The following dividend-paying companies offer attractive returns on equity and are expected to have strong earnings per share growth over the next five years. Their stocks are also trading within shouting distance of their 52-week highs.
Limited Brands LTD: This Columbus, Ohio-based apparel and personal care products retailer said recently that same-store sales jumped 11% in August. An S&P 500 component, it has a $12.2 billion market cap and a dividend yield of 1.9%. Its long-term EPS growth forecast is 16.6% and the return on equity is 67.5%. Shares are trading more than 24% higher than six months ago but have pulled back from a recent 52-week high. The stock has outperformed competitors Abercrombie & Fitch ANF and the Gap GPS over the past six months.
MasterCard MA: Shares have had a five-year average annual return of 39%. During the second quarter, Warren Buffett doubled his stake in this card processor. The S&P 500 component has a market cap of $41.9 billion and a return on equity of 43.8%. Its long-term EPS growth forecast is 18.5% and the dividend yield is 0.6%. Shares are up more than 48% since the beginning of the year, despite pulling back more than 3% in the past week. The stock has outperformed American Express AXP and Visa V over the past six months.
McDonald's MCD: August marked the 100th consecutive month of positive global same-store sales growth for the world's largest fast-food franchise, which also recently boosted its dividend 12%. The iconic company has a market cap of $90.8 billion and its dividend yield is 2.8%. Its return on equity is 37.4%. The share price is almost 22% higher than six months ago but down more than 2% from the 52-week high. Year to date, the stock has outperformed rivals Wendy's WEN and Yum! Brands YUM, as well as the broader markets.
Nu Skin Enterprises NUS: Strong growth in emerging markets drove better-than-expected second-quarter earnings and prompted this purveyor of personal care products to raise its guidance for the full year. This Provo, Utah-based company has a $2.6 billion market cap, a dividend yield of 0.6% and a long-term EPS growth forecast of 13.2%. The share price is about 46% higher than six months ago, despite pulling back almost 7% in the past week. The stock has outperformed competitors Avon AVP and Revlon REV over the past six months.
Perrigo PRGO: The price target was raised by a couple of analysts yesterday following Perrigo's suggestion that dividends would increase. This Michigan-based generic pharmaceuticals and nutritional products maker has a dividend yield of 0.3% and a return on equity of 25.9%. Its market cap is $9.0 billion. The share price has risen more than 23% in the past six months and is less than 3% below the recent 52-week high. Year to date, the stock has outperformed competitors such as Dr. Reddy's Laboratories RDY, as well as the broader markets.
Quality Systems QSII: It posted record quarterly results in July, which were followed by announcements in August of an acquisition, as well as an agreement with Dell DELL. Irvine, Calif.-based Quality Systems develops and markets health care information systems, and it has a market cap of $2.9 billion. Its dividend yield is 1.4% and the long-term EPS growth forecast is 20.1%. The share price is up about 41% year to date. The stock has outperformed competitor Allscripts Healthcare Solutions MDRX over the past six months.
VF Corporation VFC: Seven consecutive positive earnings surprises have prompted analysts to significantly increase their earnings estimates over the past several months. This maker of Wrangler jeans and Vans shoes, as well as other apparel, has a $13.9 billion market cap and a dividend yield of 1.9%. Its long-term EPS growth forecast is 12.0% and the return on equity is 15.9%. This stock has been marching higher for nearly two years, and shares are now trading about 29% higher than six months ago. The stock has outperformed the Gap since the beginning of the year.
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Posted In: Long IdeasShort IdeasDividendsTrading Ideasabercrombie & fitchAllscripts Healthcare SolutionsAmerican ExpressApparel RetailAvonConsumer DiscretionaryData Processing & Outsourced ServicesDELLDr. Reddy’s LaboratoriesInformation TechnologyLIMITED BRANDSmastercardMcDonald’snu skinPerrigoquality systemsRestaurantsRevlonThe GapVF CorporationvisaWendy’sYUM! Brands
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