New Threads Only:  Add to Google Reader or Homepage
New Threads & Replies:  Add to Google Reader or Homepage
Forums are for serious investors only. GuruFocus Forum Rules.

Forum List » Income Investors' Forum
Ideas for Income Investors. High Dividend Stocks, Mutual Funds etc.
New Topic Search
Goto Thread: PreviousNext
Goto: Forum ListMessage ListNew TopicSearchLog In
My 4 Favorite Dividend Aristocrats with Highest Profitability
Posted by: Dividend (IP Logged)
Date: May 7, 2013 09:13AM

Dividend Aristocrats are some of the best dividend growth stocks with a proven dividend hike series of more than 25 years. But if you are a fundamental investor, you also look for a strong business. Margins are a good indicator for a healthy business.

The margins are important for investors. They show if a company is getting stronger or even weaker within its business area. A very high margin shows that the company has products with a big customer satisfaction and desire. Clients need those products and they pay a high price because they can’t find a better provider.
Sometimes margins are very high due to one-off effects. Basic material companies benefited from high raw commodity prices. They are in a one-off situation which can also keep up for years.

Today I look at the Dividend Aristocrats list and show you the most profitable companies, measured by the highest operating margin. The index has 54 constituents and the top 20 stocks have a margin between 16 and 45 percent. That’s well above the index average. Fourteen of the results have a current buy or better rating.

Here are my favorite stocks:

The Procter & Gamble (PG) has a market capitalization of $213.10 billion. The company employs 126,000 people, generates revenue of $83.680 billion and has a net income of $9.317 billion. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $16.496 billion. The EBITDA margin is 19.71 percent (the operating margin is 15.88 percent and the net profit margin 11.13 percent).

Financial Analysis: The total debt represents 22.52 percent of the company’s assets and the total debt in relation to the equity amounts to 46.94 percent. Due to the financial situation, a return on equity of 13.86 percent was realized. Twelve trailing months earnings per share reached a value of $3.97. Last fiscal year, the company paid $2.14 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 19.59, the P/S ratio is 2.56 and the P/B ratio is finally 3.45. The dividend yield amounts to 3.08 percent and the beta ratio has a value of 0.47.

AFLAC (AFL) has a market capitalization of $25.92 billion. The company employs 8,673 people, generates revenue of $25.364 billion and has a net income of $2.866 billion. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $8.357 billion. The EBITDA margin is 32.95 percent (the operating margin is 16.96 percent and the net profit margin 11.30 percent).

Financial Analysis: The total debt represents 3.32 percent of the company’s assets and the total debt in relation to the equity amounts to 27.24 percent. Due to the financial situation, a return on equity of 19.82 percent was realized. Twelve trailing months earnings per share reached a value of $6.33. Last fiscal year, the company paid $1.34 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 8.78, the P/S ratio is 1.02 and the P/B ratio is finally 1.62. The dividend yield amounts to 2.53 percent and the beta ratio has a value of 1.88.

Automatic Data Processing (ADP) has a market capitalization of $33.33 billion. The company employs 57,000 people, generates revenue of $10.665 billion and has a net income of $1.388 billion. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $2.343 billion. The EBITDA margin is 21.97 percent (the operating margin is 19.90 percent and the net profit margin 13.02 percent).

Financial Analysis: The total debt represents 0.05 percent of the company’s assets and the total debt in relation to the equity amounts to 0.27 percent. Due to the financial situation, a return on equity of 22.90 percent was realized. Twelve trailing months earnings per share reached a value of $2.86. Last fiscal year, the company paid $1.55 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 24.01, the P/S ratio is 3.15 and the P/B ratio is finally 5.48. The dividend yield amounts to 2.51 percent and the beta ratio has a value of 0.67.

Sigma-Aldrich (SIAL) has a market capitalization of $9.47 billion. The company employs 9,000 people, generates revenue of $2.623 billion and has a net income of $460.00 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $795.00 million. The EBITDA margin is 30.31 percent (the operating margin is 25.12 percent and the net profit margin 17.54 percent).

Financial Analysis: The total debt represents 17.88 percent of the company’s assets and the total debt in relation to the equity amounts to 26.83 percent. Due to the financial situation, a return on equity of 19.39 percent was realized. Twelve trailing months earnings per share reached a value of $3.82. Last fiscal year, the company paid $0.80 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 20.64, the P/S ratio is 3.62 and the P/B ratio is finally 3.72. The dividend yield amounts to 1.09 percent and the beta ratio has a value of 0.94.

Take a closer look at the full list of the 20 most profitable Dividend Aristocrats. The average P/E ratio amounts to 18.47 and forward P/E ratio is 15.69. The dividend yield has a value of 2.40 percent. Price to book ratio is 5.46 and price to sales ratio 3.36. The operating margin amounts to 24.03 percent and the beta ratio is 0.83. Stocks from the list have an average debt to equity ratio of 0.72.

Related stock ticker symbols:
TROW, HCP, BEN, MCD, MHP, MDT, SIAL, BCR, KO, MMM, CL, BDX, ADP, JNJ, ED, CVX, PG, AFL, ITW, CB

Selected Articles:
· 7 Dividend Aristocrats With The Highest Payout Potential
· 20 Most Recommended Dividend Aristocrats Index Stocks
· 19 Dividend Aristocrats With Over 10% EPS Forecasts
· My Best Dividend Aristocrat Growth Picks For 2013

*If you would like to receive more dividend stock ideas and the free Dividend Weekly, you should subscribe to my free e-mail list. Alternatively, you can follow me on Facebook or Twitter.

Dividend Aristocrats with highest operating margins originally published at long-term-investments.blogspot.com.


Stocks Discussed: TROW, HCP, BEN, MCD, MHP, MDT, SIAL, BCR, KO, MMM, CL, BDX, AD,
Rate this post:

Rating: 3.4/5 (5 votes)





Sorry, only registered users may post in this forum.

Please Login if you have an account or Create a Free Account if you don't
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK
Email Hide