20 Dividend Stocks With Strong Sources Of Profitability
Published Jan 23, 2012 on Seeking Alpha

Looking for ways to dip deeper into a company's profitability? Here are some ideas you may find interesting. DuPont analyzes return on equity (ROE, or net income/equity) profitability by breaking ROE up into three components: ROE = (Net Profit/Equity) = (Net profit/Sales)*(Sales/Assets)*(Assets/Equity) = (Net Profit margin)*(Asset turnover)*(Leverage ratio) It therefore focuses on companies with the following positive characteristics: Increasing ROE along with, • Decreasing leverage, i.e. decreasing Asset/Equity ratio • Improving asset use efficiency (i.e. increasing Sales/Assets ratio) and improving net profit margin (i.e. increasing Net Income/Sales ratio) Companies with all of these characteristics are experiencing increasing profits due to operations and not to increased use of financial leverage. We ran DuPont analysis on stocks paying dividend yields above 2% and sustainable payout ratios below 50%. ‪Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six stocks mentioned below. Analyst... Read more