The Zacks Analyst Blog Highlights: Heidrick & Struggles International, D.R. Horton, M.D.C., EnPro Industries and Steel Dynamics

For Immediate Release

Chicago, IL – April 29, 2020 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Heidrick & Struggles International Inc. HSII, D.R. Horton, Inc. DHI, M.D.C. Holdings Inc. MDC, EnPro Industries NPO and Steel Dynamics, Inc. STLD.

Here are highlights from Tuesday’s Analyst Blog:

Fearing Cuts to Current Income? These 5 Dividend Stocks Look Safe

Coronavirus-induced economic mayhem has suddenly ruined companies’ favorite ways of shareholder value maximization. There have been rampant cuts in share repurchases, one of the popular tools to have charged up Wall Street time and again for all these years.

Even promised dividends have not been safe lately. Liquidity crisis at corporations calls for prudent cash management and has led to such a step.

Energy companies are known for paying out high dividends. In the ongoing oil market rout, maintaining huge dividend payouts is a tall order. Apart from energy companies, the REIT and retail sectors have also taken the dividend cut route.

March 2020 Dividend Announcements Turn Negative, April Treads Same Path

Since share repurchases are seen as more discretionary than dividends, the first blow was dealt there. But dividends that are safer in nature are also not seeing a smooth stretch. The winning trend of huge dividend payments started to falter from March itself.

Per S&P Dow Jones Indices, March 2020 dividend announcements were negative. There were 13 cuts, with 10 being suspensions, making for a total forward impact of $13.9 billion. More cuts are likely. For U.S. common issues, the net-indicated dividend change was negative $5.5 billion. Last time it turned negative was in second-quarter 2009 (negative $4.9 billion), when the previous record low was also seen (negative $43.8 billion).

As of Apr 24, nine S&P 500 companies had adjourned their April dividends and about half a dozen other companies announced cuts. Those with a still-existent dividend policy may record a sturdy yield. But one should not fall for the trap unless one is checking the company and sector’s fundamentals in the incumbent stressful business scenario.

How to Pick the Hidden Gems?

In order to pick some safer options, below we highlight a few dividend stocks with the below-mentioned criteria.

These stocks have five-year historical dividend growth at least 1%, long-term growth forecast more than 5%, 5-year historical EPS growth at least 20%, 5-year historical revenue growth at least 5%, debt-equity ratio less than one, and a cash ratio greater than 1x.

Note that upbeat long-term growth prospects ensure dividend safety of a stock. Moreover, lower debt and greater liquidity are added strengths that should help companies sail through this tough economic time and maintain dividend payouts.

Let’s take a look at the picks. These companies have a Zacks Rank #3 (Hold) and offer benchmark-beating yields.

Heidrick & Struggles International Inc.

It serves the executive talent and leadership needs of the world's top organizations.

5-Year Historical Dividend Growth: 3.28%

Long-term Growth Consensus Estimate: 10.00%

5-Year Historical EPS Growth: 38.41%

5-Year Historical Sales Growth: 8.88%

Debt-Equity Ratio: 0.26x

Cash Ratio: 1.10x

Dividend Yield: 2.55%

D.R. Horton, Inc.

It is one of the leading national homebuilders, primarily engaged in the construction and sale of single-family houses both in the entry-level and move-up markets.

5-Year Historical Dividend Growth: 28.73%

Long-term Growth Consensus Estimate: 9.98%

5-Year Historical EPS Growth: 24.04%

5-Year Historical Sales Growth: 14.38%

Debt-Equity Ratio: 0.36x

Cash Ratio: 1.35x

Dividend Yield: 1.71%

M.D.C. Holdings Inc.

It engages in homebuilding and financial service businesses in the United States.

5-Year Historical Dividend Growth: 11.06%

Long-term Growth Consensus Estimate: 6.64%

5-Year Historical EPS Growth: 35.58%

5-Year Historical Sales Growth: 14.63%

Debt-Equity Ratio: 0.64x

Cash Ratio: 1.99x

Dividend Yield: 5.39%

EnPro Industries

It is a diversified manufacturer of proprietary engineered products used in critical applications.

5-Year Historical Dividend Growth: 5.93%

Long-term Growth Consensus Estimate: 15.20%

5-Year Historical EPS Growth: 25.04%

5-Year Historical Sales Growth: 6.21%

Debt-Equity Ratio: 0.70x

Cash Ratio: 1.28x

Dividend Yield: 2.54%

Steel Dynamics, Inc.

It is among the leading steel producers and metal recyclers in the United States.

5-Year Historical Dividend Growth: 15.64%

Long-term Growth Consensus Estimate: 12.00%

5-Year Historical EPS Growth: 45.55%

5-Year Historical Sales Growth: 9.60%

Debt-Equity Ratio: 0.67x

Cash Ratio: 1.71x

Dividend Yield: 4.25%

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Steel Dynamics, Inc. (STLD) : Free Stock Analysis Report
 
EnPro Industries (NPO) : Free Stock Analysis Report
 
Heidrick & Struggles International, Inc. (HSII) : Free Stock Analysis Report
 
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M.D.C. Holdings, Inc. (MDC) : Free Stock Analysis Report
 
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