I narrowed the field to companies whose payout ratio was below 50%. My reasoning was that these companies' dividends are relatively safe and that there is still plenty of room for increases. But at least one commenter thought that this approach unfairly eliminated some excellent companies, such as utilities, tobacco companies, and real estate investment trusts, all of which deliberately pay out more than 50% of earnings to shareholders. Investors looking for higher yield immediately would be interested in just the opposite approach, starting with companies that pay out more than 50% of earnings.
And the Winner is... ...subjective (again). All of these companies have attractive properties, but the ultimate winner will depend on what is most important to each investor. The first three companies listed have double-digit expected earnings growth next year. But MSA and LEG, along with MO, have the highest payout ratios and MO, the winner of last month's Smackdown, easily has the highest yield. The bottom four (in the listing) have the lowest P/E ratios. MSA is the only one with a market cap below $1 billion, whereas the bottom three range from $16.78 to $50.06 billion in market cap. MSA, RPM, and Sysco were all more than 10% below their 52-week high, while LEG was close at 9.5%. (KMB was just 3.3% below its 52-week high and MO was just 1.3% lower.) So, once again all six finalists are deserving of further study for possible purchase.
Source: Seeking Alpha
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