DividendMay 13, 2026

Dividend Win Wednesday: 37% ROIC and Net Cash at an 11% Drawdown

Top 5 Pixie Picks

This Week's Setup

The dividend screen is crowded with resource and pharma names sitting 10–17% below 52-week peaks while generating earnings yields above 4.4% and carrying net debt below 1.8× EBITDA. COP, NUE, and STLD all trade near 52-week highs with ROIC north of 10%, zero payouts, and shareholder yields driven by buybacks rather than dividends, a setup that redirects cash to equity holders without locking in fixed obligations.

Insider buying ratios above 40% at JNJ and MRK, combined with gross margins near 75%, flag legacy pharma franchises with pricing power and balance sheet cushion trading at multiples that don't yet reflect the cash flow profile. GSK sits 17% below its peak with a 6.7% earnings yield and $5 billion in net income, the deepest discount in the group on a normalized P/E basis.

The S&P 500 CAPE at 38.9 keeps broad-market valuations historically stretched, but this screen isolates names with debt coverage ratios above 10× and analyst targets implying single-digit upside or double-digit downside, meaning the entry point here is less about macro timing and more about company-specific cash flow strength that hasn't yet priced into the current drawdown.

Quick Scan

#	Ticker	One-line thesis
1	COP	Energy producer 4% off peak with 17% ROIC
2	NUE	Steel consolidator near high with 11% ROIC
3	NEM	Gold miner 11% down with 37% ROIC
4	STLD	Steel producer 13% above 52w low, 12% ROIC
5	MRK	Pharma 10% off peak, 25% ROIC, insider buying
6	AVGO	Semiconductor near high with 23% revenue growth
7	GSK	UK pharma 17% down with 26% ROIC
8	JNJ	Healthcare giant 11% off peak, 30% ROIC

The 8 Names

1. ConocoPhillips (COP)

Dividend yield: n/a | Payout ratio: 0.0% | 52w drawdown: -3.8%

COP carries a 17% ROIC and a 5.5% earnings yield while trading within 4% of its 52-week high, a combination that flags capital discipline in an energy producer with a gross margin near 25% and interest coverage above 11×. The company generates a 3.6% shareholder yield without paying a dividend, meaning all cash returned to equity holders comes through buybacks rather than fixed obligations.

Insiders added $7.4 million over six months, with Silvina Vatnick, Ricardo Jaramillo Mejia, and Luis Fernando Restrepo Echavarria filing Form 4 purchases in late April. BMO Capital adjusted its price target to $135 from $140 while maintaining an Outperform rating, and Freedom Broker cut its rating after recent share gains, signaling divergence between momentum and valuation views.

The analyst target of $118.15 implies 0.3% upside, and the net debt-to-EBITDA ratio of 0.72 sits near the lower end of the peer group, meaning the balance sheet strength is already priced into the current multiple with no margin of safety if oil prices revert.

2. Nucor Corporation (NUE)

Dividend yield: n/a | Payout ratio: 0.0% | 52w drawdown: +17.1%

NUE trades 17% above its 52-week low with an 11% ROIC and a 4.4% earnings yield, a setup that pairs capital efficiency with a gross margin of 12% and interest coverage above 16×. The company returns 1.8% of market cap annually to shareholders through buybacks and no dividend, a structure that preserves cash for cycle management.

Insiders added $5 million over six months, with Noah Hanners, Daniel Needham, and Bradley Ford filing Form 4 purchases in early May. Jim Cramer highlighted Steel Dynamics as a "great company," and the stock landed on Zacks' Strong Buy list for May 13, though the analyst target of $187.31 implies an 18.8% downside from the current price.

The forward P/E of 22.7 sits near the high end of the materials sector, and the negative 10-year normalized earnings yield of -0.06% signals that the current multiple assumes continued margin expansion that may not hold if raw material costs revert to long-term averages.

3. Newmont Corporation (NEM)

Dividend yield: n/a | Payout ratio: 0.0% | 52w drawdown: -11.1%

NEM sits 11% below its 52-week high with a 37% ROIC and a 5.5% earnings yield, the highest return on invested capital in the group paired with a 53% gross margin and net cash of 0.18× EBITDA. The company generated 21% revenue growth year-over-year while covering interest 50× over, a balance sheet profile that flags pricing power in gold production without structural leverage risk.

Insiders added $5.1 million over six months, with David Thornton, Peter Wexler, and Peter Toth filing Form 4 purchases in early May. Solitario Resources announced a share issuance to Newmont under an amended investor rights agreement, and CNW Group noted the transaction highlights rising valuations for undeveloped gold assets, a signal that Newmont's strategic acquisition pipeline is attracting external capital.

The analyst target of $139.91 implies 16.7% upside, but the 10-year normalized earnings yield of 1.1% sits below the current earnings yield of 5.5%, meaning the long-term average valuation is materially lower than the current setup and vulnerable to gold price mean reversion.

4. Steel Dynamics, Inc. (STLD)

Dividend yield: n/a | Payout ratio: 0.0% | 52w drawdown: +12.6%

STLD trades 13% above its 52-week low with a 12% ROIC and a 4.4% earnings yield, a setup that pairs a 13% gross margin with 22× interest coverage and a 3.4% shareholder yield driven entirely by buybacks. The company carries net debt at 1.78× EBITDA, the highest leverage ratio in the steel cohort but still within investment-grade range.

Insiders added $5.1 million over six months with 100% buying and zero selling, the cleanest insider signal in the group. Kenneth Cornew, Jennifer Hamann, and Chad Bickford filed Form 4 purchases in late April and early May. The company announced a second-quarter 2026 cash dividend, and Jim Cramer called it a "great company" on air.

The analyst target of $194.92 implies a 17% downside, and the EV/EBITDA multiple of 14.8 sits 37% above NUE's 10.8, meaning the market is pricing in a margin premium that hasn't yet materialized in the gross margin differential between the two names.

5. Merck & Co., Inc. (MRK)

Dividend yield: n/a | Payout ratio: 0.0% | 52w drawdown: -9.9%

MRK sits 10% below its 52-week high with a 25% ROIC and a 6.3% earnings yield, the highest current yield in the pharma cohort paired with a 75% gross margin and 16.5× interest coverage. The company generated 1.3% revenue growth while maintaining net debt at 1.24× EBITDA, a conservative leverage profile for a legacy pharma franchise.

Insiders bought 22.3% of the time and sold 23.6% over six months, a neutral ratio that narrows to net selling of 19,199 shares but includes $4.9 million in aggregate activity. Dean Li, Dalton Smart III, and David Maraldo filed Form 4 transactions in early May, and MarketBeat highlighted Q1 earnings call commentary on pipeline progression.

The analyst target of $127.22 implies 12.8% upside, but the 10-year normalized earnings yield of 1.8% sits 4.5 percentage points below the current 6.3%, meaning the current setup assumes a structural re-rating that hasn't occurred in the prior decade and may not persist if oncology franchise dilution accelerates.

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6. Broadcom Inc. (AVGO)

Dividend yield: n/a | Payout ratio: 0.0% | 52w drawdown: +0.7%

AVGO trades within 1% of its 52-week high with a 23% ROIC and 24% year-over-year revenue growth, the fastest top-line expansion in the group paired with a 68% gross margin and 8× interest coverage. The company returns 0.4% of market cap annually to shareholders, the lowest shareholder yield in the cohort, signaling that capital allocation tilts toward internal reinvestment rather than cash distribution.

Insiders sold 17.5% of the time and bought 7.3% over six months, a net sell of 922,666 shares totaling $4.5 million. Gayla Delly, Justine Page, and S. Ram Velaga filed Form 4 transactions in April. The company reports earnings June 3 with consensus expecting $2.39 EPS and $22.1 billion in revenue, and Platform9 noted it is removing VMware administration barriers as Broadcom integrates the acquired business.

The forward P/E of 66.7 sits at the extreme high end of the semiconductor sector, and the negative 10-year normalized earnings yield of -2.96% flags that the current multiple prices in a growth trajectory that hasn't been realized over the long term, leaving no valuation cushion if AI infrastructure spending decelerates.

7. GSK plc (GSK)

Dividend yield: n/a | Payout ratio: 0.0% | 52w drawdown: -17.3%

GSK sits 17% below its 52-week high with a 26% ROIC and a 6.7% earnings yield, the deepest discount in the group on a normalized P/E basis paired with a 72% gross margin and 11.8× interest coverage. The company generated 4.1% revenue growth while carrying net debt at 1.27× EBITDA, a leverage profile that sits in the middle of the pharma peer set.

Insiders have been neutral over six months with zero net shares transacted and $5 million in aggregate activity, signaling neither conviction nor concern at the executive level. The GSK China hepatitis B alliance puts bepirovirsen and valuation in focus per Simply Wall St., and GlobeNewswire published a market research report on sotrovimab (Xevudy) with epidemiology and pipeline forecasts through 2035.

The analyst target of $57.48 implies 12.7% upside, but the EV/EBITDA multiple of 20.8 sits 86% above NEM's 9.2 and 14% above MRK's 11.2, meaning the market is pricing in a pipeline premium that hasn't yet translated into revenue acceleration relative to the U.S. pharma cohort.

8. Johnson & Johnson (JNJ)

Dividend yield: n/a | Payout ratio: 0.0% | 52w drawdown: -10.7%

JNJ sits 11% below its 52-week high with a 30% ROIC and a 4.5% earnings yield, the highest return on invested capital in the healthcare cohort paired with a 68% gross margin and 34.5× interest coverage. The company generated 6.1% revenue growth while maintaining net debt at 0.86× EBITDA, the lowest leverage ratio among the pharma names in the group.

Insiders bought 41.4% of the time and sold 28.3% over six months, a 13-percentage-point tilt toward buying that translates to net purchases of 167,433 shares totaling $5.7 million. Marillyn Hewson, Hubert Joly, and Eugene Woods filed Form 4 purchases in late April. Wall Street Journal noted JNJ as one of two U.S. companies with a better credit rating than the U.S. government, and 24/7 Wall St. highlighted it as a Russell 1000 Dividend ETF anchor holding.

The analyst target of $237.29 implies 5.6% upside, and the 10-year normalized earnings yield of 0.07% sits 4.4 percentage points below the current 4.5%, meaning the current setup assumes a valuation re-rating that hasn't been sustained over the prior decade and may not hold if pharma litigation reserves or patent cliffs re-emerge.

What to Watch

Broadcom earnings June 3: Consensus expects $2.39 EPS and $22.1 billion in revenue; any AI infrastructure commentary will reset expectations for VMware integration margins and re-rate the 66× forward P/E.
Steel sector earnings through late May: NUE and STLD report in the back half of May; gross margin guidance will determine whether the 13–17% rally from 52-week lows has priced in the steel recovery or left room for multiple expansion.
Gold price volatility into June FOMC: NEM's 37% ROIC and net cash position are insulated from rate risk, but if gold reverts below $2,300/oz the 16.7% implied upside to analyst targets evaporates and the 11% drawdown becomes a starting point rather than an exit.
Pharma insider activity through mid-Q2: MRK and JNJ insiders are net buyers with ratios above 40%, but if Form 4 filings shift to net selling in June it will signal that the Q1 dip was a liquidity event rather than a structural re-entry point.

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The Stock Pixie Score is a 0–10 composite that measures how well a stock matches the criteria for that screen. Scores reflect the strength of quantitative signals across valuation, quality, and trend factors weighted for the specific screener. A higher score means stronger alignment; above 8 indicates the algorithm finds the setup compelling across most of the metrics it tracks. It is a filter, not a forecast.

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