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4/08/2013

7 Dividend Aristocrats With The Highest Payout Potential

Dividend Aristocrats with low pay-out ratios and debt to equity ratios originally published at "long-term-investments.blogspot.com". I love dividend growth and high growth rates too. The higher the dividend payments grow the faster my passive income grows too and improves my living standard.

Two factors with significant influence to the matter are the payout ratio well as the debt to equity ratio. If both ratios a low enough, then it signals that there is still potential to hike the future dividend by a higher rate.

Today I like to screen one of the best dividend growth categories, the Dividend Aristocrats, by stocks with the highest payout potential. I selected those stocks from the index with an earnings payout ratio of less than 30 percent as well as a debt to equity ratio lower than 0.5.

Seven great dividend growth stocks fulfilled these criteria of which six have a current buy or better rating.

Here are my favorite stocks:
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Cardinal Health (NYSE:CAH) has a market capitalization of $14.58 billion. The company employs 32,500 people, generates revenue of $107.552 billion and has a net income of $1.070 billion. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $2.112 billion. The EBITDA margin is 1.96 percent (the operating margin is 1.67 percent and the net profit margin 0.99 percent).


Financial Analysis: The total debt represents 11.93 percent of the company’s assets and the total debt in relation to the equity amounts to 46.35 percent. Due to the financial situation, a return on equity of 17.70 percent was realized. Twelve trailing months earnings per share reached a value of $3.30. Last fiscal year, the company paid $0.86 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 12.95, the P/S ratio is 0.14 and the P/B ratio is finally 2.35. The dividend yield amounts to 2.57 percent and the beta ratio has a value of 0.77.



Illinois Tool Works (NYSE:ITW) has a market capitalization of $28.17 billion. The company employs 60,000 people, generates revenue of $17.924 billion and has a net income of $2.495 billion. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $3.460 billion. The EBITDA margin is 19.30 percent (the operating margin is 15.88 percent and the net profit margin 13.92 percent).

Financial Analysis: The total debt represents 26.14 percent of the company’s assets and the total debt in relation to the equity amounts to 47.80 percent. Due to the financial situation, a return on equity of 24.25 percent was realized. Twelve trailing months earnings per share reached a value of $5.30. Last fiscal year, the company paid $1.48 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 11.68, the P/S ratio is 1.56 and the P/B ratio is finally 2.67. The dividend yield amounts to 2.46 percent and the beta ratio has a value of 1.14.



Sigma-Aldrich (NASDAQ:SIAL) has a market capitalization of $9.11 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 $3.77. 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 20.13, the P/S ratio is 3.48 and the P/B ratio is finally 3.58. The dividend yield amounts to 1.13 percent and the beta ratio has a value of 0.94.


Take a closer look at the full list of Dividend Aristocrats with highest payout potential. The average P/E ratio amounts to 12.36 and forward P/E ratio is 11.73. The dividend yield has a value of 2.37 percent. Price to book ratio is 2.21 and price to sales ratio 1.37. The operating margin amounts to 15.70 percent and the beta ratio is 0.92. Stocks from the list have an average debt to equity ratio of 0.26.

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


7 Dividend Aristocrats With The Highest Payout Potential (Click to enlarge)

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Related stock ticker symbols:
CVX, AFL, XOM, CAH, ITW, CB, SIAL

Selected Articles:


*I am long SIAL, ITW. 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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