Waddell & Reed Financial
Waddell & Reed Financial, Inc. (NYSE:WDR), an asset manager, generated a total return of 76.6% over the past 12 months. The company pays a dividend yield of 2.4% on a payout ratio of 42% of its current-year EPS estimate. The company grew its dividend at a CAGR of 8% over the past five years. Waddell & Reed Financial, Inc. (NYSE:WDR) demonstrated strong financial performance in the first quarter, with its assets under management (AUM) passing the $100 billion mark (reaching $103.8 billion at quarter-end) and sales hitting a multi-year high.
EPS from continuing operations beat analyst estimates, and was 14.5% higher than in the same quarter a year earlier. Also, the company’s operating margins improved in the quarter, and are expected to continue to increase based on a better fund performance going forward. It is worth noting that Barron’s annual performance review survey recognized Waddell & Reed Financial, Inc. (NYSE:WDR) as boasting one of the Best Mutual Fund Families over the last five years. Analysts are generally upbeat about this stock, projecting a 19.1% increase in EPS this year and 15.7% next year. Waddell & Reed is trading at 17.7x 2013 EPS estimate and 15.3x 2014 EPS estimate.
Ingredion
Ingredion Inc (NYSE:INGR), a producer of starch and sweetener ingredients, achieved a total return of 40.3% over the past 12 months. The stock yields 2.1% on a payout ratio of 26% of its current-year EPS estimate. Its low payout ratio is a good indication of the potential for future dividend growth. The company’s dividend grew at a CAGR of 20.7% over the past five years. Back in March, Ingredion Inc (NYSE:INGR) boosted its dividend by 46% to 38 cents per share, which marked the company’s fourth dividend increase in the past two years.
The company’s financial performance has been strong, as it achieved a 3-year EPS CAGR of 40% and a 10-year EPS CAGR of 20%. Ingredion is driven operationally by an EPS CAGR target of between 10% and 12%, and a return on capital employed target greater than 8.5%. Its sales, which totaled $6.5 billion in 2012, are expected to reach $8 billion within five years, driven by a 3% growth in developed nations and a 5% growth in emerging markets. Ingredion Inc (NYSE:INGR) is valued at 12.4x its 2013 EPS estimate and 11.3x its 2014 EPS estimate.
Final thoughts
When most investors think of dividend stocks, they imagine some of the financial industry’s biggest players, i.e. large-cap stocks exclusively. As the list of aforementioned stocks, show, however, some of the market’s best bets in the income space can come by way of small-caps. Ingredion is a good example of a stable, yet uncovered company that generates enormous dividend growth. Waddell & Reed, Houston Wire & Cable Company (NASDAQ:HWCC), Medical Properties Trust, Inc. (NYSE:MPW) and CoreSite Realty Corp (NYSE:COR) are also solid investments moving forward, with the latter two’s REIT statuses are added reasons to be bullish.
Disclosure: none
