Active investors should try to evaluate all stocks to find the best ones for their portfolios. Unforunately, media attention is focused on large cap stocks because they are well known and on small caps because of the size effect-- the observed phenomenon that stocks with smaller market capitalizations have reaped higher returns than stocks with larger market capitalizations. This media coverage leaves mid caps high and dry.
Rather than suffer an attentional bias at the hands of the media, the following screen was performed to find attractive, dividend paying mid cap stocks:
Dividend yield. Each stock pays a dividend yield of at least 2%, which is in excess of the 10-year treasury bond and the dividend yield of the S&P 500.
Long term historical dividend growth. Each of these stocks had over a 5% average annual increase in dividend payments over the past 10 years. (Oddly, historical dividend growth is seldom discussed.) Thus, each of these dividend stocks has a long-term trend of dividend growth, which is better than the static interest payments on fixed-rate treasuries.
Long term historical return on equity. Each of these stocks has positive average ROE over the past 10 years. This criterion filters for stocks which were able to endure and prosper over the economic downturn. Furthermore, this long term history filters out firms that are experiencing a short burst of good fortune.
Price multiples, dividend histories, and return on equity histories are provided below:
Bemis Company, Inc. (BMS) recently traded at $31.55 per share. At this price level, the stock has a 3.0% dividend yield. For 10 out of the past 10 fiscal years, a share of BMS paid a total of $7.24 in dividends. Of these dividend payments, a total of $4.30 were paid in the last five years.
BMS shareholders have seen a 4.9% change in share price over the past year. At present, shares of this mid cap stock trade at a price-to-book ratio of 2.0, a price-to-earnings multiple of 18.6, and a price-to-sales multiple of 0.6 (trailing twelve months). Over the past decade shareholders savored a 13.2% average annual return on equity.
Greif, Inc. (GEF) recently traded at $48.56 per share. At this price level, the stock has a 3.5% dividend yield. For 10 out of the past 10 fiscal years, a share of GEF paid a total of $8.90 in dividends. Of these dividend payments, a total of $7.04 were paid in the last five years.
GEF shareholders have seen a 6.6% change in share price over the past year. At present, shares of this mid cap stock trade at a price-to-book ratio of 1.9, a price-to-earnings multiple of 13.1, and a price-to-sales multiple of 0.5 (trailing twelve months). Over the past decade shareholders savored a 13.1% average annual return on equity.
Hasbro Inc. (HAS) recently traded at $34.46 per share. At this price level, the stock has a 3.5% dividend yield. For 10 out of the past 10 fiscal years, a share of HAS paid a total of $4.46 in dividends. Of these dividend payments, a total of $3.56 were paid in the last five years.
HAS shareholders have seen a 8.1% change in share price over the past year. At present, shares of this mid cap stock trade at a price-to-book ratio of 3.2, a price-to-earnings multiple of 11.8, and a price-to-sales multiple of 1.1 (trailing twelve months). Over the past decade shareholders savored a 13.2% average annual return on equity.
McCormick & Co. Inc. (MKC) recently traded at $50.62 per share. At this price level, the stock has a 2.5% dividend yield. For 10 out of the past 10 fiscal years, a share of MKC paid a total of $6.88 in dividends. Of these dividend payments, a total of $4.40 were paid in the last five years.
MKC shareholders have seen a 0.4% change in share price over the past year. At present, shares of this mid cap stock trade at a price-to-book ratio of 4.2, a price-to-earnings multiple of 18.2, and a price-to-sales multiple of 1.8 (trailing twelve months). Over the past decade shareholders savored a 27.3% average annual return on equity.
Rayonier Inc. (RYN) recently traded at $45.4 per share. At this price level, the stock has a 3.5% dividend yield. For 10 out of the past 10 fiscal years, a share of RYN paid a total of $9.83 in dividends. Of these dividend payments, a total of $6.56 were paid in the last five years.
RYN shareholders have seen a 1.7% change in share price over the past year. At present, shares of this mid cap stock trade at a price-to-book ratio of 4.2, a price-to-earnings multiple of 20.6, and a price-to-sales multiple of 3.7 (trailing twelve months). Over the past decade shareholders savored a 16.6% average annual return on equity.
Each of these firms has a track-record of providing dividend income to shareholders and growing shareholder wealth through positive equity returns. HAS and GEF currently trade at attractive valuations multiples, making them interesting candidates for an income portfolio. Investors should also keep an eye on RYN, MKC, and BMS, and consider them in the future if they trade at lower price multiples.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Disclaimer: This article was written to provide investor information and education, and should not be construed as a guarantee or investment advice. I have no idea what your individual risk, time-horizon, and tax circumstances are: please seek the personal advice of a financial planner. This article uses third-party data and may contain approximations and errors. Please check estimates and data for yourself before investing. To repeat, this research does NOT constitute a guarantee.
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