institutional shares purchased over the current quarter at 2.0M, which is 11.43% of the company's 17.50M share float.
9. Western Gas Partners (NYSE: WES ) : Engages in the acquisition, ownership, development, and operation of midstream energy assets in east and west Texas, the Rocky Mountains, and the Mid-Continent. Market cap of $3.44B. Net institutional shares purchased over the current quarter at 3.2M, which is 6.47% of the company's 49.46M share float.
10. World Wrestling Entertainment (NYSE: WWE ) : World Wrestling Entertainment,, an integrated media and entertainment company, engages in the sports entertainment business. Market cap of $710.71M. Net institutional shares purchased over the current quarter at 1.9M, which is 7% of the company's 27.13M share float.
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 Rebecca Lipman does not own any of the shares mentioned above. Institutional data sourced from Fidelity.
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