Investors who are looking for dividend stocks may have some attractive options in the services industry, where a number of mostly shipping and transportation companies are weathering uncertain global economic conditions and posting strong sales figures, have plenty of money to keep operations going, and are managing to give back significantly to shareholders.
The following six small and mid-cap companies have been selected based on the following criteria:
-A high price-to-sales ratio (above 2). A high P/S ratio is a requirement for services companies, for whom sales are the main source of revenue.
-A healthy dividend yield (2 percent or more). If a company’s return rate is attractive, this can be an indication of a stability and strength.
-A high operating margin (over 25 percent). A strong operating margin can be an important metric for services companies, who must be able to pay their fixed costs without difficulty.
-Performance year-to-date. Each of these stocks can be said to be having a good year in terms of performance, as they have all advanced over 20 percent.
Union Pacific Corporation (UNP) – The well-known railroad shipping company has a market cap of $73.48 billion. Union Pacific has a price-to-sales ratio of 3.44, and is returning at a rate of 2 percent. With a 32.9 percent operating margin, the stock is up nearly 27 percent year-to-date, currently trading at $158.
Paychex Inc. (PAYX) – The Rochester, New York-based payroll processing company has a market cap of$14.34 billion. With a healthy price-to-sales ratio of 6.16, Paychex returns at a rate of 3.56 percent, and has a 39 percent operating margin. Shares are trading for $39.30, up 27.6 percent in 2013.
Grupo Aeroportuario Centro Norte, S.A. de C.V. (OMAB) – The popular Mexican airline has a market cap of $1.39 billion, a price-to-sales ratio of 5.73, and an operating margin of nearly 40 percent. Shares are currently trading for $28, up 33 percent year-to-date, and are returning at a rate of 3.4 percent.
Costamare Inc. (CMRE) – The Greek container-ship company has a market cap of $1.26 billion. Costamare has a price-to-sales ratio of 3.3, a 27.4 percent operating margin, and is returning at a rate of 6.4 percent. Shares are currently trading for $16.90, up over 27 percent year-to-date.
Navios Maritime Partners L.P. (NMM) – The Greek operator of dry cargo vessels has a market cap of $947.3 million. With a price-to-sales ratio of 4.56, the company has an impressive return rate of 12.6 percent, and an equally impressive operating margin of 52.6 percent. Shares are currently trading for $14.08, up 25.6 percent year-to-date.
Capital Product Partners L.P. (CPLP) – The Greek shipping company specializes in oil and chemicals transportation. With a market cap of $617.5 million, the company has a price-to-sales ratio of 3.9, an operating margin of 28.5 percent, and is returning at an annual rate of 10.3 percent. Shares are currently trading for $9, up nearly 49 percent year-to-date.
[Image: a shipping vessel in the San-Francisco Bay, courtesy of Wikimedia Commons]