We have some unfinished business to take care of today.

Youll recall in my last column, I began an ex-dividend stock war between Home Loan Servicing (Nasdaq: HLSS ) and Hickory Tech Corp. (Nasdaq: HTCO ).

My goal? To whittle down Bespoke Investment Groups screen of stocks going ex-dividend in the next month to the single best option. After all, none of us have unlimited capital to invest. So we have to make choices on which stocks to buy.

With that in mind, lets finish up our blow-by-blow fundamental analysis of the two stocks. If you missed the first four rounds, be sure to catch up on the action here first.

Round 5: Minimal Need for Credit

Even now, securing credit isnt easy. Accordingly, I recommend focusing on companies that dont need to raise significant amounts of capital. Thats because when interest rates rise, so will their interest payments, sapping money that could be paid out as dividends instead.

At first blush, it appears that neither company is debt free. However, digging into the financial statements reveals otherwise.

Although Home Loan shows a liability of $368 million on its balance sheet, its not debt. Its an accounting offset for servicing fees it received in advance. And a small portion (less than $1 million) is for interest rate swaps. Translation? In all actuality, its debt free.

Unfortunately, Hickory cant make the same boast. It carries $142 million in debt, which puts its leverage ratio in-line with its historical averages. So the companys not in jeopardy of collapsing under its debt load. Nevertheless, its more reliant on debt than Home Loan.

Advantage: Home Loan

Round 6: Earnings Buffer

Just like cash can provide a buffer, so can earnings. That is, as long as a company doesnt pay out 100% of earnings each quarter. We can track this buffer by calculating a companys dividend payout ratio (DPR). As a general rule, I prefer to invest in companies with DPRs of less than 80%

Home Loan is definitely the safer bet, here. Its DPR checks-in at about 30%, compared to Hickorys 79%.

Advantage: Home Loan

Round 7: Dividend Yield and Growth

Were income investors, so incomes what matters most, right? And in addition to a respectable yield, we also want to focus on companies with a track record of consistently increasing dividend payments.

At current prices, Hickory yields 5.3% and Home Loan yields 7.7%. Thats a meaningful difference.

In terms of increases, both companies recently raised their dividends.

On September 25, Hickory raised its quarterly dividend by 3.5% to $0.145 per share. It marks the third increase since 2010.

On October 1, Home Loan increased its monthly dividend by 10% to $0.11 per share. It marks the companys second increase in 2012.

As for future dividend growth, Bloomberg estimates Hickorys dividend will increase by 3.45% over the next three years. Home Loans is expected to increase by 24.74%. Again, thats a noticeable difference in favor of Home Loan.

Advantage: Home Loan

Round 8: Valuation

Capital appreciation shouldnt be our primary concern. Income should. But that doesnt mean we should ignore the potential. The more the better, which means buying companies on the cheap.

Both companies are trading at a discount to their respective industry averages. Hickorys price-to-earnings (P/E) ratio of 17.2 is 33% below the average. Whereas, Home Loans P/E ratio of 13.8 is 29% below its industry average.

However, Hickory is trading at a 12.5% premium to the market the P/E ratio for the S&P 500 Index is currently 15.3 and a 43% premium to its own five-year average P/E ratio of 12.

All told, Home Loan represents the better bargain.

Advantage: Home Loan

Lets Go to the Scorecard

In case you werent keeping track, heres the final score: Home Loan: 6 Hickory: 1, with a tie in one category.

Thanks to its cheaper valuation, higher-yield prospects and minimal need for credit, Home Loan ranks as this months most compelling ex-dividend stock.

In about six months, well check up on the performance of each stock to declare the ultimate winner of this stock war.

If you choose to invest in Home Loan, please remember you need to own shares one day prior to the ex-dividend date of October 29 to receive the next payment. Also take note of the fact that the company reports earnings on Thursday, so shares could be volatile this week.

Thats it for today. Before you go, though, let us know what you think about this column by emailing us at feedback@DividendsandIncomeDaily.com or by leaving a comment on our website. If theres enough interest, well conduct this ex-dividend stock war every month. So dont be afraid to speak up!