7 Mid-Cap Income Stocks
When most people think about defensive stocks, they think dividend-paying, stable large caps. That's fine, but many mid-cap stocks -- defined as a market cap between $1 billion and $10 billion here -- offer the same characteristics without being as high-profile.
I ran the CAPS Screener to look for defensive stocks in the mid-cap universe. Specific search parameters I ran included:
Market capitalization between $1 billion and $10 billion.
CAPS rating of four or five stars (out of five).
Price-to-earnings positive and less than 15.
Long-term debt-to-equity ratio of 1 or less (manageable debt levels to deal with trouble).
Current dividend yield between 2.5% and 6% (a reasonable dividend provides price support and income, while a high dividend can be unsustainable or a sign of trouble).
Earnings growth greater than 5% over the past three years.
Beta -- a measure of volatility relative to the market -- less than 1.0.
The screen returned 15 stocks across a number of sectors, including the following seven.
Company Name | Debt-to-Equity Ratio | Dividend Yield | Beta | PE (TTM) | CAPS Rating (out of 5) | Sector |
|---|---|---|---|---|---|---|
Cleco (NYS: CNL) | 1.00 | 3.2% | 0.41 | 12.4 | ***** | Utilities |
Hanover Insurance Group (NYS: THG) | 0.35 | 3.2% | 0.46 | 14.4 | **** | Financial |
j2 Global Communications (NAS: JCOM) | 0 | 2.6% | 0.77 | 13.6 | **** | Technology |
Mattel (NAS: MAT) | 0.39 | 3.5% | 0.98 | 13.5 | **** | Consumer Goods |
Molson Coors Brewing (NYS: TAP) | 0.24 | 3% | 0.73 | 11.9 | ***** | Consumer Goods |
Rent-A-Center (NAS: RCII) | 0.48 | 2.5% | 0.83 | 10.7 | **** | Services |
Teleflex (NYS: TFX) | 0.49 | 2.5 | 0.73 | 10.3 | **** | Health Care |
*Source: Motley Fool Stock Screener. As of Sept. 5.
These stocks represent a variety of sectors and business models, but all share strong balance sheets, good dividend yields, less than market volatility, reasonable valuations, and high ratings from our CAPS community. I also checked out dividend-payout ratios, and Mattel's ratio of 66% was the only one over 50%.
Don't forget the mid-cap world when exploring for stable, dividend paying stocks. There are plenty of quality stocks outside large-cap land, including some well-known names. As a bonus, smaller companies don't have the coverage of the big names, so there's a better chance of finding an underfollowed bargain.
Like any screen, these results should be considered a starting point for further research and not an outright buy recommendation.
You can follow any of the stocks mentioned here using our free watchlist service, My Watchlist.
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At the time thisarticle was published Fool contributor Russ Krull has no financial position in any stock mentioned. The Motley Fool owns shares of Molson Coors. Motley Fool newsletter services have recommended buying shares of Teleflex, Molson Coors, and Mattel. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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