When you invest in dividend stocks, you need to also look at internal return rates. The most popular ratios are return on equity and return on investment.
A company that has a big return on equity and low debt ratios indicates that the high ratio was not created by taking debt and boosting earnings. This is great for us investors; we own a piece of a high income-generating company.
If the company can scale up its sales by taking more debt and issuing new shares, our return could boost. That's also one reason why I look at low debt with good return on equity ratios. If the company also does stock buybacks and hiked dividends, great!
My experience is that no company fulfills each of these points. It's no shame when a company suffers and does not meet every optimum value. Each business is volatile and risky.
I've tried to create a screen, based on some return figures. Below are my eight favorites. At the end of this article, you can find a list with 16 additional stocks.
These are my main criteria:
- Midcap+
- Forward P/E under 15
- Operating Margin over 15 percent
- Debt-to-equity under 1
- Return on Equity 15%+
- Payout half of profits
- Mid-digit Earnings growth forecasts
8 high return creating stocks, low debt and price ratios included are...
- ConocoPhillips (COP, Financial) has a market capitalization of $98.33 billion. The company employs 19,200 people, generates revenue of $56,185 million and has a net income of $8,037 million. ConocoPhillips' earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $20,761 million. The EBITDA margin is 36.95 percent (the operating margin is 22.78 percent and the net profit margin 14.30 percent).
Financial Analysis: The total debt represents 18.35 percent of ConocoPhillips' assets and the total debt in relation to the equity amounts to 41.59 percent. Due to the financial situation, a return on equity of 15.94 percent was realized by ConocoPhillips. Twelve trailing months earnings per share reached a value of $6.49. Last fiscal year, ConocoPhillips paid $2.70 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 12.41, the P/S ratio is 1.75 and the P/B ratio is finally 1.88. The dividend yield amounts to 3.65 percent and the beta ratio has a value of 1.02.
Check out #2 - #8 here: 8 High-Return Creating Stocks...
