3 Picks from Business Software and Services Industry with Profitable Growth

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Oct 07, 2011
Dividend stocks should be a part of everybody’s long-term stock portfolio. Better you have dividend stocks from growing industries. Let’s take a look into business software and services industry, an industry that I had analyzed by the best yielding dividend stocks.


The industry has a total market capitalization of $113 billion. The average P/E ratio is 34.3, P/B ratio 11.2, and the average dividend yield amounts to 2.5%. More interesting are the margins and the past growth from the industry. The average company from the business software and services industry has a net profit margin of 9.9%.


I screened stocks from the industry with a positive dividend yield and a market capitalization of more than $300 million. In addition, the stock should be a growth pick with five-year sales growth of more than 10% and profitable growth. This is the reason why five-year earnings per share growth beats five-year sales growth. Below are my favorite stocks due to best growth:


1. Jack Henry & Associates (JKHY) has a market capitalization of $2.6 billion, generates revenues in an amount of $966.9 million and a net income of $137.5 million. It follows P/E ratio is 18.8 and forward P/E ratio 15.7. P/S ratio is 2.7 and P/B ratio 2.9. Dividend Yield: 1.4%. The 5-year sales growth amounted to 10.35% and earnings per share growth 10.36%.


2. Ebix (EBIX, Financial) has a market capitalization of $557.3 million, generates revenues in an amount of $150.7 million and a net income of $70.1 million. It follows P/E ratio is 8.6 and forward P/E ratio 9.2. P/S ratio is 3.7 and P/B ratio 1.7. Dividend Yield: 1.1%. The 5-year sales growth amounted to 40.55% and earnings per share growth 57.95%.


3. Pegasystems (PEGA, Financial) has a market capitalization of $1.2 billion, generates revenues in an amount of $385.2 million and a net income of $5.5 million. It follows P/E ratio is 221.0 and forward P/E ratio 21.1. P/S ratio is 3.0 and P/B ratio 5.6. Dividend Yield: 0.4%. The 5-year sales growth amounted to 27.42% and earnings per share growth 42.02%.


Take a closer look at the full table of the best yielding business software and services stocks. The average P/E ratio (P/E ratio) amounts to 15.1 while the forward P/E ratio is 14.7. The dividend yield has a value of 3.5%. Price to book ratio is 3.3 and price to sales ratio 2.5. The operating margin amounts to 17.5%.