Value Ideas: 9 High Dividend Yield Stocks With Encouraging ROE Trends
Published Apr 12, 2011 on Seeking Alpha

How do you know when a company’s dividend is sustainable? You can always look at historical dividend trends for the company, but another way to is to study the health of the company’s profitability – through DuPont analysis of the company’s return on equity.With that in mind, we ran a DuPont analysis of the return on equity (ROE) of all U.S. companies with dividend yields between 4-7%. From this analysis, we found 9 companies that passed all requirements for positive results. Click to expand image:We broke the ROE equation into three parts:

 ROE = (Net Profit/Equity) = (Net profit/Sales)*(Sales/Assets)*(Assets/Equity) = (Net Profit margin)*(Asset turnover)*(Leverage ratio) 

All of the stocks mentioned below have seen rising ROE values for the recent quarter, year-over-year. Then we wanted to analyze the sources of these returns, so we narrowed down the original universe to only focus on companies with the following characteristics: Decreasing.... Read more