Outperforming Dividend Stocks

Over the last three months, the S&P 500 has fallen roughly 9.6%, yet some stocks have managed to buck the trend and move higher. We wanted to analyze these stocks by running DuPont analysis on their sources of profitability, as measured by return on equity. Analyzing the sources of returns for a company, we can focus on companies with the following characteristics:

Increasing ROE along with, Decreasing leverage, i.e. decreasing Asset/Equity ratio and Improving asset use efficiency (i.e. increasing Sales/Assets ratio) and improving net profit margin (i.e. increasing Net Income/Sales ratio). Companies passing all requirements are thus experiencing increasing profits due to operations and not to increased use of leverage.

Source: Seeking Alpha

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