It’s always interesting when I start looking for good stocks that will generate income through a regular dividend. I did the exercise today when looking for some good dividend stocks in the S&P500 index. There are many ways to do this but in my opinion, what you are looking for is:
#1-Stock that pays a high dividend yield (obviously)
#2-Stock that is growing its dividend or at least keeping it stable
#3-Stock that has decent earnings and should be able to keep up its dividend payments
There are of course many other factors that could be used but in my opinion, those are the most important ones.
To start off, here are the top 40 stocks in terms of dividend yield in the S&P 500:
Ticker | Name | Price | Dividend Yield | Payout Ratio | Ex-Dvd Date |
---|---|---|---|---|---|
WIN | Windstream Holdings Inc | 7.98 | 12.55 | 356.15 | 3/27/2014 |
FTR | Frontier Communications Corp | 4.65 | 8.6 | 298.64 | 3/5/2014 |
CTL | CenturyLink Inc | 31.85 | 6.78 | 231.48 | 3/6/2014 |
FE | FirstEnergy Corp | 32.98 | 6.67 | 119.43 | 2/5/2014 |
DO | Diamond Offshore Drilling Inc | 56.92 | 6.15 | 67.54 | 2/13/2014 |
HCP | HCP Inc | 36.32 | 5.78 | 110.32 | 2/6/2014 |
HCN | Health Care REIT Inc | 53.57 | 5.71 | 607.36 | 2/6/2014 |
POM | Pepco Holdings Inc | 19.13 | 5.65 | 87.02 | 3/7/2014 |
ETR | Entergy Corp | 63.27 | 5.25 | 69.57 | 2/7/2014 |
ESV | Ensco PLC | 57.18 | 5.25 | 28.61 | 3/13/2014 |
T | AT&T Inc | 35.16 | 5.23 | 141.35 | 1/8/2014 |
TE | TECO Energy Inc | 17.24 | 5.1 | 77.4 | 2/14/2014 |
VTR | Ventas Inc | 57.28 | 5.06 | 238.42 | 3/7/2014 |
RAI | Reynolds American Inc | 49.99 | 5.04 | 103.6 | 3/7/2014 |
EQR | Equity Residential | 51.87 | 5.01 | 210.01 | 3/20/2014 |
TEG | Integrys Energy Group Inc | 54.41 | 5 | 72.79 | 2/26/2014 |
MO | Altria Group Inc | 38.39 | 5 | 82.72 | 3/14/2014 |
SO | Southern Co/The | 41.11 | 4.94 | 72 | 2/6/2014 |
PPL | PPL Corp | 30.09 | 4.89 | 54.54 | 3/7/2014 |
KMI | Kinder Morgan Inc/DE | 36 | 4.56 | 116.28 | 1/29/2014 |
KIM | Kimco Realty Corp | 19.75 | 4.56 | 356.18 | 3/31/2014 |
EXC | Exelon Corp | 27.39 | 4.53 | 147.72 | 2/12/2014 |
RIG | Transocean Ltd | 49.42 | 4.53 | 34.81 | 2/19/2014 |
DUK | Duke Energy Corp | 69.01 | 4.52 | 100.42 | 2/19/2014 |
PCG | PG&E Corp | 40.28 | 4.52 | 95.71 | 3/28/2014 |
PEG | Public Service Enterprise Group Inc | 32.04 | 4.49 | 56.31 | 3/7/2014 |
ED | Consolidated Edison Inc | 55.28 | 4.45 | 62.3 | 2/10/2014 |
AEE | Ameren Corp | 36.16 | 4.42 | #VALUE! | 3/10/2014 |
LO | Lorillard Inc | 50.68 | 4.34 | 73.63 | 2/26/2014 |
SCG | SCANA Corp | 46.93 | 4.33 | 61.8 | 3/11/2014 |
PM | Philip Morris International Inc | 87.13 | 4.32 | 62.64 | 3/25/2014 |
VZ | Verizon Communications Inc | 49.14 | 4.32 | 657.01 | 1/8/2014 |
PBCT | People's United Financial Inc | 15.12 | 4.3 | 88.83 | 1/30/2014 |
PNW | Pinnacle West Capital Corp | 52.92 | 4.29 | 75.48 | 1/30/2014 |
AEP | American Electric Power Co Inc | 46.74 | 4.28 | 72.76 | 2/10/2014 |
MAC | Macerich Co/The | 58.89 | 4.21 | 111.53 | 2/18/2014 |
DRI | Darden Restaurants Inc | 54.37 | 4.05 | 64.09 | 1/8/2014 |
XEL | Xcel Energy Inc | 27.94 | 4.01 | 57.67 | 3/18/2014 |
GAS | AGL Resources Inc | 47.23 | 3.98 | 74.91 | 2/19/2014 |
DTE | DTE Energy Co | 66.39 | 3.95 | 62.01 | 3/20/2014 |
WMB | Williams Cos Inc/The | 38.57 | 3.94 | 102.53 | 3/5/2014 |
COP | ConocoPhillips | 70.65 | 3.91 | 44.31 | 2/13/2014 |
KRFT | Kraft Foods Group Inc | 53.92 | 3.89 | 18.05 | 3/27/2014 |
GRMN | Garmin Ltd | 46.22 | 3.89 | 64.78 | 3/13/2014 |
LEG | Leggett & Platt Inc | 30.94 | 3.88 | 65.3 | 3/12/2014 |
LLY | Eli Lilly & Co | 51 | 3.84 | 53.48 | 2/12/2014 |
CMS | CMS Energy Corp | 26.77 | 3.81 | 66.74 | 2/12/2014 |
PCL | Plum Creek Timber Co Inc | 46.51 | 3.78 | 133.99 | 2/19/2014 |
PSA | Public Storage | 150.52 | 3.72 | 114.78 | 3/10/2014 |
AIV | Apartment Investment & Management Co | 25.91 | 3.71 | #VALUE! | 2/19/2014 |
WEC | Wisconsin Energy Corp | 41.34 | 3.7 | 50.58 | 2/12/2014 |
AVB | AvalonBay Communities Inc | 118.23 | 3.62 | 147.85 | 3/28/2014 |
CNP | CenterPoint Energy Inc | 23.18 | 3.58 | 82.97 | 2/14/2014 |
LMT | Lockheed Martin Corp | 148.66 | 3.58 | 49.65 | 2/27/2014 |
IRM | Iron Mountain Inc | 30.35 | 3.56 | 196.45 | 3/19/2014 |
MRK | Merck & Co Inc | 50.05 | 3.52 | 83.87 | 3/13/2014 |
D | Dominion Resources Inc/VA | 64.69 | 3.48 | 373.09 | 2/26/2014 |
INTC | Intel Corp | 25.96 | 3.47 | 39.53 | 2/5/2014 |
NEM | Newmont Mining Corp | 23.03 | 3.47 | 36.87 | 3/14/2014 |
NU | Northeast Utilities | 42.39 | 3.47 | 71.4 | 2/28/2014 |
SE | Spectra Energy Corp | 35.62 | 3.43 | 80.17 | 2/5/2014 |
PFE | Pfizer Inc | 30.63 | 3.4 | 68.9 | 2/5/2014 |
CVC | Cablevision Systems Corp | 17.93 | 3.35 | 483.89 | 3/12/2014 |
MCD | McDonald's Corp | 97.03 | 3.34 | 53.07 | 2/26/2014 |
FCX | Freeport-McMoRan Copper & Gold Inc | 37.74 | 3.31 | 39.01 | 1/13/2014 |
VNO | Vornado Realty Trust | 88.79 | 3.29 | 265.31 | 2/5/2014 |
WM | Waste Management Inc | 44.87 | 3.25 | 80.58 | 3/4/2014 |
PBI | Pitney Bowes Inc | 23.3 | 3.22 | 68.95 | 2/12/2014 |
CINF | Cincinnati Financial Corp | 52.37 | 3.21 | 62.47 | 3/17/2014 |
SYY | Sysco Corp | 36.1 | 3.21 | 65.99 | 4/2/2014 |
CVX | Chevron Corp | 124.91 | 3.2 | 26.14 | 2/19/2014 |
MCHP | Microchip Technology Inc | 44.75 | 3.17 | 214.95 | 2/18/2014 |
SPG | Simon Property Group Inc | 152.16 | 3.15 | 86.84 | 2/10/2014 |
GE | General Electric Co | 28.03 | 3.14 | 50.22 | 2/20/2014 |
RSG | Republic Services Inc | 33.2 | 3.13 | 58.39 | 3/28/2014 |
DPS | Dr Pepper Snapple Group Inc | 48.72 | 3.12 | 45.54 | 3/13/2014 |
KMB | Kimberly-Clark Corp | 104.46 | 3.1 | 66.46 | 3/5/2014 |
NEE | NextEra Energy Inc | 85.62 | 3.08 | 52.33 | 2/26/2014 |
PAYX | Paychex Inc | 45.53 | 3.07 | 83.78 | 1/31/2014 |
EIX | Edison International | 46.3 | 3.07 | 28.48 | 3/28/2014 |
STX | Seagate Technology PLC | 56.16 | 3.06 | 28.18 | 2/10/2014 |
CLX | Clorox Co/The | 92.76 | 3.06 | 60.06 | 1/27/2014 |
GIS | General Mills Inc | 49.91 | 3.05 | 46.79 | 1/8/2014 |
NI | NiSource Inc | 32.88 | 3.04 | 66.61 | 2/5/2014 |
MAT | Mattel Inc | 47.58 | 3.03 | 55.08 | 2/18/2014 |
PLD | Prologis Inc | 36.95 | 3.03 | #VALUE! | 3/13/2014 |
CSCO | Cisco Systems Inc | 22.45 | 3.03 | 33.16 | 1/2/2014 |
ABBV | AbbVie Inc | 52.81 | 3.03 | 0 | 1/13/2014 |
SPLS | Staples Inc | 15.89 | 3.02 | #VALUE! | 3/26/2014 |
K | Kellogg Co | 61.07 | 3.01 | 64.72 | 2/27/2014 |
LYB | LyondellBasell Industries NV | 80.28 | 2.99 | 84.09 | 3/6/2014 |
MSFT | Microsoft Corp | 37.43 | 2.99 | 35.19 | 2/18/2014 |
CA | CA Inc | 33.65 | 2.97 | 48.48 | 3/3/2014 |
CAG | ConAgra Foods Inc | 33.7 | 2.97 | 52.55 | 1/29/2014 |
HP | Helmerich & Payne Inc | 84.08 | 2.97 | 12.97 | 2/12/2014 |
PG | Procter & Gamble Co/The | 81.41 | 2.96 | 56.75 | 1/22/2014 |
HAS | Hasbro Inc | 55.01 | 2.91 | 55.62 | 1/31/2014 |
WU | Western Union Co/The | 17.25 | 2.9 | 24.54 | 3/13/2014 |
JNJ | Johnson & Johnson | 91.59 | 2.88 | 60.89 | 2/21/2014 |
DOW | Dow Chemical Co/The | 44.4 | 2.88 | 170.73 | 3/27/2014 |
The next step required looking at growth in dividends. A company that has diminished its dividend payment in recent times is generally more inclined to do so again. So I was looking to take out companies that recently declined their dividends. That took out 7-8 names.
This brings us to the final step, determining if the company is liketlyy to be able to pay this dividend in the medium term. The way I do this is to compare the earnings of the company to the dividend yield. For example, if a company pays out a 5% dividend yield but only makes 2.5% (of its price) in earnings, then that is not sustainable.
But if a company makes 2$ per share of earnings and pays out half of that amount in dividends, it is more logical to expect the dividend to remain intact. Doing that exercise, here are the 8 names that came out on top:
Ticker | Name | Price | EPS | PE Ratio | PE Next Year | Sales Growth | Analyst rating | Book Value | Beta | Revenue/Share | Sales 5Y Avg Growth | EPS 5Y Avg Growth | ||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
AAPL | Apple Inc | 543.93 | 40.03 | 13.65 | 11.24 | 9.2 | 4.33 | 137.4 | 0.95 | 184.7 | 28.6 | 29.52 | ||
RAX | Rackspace Hosting Inc | 36.73 | 0.78 | 56.04 | 51.44 | 27.72 | 3.6 | 7.07 | 1.12 | 9.68 | 23.1 | 26 |
As you can see, all of these names have a dividend yield over 5%, all but one have seen dividend increases in recent months and all are making more money thaan they are paying off. From there, it becomes more subjective and I might want to stay away from some names. For example, some might not like investing in AT&T because of its many problems and high level of competition. Other might want to avoid pharmaceuticals (Eli Lilly & Co)… But in my opinion, all of these are top 2010 dividend stock picks. Any thoughts? If you liked this post, you can consider subscribing to our free newsletters here
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