3 Small-Cap Auto Parts Stocks With Consistent Dividends

Published Fri, 11 Sep 2015 09:00 CET by DividendYields.org

Understanding how to estimate dividend-paying companies can provide investors with an insight into how dividends can lead to return growth. Most investors believe that high dividend yields suggest a good return on investment. However, if a dividend yield is considerably higher than the industry average, it may simply mean that the stock is underpriced. Therefore, more important than the dividend yield is a consistent dividend growth.
Below is a summary of three small-cap stocks that trade in the consumer goods sector of the auto parts industry. All three stocks have a market cap of less than $1 billion, they operate in the U.S. and internationally and they generate a consistent dividend.

Remy International, Standard Motor Products and Strattec Security Stock Performance Year over Year Graph
Remy International (Nasdaq: REMY) is an Indiana-based company engaging in the design, manufacturing, re-manufacturing, and distribution of automotive and commercial vehicle alternators, starters, multi-line products and hybrid motors to original equipment manufacturers (OEMs) and the automotive aftermarket both in the U.S and internationally. REMY’s payout ratio is high as a result of a low EPS of $0.37. In Q2 2015, the company reported net losses of $1.0 million due to worse volume/mix, currency conversion, restructuring costs and $1.2 million expenses related to the Maval acquisition and the pending acquisition by BorgWarner, which is expected to close during the Q4 2015. On the upside, the company has a low D/E ratio and a P/E 79.51 that significantly outperforms the industry average 15.69, suggesting high investor confidence. After the announcement of the BorgWarner transaction on July 17, the stock performance has hit new levels reaching almost 40%, so the market is expecting big things, going forward. A beta of 1.03 suggests a safe investment, with a 3-year beta estimate of 0.82.

Standard Motor Products (NYSE: SMP), a New-York based company, is a leader in the manufacturing and distribution of replacement parts for motor vehicles in the automotive aftermarket industry in the U.S and internationally. In Q2 2015 results, SMP used its cash to fund its $19 million debt, a strategic decision reflected on its low D/E ratio. Additionally, it has raised the level of annual allowance for cash dividends and share repurchases up to $20 million each and has also increased the share repurchase program of the Board of Directors from $10 million to $20 million. These decisions indicate the company’s willingness to improve shareholder value and cash dividends, going forward. The low payout ratio is the result of an EPS of $1.86, whereas consensus EPS is $2.71 up to 2016. A beta of 1.13 indicates a relatively a safe investment, whereas leveraged beta is estimated at 1.23 for the next three years. Analysts forecast an average growth rate of 10% annually.

Name Price ($) 52 wk low 52 wk high 52 wk low % 52 wk high % Market Cap ($ b) P/E D/E Beta Payout Ratio
Remy International 29.34 16.31 29.73 79.89% -1.31% 0.94 79.51 0.71 1.03 119%
Standard Motor Products 35.09 30.30 43.72 15.81% -19.74% 0.80 18.86 0.13 1.13 32%
Strattec Security 62.40 60.11 110.96 3.81% -43.76% 0.23 11.02 0.10 0.90 9%

Strattec Security (Nasdaq: STRT), the Milwaukee-based company, designs, develops, manufactures and markets automotive access control products primarily in the U.S., but also internationally, through the VAST Alliance. VAST is an alliance of WITTE Automotive from Velbert (Germany), Strattec Security from Milwaukee and ADAC Automotive from Grand Rapids and is directed by a single management team in order to effectively serve global customers.
STRT’s low D/E ratio is the result of a decrease in accounts payable by 22.8%, suggesting the company’s strength to achieve large-scale strategic goals. In Q4 2105 results (the company’s FY is in June) the company reported a net income growth of 28.3%, leading to a high EPS of $5.66 and a low payout ratio. Although there is no estimate for EPS going forward, STRT’s current EPS indicates the company’s ability to generate a steady stream of dividend for investors. A beta of 0.90 implies a safe investment, with a 3-year estimate of 0.77, although the stock’s YoY performance has experienced fluctuations.

Stock name Dividend Yield
Standard Motor Products 1.68
Strattec Security 1.62

Articles featuring Standard Motor Products (SMP):

17 Upcoming Dividend Increases

Introduction The information presented below was created based on combining the "U.S. Dividend Champion" spreadsheet compiled by David Fish hosted here with upcoming dividend information from the NASDAQ. This meshes metrics about companies with dividend growth history with upcoming dividend payments (and whether those payments are increasing). These companies all have a minimum 5-year dividend growth history. The "ex-dividend" date is the day you are no longer entitled... Read more

Upcoming Dividends; 75 Companies, 33 Increases, 18 Double Digit Increases!

Introduction The information presented below was created based on combining the "U.S. Dividend Champion" spreadsheet compiled by David Fish hosted here with upcoming dividend information from the Nasdaq. This meshes metrics about companies with dividend growth history with upcoming dividend payments (and whether those payments are increasing). These lists highlights the companies with a minimum 5-year dividend growth history. What David has done is exhaustively map the companies... Read more

Dividend Challengers (And Near-Challengers): 69 Increases Expected By February 28

In compiling the Dividend Champions list, I get to see which companies are nearing the anniversaries of their previous dividend increases. Since most of these firms raise their payout about the same time every year, I can say with some confidence that they are likely to do so again. I have separated the Champions (25 or more years of higher dividends), Contenders (10-24 years), and Challengers (5-9 years) into distinct groupings, so please look for the other articles, which I hope will be... Read more

95 Dividend Growth Stocks Going Ex-Dividend Next Week

Introduction As a dividend growth investor, I am always looking for my next income-producing investment. The first list below was created to help facilitate my own investing goals. It provides a set of upcoming dividend stock opportunities. It highlights the companies that showcase a dividend growth mindset. Additionally, it gives investors a chance to potentially buy more shares prior to an upcoming ex-dividend date. If it happens to be a dividend increase, that will be highlighted as... Read more

19 Dividend Increases: January 30-February 3, 2017

Monitoring dividend increases for stocks on my watch list helps me identify candidates for further analysis. Companies that regularly raise their dividend payments show confidence in future earnings growth potential. This past week, 19 companies on my watch list announced dividend increases, including one of the stocks I hold in my portfolio. The following table presents a summary. The table is sorted by percentage increase, %Incr. Dividends are annualized and in US$, unless otherwise... Read more