11 Dividend Stocks With LBO Characteristics

With a new buyout being announced (seemingly) every day, I thought it might be worth looking into stocks that might be LBO (leveraged buy out) candidates. I started off by taking the Russell 1000 and sorting it so I only included stocks with net cash on their balance sheet. This shows an underleveraged balance sheet that private equity could exploit in a buyout. Then, I looked for stocks with 15%+ returns on invested capital (private equity loves strong returns on capital), a low multiple to allow for a deal to be reached, and a dividend yield (showing the company's confidence in future cash flows, plus paying investors to wait while for the buyout). After performing this search, I ended up with the following 11 candidates. Ticker Short Name Dvd Yld EV/TTM EBIT Op ROIC HRB H&R BLOCK INC 3.58 8.42 21.04 FL FOOT LOCKER INC 3.35 8.05 15.13 MHP MCGRAW-HILL... Read more