For Dividend Security Check Out These 10 Profitable Champions
If you like dividend stocks, you probably want to make sure they can maintain, or even grow, their dividend. If history is any indicator, Dividend champions can likely offer the stability you're looking for. [Related list: 20 Highest Yield Dividend Champions]
"Dividend Champion" is a term coined by The DRiP Investing Resource Center referring to U.S Companies that have offered AND increased their dividend for a minimum of 25 straight years. Just over 100 make the cut.
Because dividend payments are taken from a company's profits, it's important to make sure the profit margins of "champions" are strong. So to narrow down the list to the names below we wanted to pick out stocks with impressive profitability metrics. In particular, to analyze their profitability, we compare the companies' trailing twelve month (TTM) gross, operating, and profit margins with their industry averages to find those more profitable than their peers. Here's a breakdown:
TTM Gross margin: This metric that tells us the percentage of a company's revenue is left after paying all production expenses. Costs include overhead, payroll and taxation. ((revenues – cost of goods sold) / Revenue ) *100 = Gross margin %
TTM Operating margin: This tells us the percentage remaining after all operating expenses are paid. Operating expenses include: supplies, repairs, research and development, and depreciation. (Operating Income / Net Operating Revenue) *100 = Operating Margin %
TTM Pretax margin: A company's earnings before taxes. This incorporates all of the expenses associated with business excluding taxes. It can help to determine the overall operating efficiency of the firm. The higher the pretax margin, the more profitable the company. (Net profit before taxes / net sales) *100 = Pretax Margin
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Below is a list of stocks that we compiled using the criteria above.