2/08/2013

20 Dividend Stocks From The Services Sector With Highest Expected Growth

The best growing services dividend stocks originally published at "long-term-investments.blogspot.com". The services sector is still an attractive investment field. I also have invested some money into stocks from the sector. I talk about Wal-Mart and Walt Disney.

The whole sector has 844 companies listed of which 350 pay dividends. The total market capitalization of all services stocks combined is USD 58.896 trillion. An average stock from the sector has a P/E ratio of 24.94 and yields at 1.66 percent.


I personally don’t like services stocks because of the low margin business. I love stocks with big margins and strong competitive advantages. High margins also show that the company owns and distributes products that are unique. Apple has really huge margins because they have created a unique product that people love and they are willing to pay nearly every price for it.


It sounds a little bit easy but the Apple story is much more complicated and is also a product of excellent brand marketing. I personally will never buy Apple shares because of the fast product cycle. If you lose your consumer focus, you are off the battle.


However, out there are some services stocks with a strong consumer loyalty and huge growth potential which is still attractive for many investors. Think about the payment provider MasterCard and Visa.


Today I want to highlight some of the best yielding services dividend stocks with a double-digit growth, expected for the next five years.

There are nearly 200 companies - wow, the services sector is full of growth. So, I focus on large capitalized stocks with the highest yield. Below is a small list of the 20 best results. Railroads are my favorites due to the expected shale gas boom and the cheap valuation.


Here are my favorite stocks:
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Norfolk Southern (NYSE:NSC) has a market capitalization of $21.60 billion. The company employs 30,329 people, generates revenue of $11.040 billion and has a net income of $1.749 billion. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $4.040 billion. The EBITDA margin is 36.59 percent (the operating margin is 28.30 percent and the net profit margin 15.84 percent).

Financial Analysis: The total debt represents 28.61 percent of the company’s assets and the total debt in relation to the equity amounts to 88.95 percent. Due to the financial situation, a return on equity of 17.69 percent was realized. Twelve trailing months earnings per share reached a value of $5.36. Last fiscal year, the company paid $1.94 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 12.84, the P/S ratio is 1.98 and the P/B ratio is finally 2.22. The dividend yield amounts to 2.89 percent and the beta ratio has a value of 1.13.

”Long-Term
Long-Term Stock History Chart Of Norfolk Southern (NSC)
”Long-Term
Long-Term Dividends History of Norfolk Southern (NSC)
”Long-Term
Long-Term Dividend Yield History of Norfolk Southern (NSC)

Target Corporation (NYSE:TGT) has a market capitalization of $40.54 billion. The company employs 365,000 people, generates revenue of $69.865 billion and has a net income of $2.929 billion. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $7.453 billion. The EBITDA margin is 10.67 percent (the operating margin is 6.38 percent and the net profit margin 4.19 percent).

Financial Analysis: The total debt represents 38.73 percent of the company’s assets and the total debt in relation to the equity amounts to 114.14 percent. Due to the financial situation, a return on equity of 18.71 percent was realized. Twelve trailing months earnings per share reached a value of $4.51. Last fiscal year, the company paid $1.15 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 13.80, the P/S ratio is 0.58 and the P/B ratio is finally 2.65. The dividend yield amounts to 2.30 percent and the beta ratio has a value of 0.93.

”Long-Term
Long-Term Stock History Chart Of Target Corporation (TGT)
”Long-Term
Long-Term Dividends History of Target Corporation (TGT)
”Long-Term
Long-Term Dividend Yield History of Target Corporation (TGT)

Fidelity National Information (NYSE:FIS) has a market capitalization of $10.87 billion. The company employs 33,000 people, generates revenue of $5.745 billion and has a net income of $505.30 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $1.704 billion. The EBITDA margin is 29.66 percent (the operating margin is 18.57 percent and the net profit margin 8.79 percent).

Financial Analysis: The total debt represents 34.73 percent of the company’s assets and the total debt in relation to the equity amounts to 73.96 percent. Due to the financial situation, a return on equity of 7.65 percent was realized. Twelve trailing months earnings per share reached a value of $1.74. Last fiscal year, the company paid $0.20 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 21.35, the P/S ratio is 1.91 and the P/B ratio is finally 1.68. The dividend yield amounts to 2.14 percent and the beta ratio has a value of 0.67.

”Long-Term
Long-Term Stock History Chart Of Fidelity National Information (FIS)
”Long-Term
Long-Term Dividends History of Fidelity National Information (FIS)
”Long-Term
Long-Term Dividend Yield History of Fidelity National Information (FIS)

Yum! Brands (NYSE:YUM) has a market capitalization of $28.67 billion. The company employs 60,580 people, generates revenue of $13.633 billion and has a net income of $1.608 billion. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $2.939 billion. The EBITDA margin is 21.56 percent (the operating margin is 16.83 percent and the net profit margin 11.79 percent).

Financial Analysis: The total debt represents 32.65 percent of the company’s assets and the total debt in relation to the equity amounts to 136.58 percent. Due to the financial situation, a return on equity of 80.31 percent was realized. Twelve trailing months earnings per share reached a value of $3.37. Last fiscal year, the company paid $1.24 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 18.86, the P/S ratio is 2.09 and the P/B ratio is finally 13.18. The dividend yield amounts to 2.13 percent and the beta ratio has a value of 0.83.

”Long-Term
Long-Term Stock History Chart Of Yum! Brands (YUM)
”Long-Term
Long-Term Dividends History of Yum! Brands (YUM)
”Long-Term
Long-Term Dividend Yield History of Yum! Brands (YUM)
Take a closer look at the full list of the 20 services dividend stocks with best growth perspectives. The average P/E ratio amounts to 17.11 and forward P/E ratio is 13.29. The dividend yield has a value of 2.30 percent. Price to book ratio is 3.86 and price to sales ratio 1.54. The operating margin amounts to 14.76 percent and the beta ratio is 1.20. Stocks from the list have an average debt to equity ratio of 0.98.


Here is the full table with some fundamentals (TTM):

20 Services Stocks With Strong Growth (Click to enlarge)

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Related stock ticker symbols:
NSC, UPS, WAG, CSX, CCL, TWC, CAH, CUK, MHP, TGT, LTD, FIS, YUM, UNP, HOT, M, TWX, TYC, JWN, VIAB

Selected Articles:


*I am long WAG. I receive no compensation to write about these specific stocks, sector or theme. I don't plan to increase or decrease positions or obligations within the next 72 hours.

For the other stocks: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I receive no compensation to write about any specific stock, sector or theme.



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