Small And Mid Cap Dividend Stocks With Sustainable Payouts

Do you prefer stocks that pay handsome - and reliable- dividend income? To create the list below we researched companies with a dividend yield between 2%-5%, and sustainable payout ratios below 50%. This allowed us to avoid high yield names with potentially unsustainable payouts. Dividend income investment ideas are only important if the long-term payout is predictable, and we are comfortable with the future profitability of the company. We further analyzed our list of companies for strong profitability by performing DuPont analysis. DuPont analyzes profitability by breaking up return on equity (net income/equity) into three components. If the ROE is unsatisfactory, the DuPont analysis helps target the part of the business that is underperforming. Learn more about the equation here.

Those companies that pass DuPont are seeing positive trends in the sources of their increasing profitability, which adds further weight to the idea that the names are profitable. Our final list consisted of 5 stocks: American States Water Company (AWR), Destination Maternity Corporation (DEST), Dr Pepper Snapple Group, Inc. (DPS), Kansas City Life Insurance Company (KCLI) and The Men's Warehouse (MW).

Source: Seeking Alpha

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