Investors usually look for two things when they invest. First, they want the company to earn money. Second, they want the earnings to be distributed to them. A stock which has positive net income and pays dividends, is not difficult to find. However, 10 years of profitability and increased dividends are a rarity in any markets. For stocks with long terms track records like this, a decent business outlook and reasonable valuations will be sufficient reasons to take a position.
I screened for stocks using the following criteria:
1. Ten years of positive net income.
2. Ten years of increasing dividends.
3. Dividend yield greater than 3%.
4. Net cash financial position with gross debt-to-equity ratios less than 30%.
The following stocks passed the test:
Arrow Financial Corporation (AROW, Financial) is a bank holding company organized in 1983 by Glens Falls National Bank and Trust Co. which was founded in 1851. The company, through its subsidiaries, Glens Falls National Bank and Trust Co. and Saratoga National Bank and Trust Co., serves eastern New York with 35 offices and offers electronic banking through internet banking, automated teller machines and point-of-sale terminals. As full service commercial banks, the company’s subsidiaries provide a broad range of financial products, including trust services, money market and deposit accounts and mortgage, consumer and commercial loans. AROW trades at 7.1x trailing twelve months EV/EBITDA with 4.0% dividend yield.
Paychex, Inc. (PAYX, Financial) was founded in 1971 by B. Thomas Golisano. It is a leading provider of payroll, human resource, and benefits outsourcing solutions for small to medium-sized businesses. The company offers comprehensive payroll services, including payroll processing, payroll tax administration, and employee pay services. Human resource services include 401(k) plan record keeping, section 125 plans, a professional employer organization, time and attendance solutions, and other administrative services for business. A variety of business insurance products are made available through Paychex Insurance Agency Inc. PAYX trades at 11.8x trailing twelve months EV/EBITDA with a 3.9% dividend yield.
Washington Trust Bancorp (WASH, Financial) is the parent of The Washington Trust Company, a state-chartered bank headquartered in Westerly, RI. Founded in 1800, Washington Trust is the oldest community bank in the nation and is the largest independent bank headquartered in Rhode Island. Washington Trust offers a full range of financial services, including commercial banking, small business banking, personal banking, and wealth management and trust services through its offices located in Rhode Island, southeastern Connecticut and eastern Massachusetts. PAYX trades at 7.2x trailing twelve months EV/EBITDA with a 3.5% dividend yield.
NTT DOCOMO Inc. (DCM, Financial) is Japan's premier provider of leading-edge mobile voice, data and multimedia services. The company serves over 60 million mobile customers in Japan via advanced wireless networks, including a nationwide 3G network and one of the world's first commercial LTE networks. Leveraging its unique capabilities as a mobile operator, DOCOMO is a leading developer of cutting-edge technologies for NFC mobile payments, mobile GPS, mobile TV, intuitive mobile assistance, environmental monitoring, smart grids and much more. Overseas, the company provides technical and operational expertise to eight mobile operators and other partner companies. DCM trades at 3.0x trailing twelve months EV/EBITDA with a 4.9% dividend yield.
Johnson & Johnson (JNJ, Financial) was founded in 1886 and listed on NYSE in 1944. It is engaged in the research and development, manufacture and sale of a range of products in the healthcare field. It operates in three segments: consumer, pharmaceutical, and medical devices and diagnostics. JNJ achieved 29 consecutive years of adjusted earnings increases; and 50 consecutive years of dividend increases. JNJ trades at 12.7x trailing twelve months EV/EBITDA with a 3.2 % dividend yield.
Met-Pro Corp.(MPR, Financial) is a leading niche-oriented global provider of product recovery, pollution control, fluid handling and filtration solutions. The company’s diverse and synergistic solutions and products address the world’s growing need for clean air and water, reduced energy consumption and improved operating efficiencies. Through its global sales organization, internationally recognized brands, and operations in North America, South America, Europe and the People's Republic of China, Met-Pro’s solutions, products and systems are sold to a well-diversified cross-section of customers and markets around the world. MPR trades at 8.1x trailing twelve months EV/EBITDA with a 3.0 % dividend yield.
Disclosure
The author does not have a position in any of the stocks mentioned.
I screened for stocks using the following criteria:
1. Ten years of positive net income.
2. Ten years of increasing dividends.
3. Dividend yield greater than 3%.
4. Net cash financial position with gross debt-to-equity ratios less than 30%.
The following stocks passed the test:
Arrow Financial Corporation (AROW, Financial) is a bank holding company organized in 1983 by Glens Falls National Bank and Trust Co. which was founded in 1851. The company, through its subsidiaries, Glens Falls National Bank and Trust Co. and Saratoga National Bank and Trust Co., serves eastern New York with 35 offices and offers electronic banking through internet banking, automated teller machines and point-of-sale terminals. As full service commercial banks, the company’s subsidiaries provide a broad range of financial products, including trust services, money market and deposit accounts and mortgage, consumer and commercial loans. AROW trades at 7.1x trailing twelve months EV/EBITDA with 4.0% dividend yield.
Paychex, Inc. (PAYX, Financial) was founded in 1971 by B. Thomas Golisano. It is a leading provider of payroll, human resource, and benefits outsourcing solutions for small to medium-sized businesses. The company offers comprehensive payroll services, including payroll processing, payroll tax administration, and employee pay services. Human resource services include 401(k) plan record keeping, section 125 plans, a professional employer organization, time and attendance solutions, and other administrative services for business. A variety of business insurance products are made available through Paychex Insurance Agency Inc. PAYX trades at 11.8x trailing twelve months EV/EBITDA with a 3.9% dividend yield.
Washington Trust Bancorp (WASH, Financial) is the parent of The Washington Trust Company, a state-chartered bank headquartered in Westerly, RI. Founded in 1800, Washington Trust is the oldest community bank in the nation and is the largest independent bank headquartered in Rhode Island. Washington Trust offers a full range of financial services, including commercial banking, small business banking, personal banking, and wealth management and trust services through its offices located in Rhode Island, southeastern Connecticut and eastern Massachusetts. PAYX trades at 7.2x trailing twelve months EV/EBITDA with a 3.5% dividend yield.
NTT DOCOMO Inc. (DCM, Financial) is Japan's premier provider of leading-edge mobile voice, data and multimedia services. The company serves over 60 million mobile customers in Japan via advanced wireless networks, including a nationwide 3G network and one of the world's first commercial LTE networks. Leveraging its unique capabilities as a mobile operator, DOCOMO is a leading developer of cutting-edge technologies for NFC mobile payments, mobile GPS, mobile TV, intuitive mobile assistance, environmental monitoring, smart grids and much more. Overseas, the company provides technical and operational expertise to eight mobile operators and other partner companies. DCM trades at 3.0x trailing twelve months EV/EBITDA with a 4.9% dividend yield.
Johnson & Johnson (JNJ, Financial) was founded in 1886 and listed on NYSE in 1944. It is engaged in the research and development, manufacture and sale of a range of products in the healthcare field. It operates in three segments: consumer, pharmaceutical, and medical devices and diagnostics. JNJ achieved 29 consecutive years of adjusted earnings increases; and 50 consecutive years of dividend increases. JNJ trades at 12.7x trailing twelve months EV/EBITDA with a 3.2 % dividend yield.
Met-Pro Corp.(MPR, Financial) is a leading niche-oriented global provider of product recovery, pollution control, fluid handling and filtration solutions. The company’s diverse and synergistic solutions and products address the world’s growing need for clean air and water, reduced energy consumption and improved operating efficiencies. Through its global sales organization, internationally recognized brands, and operations in North America, South America, Europe and the People's Republic of China, Met-Pro’s solutions, products and systems are sold to a well-diversified cross-section of customers and markets around the world. MPR trades at 8.1x trailing twelve months EV/EBITDA with a 3.0 % dividend yield.
Disclosure
The author does not have a position in any of the stocks mentioned.
