Skip to main content

What are we looking for?

Low-volatility U.S.-listed stocks, including American depositary receipts, that also offer a high-quality profile for long-term investors.

The screen

We screened our U.S. and ADR universe of stocks with the following criteria:

  • A market capitalization of $10-billion (U.S.) or above; a beta of one or less. A stock with a beta greater than one is considered more volatile than the market; less than one means less volatile;
  • A return on capital greater than 12 per cent;
  • A positive sales change over 12 months and 24 months;
  • A positive free-cash-flow-to-capital ratio. This ratio gives a sense of how well the company uses the invested capital to generate free cash flows, which could be used to stimulate growth, pay and/or increase dividends, reduce debt, etc. A positive figure is good – 5 per cent and above is excellent;
  • All companies need to pay a dividend;
  • All companies need to have raised their dividend every single year over the past four years.

More about StockPointer

StockPointer is a fundamental analysis tool based on an EVA (economic value-added) model to quickly and easily identify investment opportunities. In addition to providing detailed reports on more than 7,500 companies (Canadian stocks, U.S. stocks and ADRs), StockPointer also allows investors to create personalized filters and build custom portfolios.

What did we find?

Ranking our results by return on capital, Sky PLC, the Pan-European telecommunication company, comes up as the top performer of the group. Sky also generates the highest free-cash-flow-to-invested-capital ratio at 35 per cent, and has the highest dividend yield at 3.5 per cent. NetEase Inc., a Chinese Internet technology company, has by far the most aggressive growth profile of the group. Its 46-per-cent and 196-per-cent sales growth over 12 and 24 months, respectively, is unmatched and the dividend growth rates are also through the roof. Its free cash flows are high and increasing, and the dividend payout is only of 24 per cent (not shown in table), which should allow the company to continue to raise the dividend in the coming quarters. For the record, the company has no long-term debt and has not issued new shares – which would dilute holdings of current shareholders – in any of the past five years. Nike Inc., third on the list, announced the start of a distribution partnership with Amazon in July. Nike's stock gained about 11 per cent when the deal was announced but has since then come back to its previous levels, around $53.

Investors are advised to do additional research prior to investing in any of the companies mentioned.

Jean-Didier Lapointe is a financial analyst at Inovestor Inc.

Select U.S.-listed dividend stocks

CompanyTickerMarket Cap. ($Mil U.S.)R/CFCF / CapitalBeta12M Sales Chg.24M Sales Chg.Div. Yield1Yr Div. Growth2Yr Div. Growth (Annualized) 3Yr Div. Growth (Annualized) 4Yr Div. Growth (Annualized)
Sky PLC Sponsored ADRSKYAY-OTC 21,580 33.9%35%0.5410%16%3.49%7.46%12.60%11.49%14.38%
Netease Inc. Sponsored ADRNTES-Q 35,880 28.9%24%0.946%196%1.65%54.24%56.56%28.14%38.83%
Nike Inc. NKE-N 87,390 23.2%13%0.476%12%1.35%12.90%13.86%14.61%18.71%
Skyworks Solutions Inc.SWKS-Q 18,940 22.5%24%0.85%13%1.24%7.69%49.67%116.74%N/A
TJX Companies Inc.TJX-N 46,100 20.2%13%0.775%13%1.73%21.81%21.94%21.40%21.81%
Visa Inc.V-N 241,390 19.6%20%0.9323%31%0.63%17.59%17.49%18.41%20.37%
C.H. Robinson Worldwide Inc.CHRW-Q 10,270 19.2%4%0.467%2%2.46%6.59%9.30%8.33%6.57%
Unitedhealth Group Inc.UNH-N 186,630 18.5%22%0.649%39%1.55%23.53%27.10%29.28%30.06%
Estée Lauder Companies Inc.EL-N 39,580 17.8%14%0.75%10%1.26%15.79%19.78%19.17%5.14%
Starbucks Corp.SBUX-Q 79,540 17.6%9%0.89%22%1.82%25.00%24.79%24.27%24.14%
Cintas Corp.CTAS-Q 14,760 17.0%14%0.849%19%0.97%26.67%25.09%19.98%20.07%

Source: StockPointer