When it comes to dividend investing, selecting the right stock often means choosing the largest, most consistent, most secure, and most popular companies in their respective fields. But more adventurous income investors might want to explore riskier stocks that are often overlooked. One is Copa Holdings SA (CPA), writes Rick Orford, author at Barchart.
Smaller-cap companies, while not household names or industry leaders, can still offer consistent yields at more attractive levels. Such stocks can be a hit or miss - unless you look for the best ones that meet the right criteria. With Barchart’s Stock Screener tool, I added the following filters:
Number of Analysts: 8 to 12. I limited the list to stocks that Wall Street covers, but not excessively. The 8-12 range is best suited for that situation.
Current Analyst Rating: 4.5 to 5 (Strong Buy). I wanted only the best of the best on this list to improve the chances of success.
Dividend Payout Ratio: 25% to 60%. The dividend payout ratio is the portion of the company’s earnings that is used to pay dividends. A range of 25% to 60% represented a reasonable balance between relatively high yields and sufficient funds to support business growth and improvement.
Market Cap: $3 billion to $10 billion. This filter limited my search to mid-cap companies, which are often ignored in top dividend stock lists.
Annual Dividend Yield: 0.01% and above.
The screen yielded 13 companies. From there, I arranged the results in order from highest to lowest TTM dividend yield, then checked the top ones for dividend consistency. Thankfully, the top three had regular dividend payments.
One was CPA, a South American airline holding company that operates the Copa Airlines, AeroRepublica, and Wingo brands. The company offers around 375 daily scheduled flights to 32 countries across all of its businesses. It is one of the top airlines in Latin America, and its cheaper offerings through Wingo make it an attractive choice for budget-conscious travelers.
According to its latest financials, Copa pays a $1.61 quarterly dividend, which translates to $6.44 per share per year – and a high 6% yield. The company has a relatively safe payout ratio of 43.9% and one of the highest analyst scores I’ve recently seen - 4.91 based on 10 reviews.
