When markets are struggling, investors often turn to large companies that are paying strong dividends. Strong dividends are an insight to the company's strength, and if they are a large company, then it seems unlikely the company is going to fail anytime soon.
We started a screen for these large companies, and then narrowed it down with the remainders that are more profitable than their respective industry averages.
Specifically...
We wanted companies that have market caps over $10 billion, and paying dividends between 3%-7% with positive payout ratios under 50%. This shows a strong dividend that isn't too large of a portion of earnings, showing responsibility on the management's part.
Then we screened for companies that have trailing 12 month (TTM) gross, operating, and pre-tax margins that are higher than their industry averages, indicating a higher profitability than their peers.
The list below has the final results from that screen. Do you think they will do well in tougher market conditions?
List sorted by market cap. (Click here to access free, interactive tools to analyze these ideas.)
1. Public Service Enterprise Group (NYSE: PEG): Operates in the energy industry primarily in the northeastern and mid Atlantic United States. Market cap at $15.84B, most recent closing price at $31.31.Dividend yield at 4.52%, payout ratio at 48.61%. TTM gross margin at 36.12% vs. industry average at 28.47%. TTM operating margin at 27.% vs. industry average at 18.93%. TTM pre-tax margin at 21.15% vs. industry average at 12.43%.
2. NextEra Energy: Engages in the generation, transmission, distribution, and sale of electric energy in the United States and Canada. Market cap at $27.17B, most recent closing price at $65.15.Dividend yield at 3.66%, payout ratio at 44.60%. TTM gross margin at 34.66% vs. industry average at 26.88%. TTM operating margin at 24.68% vs. industry average at 17.89%. TTM pre-tax margin at 18.19% vs. industry average at 12.29%.
3. Campbell Soup (NYSE: CPB): Engages in the manufacture and marketing of branded convenience food products worldwide. Market cap at $10.04B, most recent closing price at $31.48.Dividend yield at 3.65%, payout ratio at 49.63%. TTM gross margin at 41.66% vs. industry average at 31.75%. TTM operating margin at 16.41% vs. industry average at 11.31%. TTM pre-tax margin at 13.91% vs. industry average at 8.37%.
4. JPMorgan Chase (NYSE: JPM): Provides various financial services worldwide. Market cap at $125.78B, most recent closing price at $31.99.Dividend yield at 3.63%, payout ratio at 23.90%. TTM gross margin at 81.73% vs. industry average at 61.34%. TTM operating margin at 47.11% vs. industry average at 38.28%. TTM pre-tax margin at 23.78% vs. industry average at 18.28%.
5. Intel (Nasdaq: INTC): Engages in the design, manufacture, and sale of integrated circuits for computing and communications industries worldwide. Market cap at $131.16B, most recent closing price at $25.43.Dividend yield at 3.22%, payout ratio at 33.02%. TTM gross margin at 74.58% vs. industry average at 60.37%. TTM operating margin at 31.83% vs. industry average at 22.3%. TTM pre-tax margin at 31.86% vs. industry average at 20.61%.
6. Analog Devices: Engages in the design, manufacture, and marketing of analog, mixed-signal, and digital signal processing integrated circuits used in industrial, communication, computer, and consumer applications. Market cap at $11.13B, most recent closing price at $36.20.Dividend yield at 3.22%, payout ratio at 44.39%. TTM gross margin at 69.13% vs. industry average at 60.37%. TTM operating margin at 32.74% vs. industry average at 22.3%. TTM pre-tax margin at 32.08% vs. industry average at 20.61%.
7. McDonald's (NYSE: MCD): Operates as a foodservice retailer worldwide. Market cap at $90.1B, most recent closing price at $87.08. Dividend yield at 3.16%, payout ratio at 48.32%. TTM gross margin at 44.84% vs. industry average at 36.76%. TTM operating margin at 30.76% vs. industry average at 19.3%. TTM pre-tax margin at 29.74% vs. industry average at 17.43%.
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 Danny Guttridge does not own any of the shares mentioned above.
