The CAPS Screen: Don’t Touch These 5 Dividend Time Bombs

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The collective wisdom of the Motley Fool CAPS investment community produced for me these five dividend dynamos

As I have cautioned before, even though most of the stock market's gains come from dividends, high yields aren't all gumdrops and rainbows. Shareholders of dividend-cutters Ford (NYSE: F) and Marsh & McLennan (NYSE: MMC) know that it’s also important to make sure a company is healthy enough to support a large dividend if one is to avoid the next dividend implosion.

With that in mind, our new CAPS screening tool showed me some high dividend payers it might be best to avoid. The five companies below offer dividend yields above 3%.

They also have:

  • Market caps greater than $5 billion.
  • One- or two-star ratings from our CAPS community.

Remember, in the first year for which we have data, one-star companies flamed out with an average loss of 17%. Two-star companies also underperformed.

Company

Share
Price

Sector

Market Cap
(in billions)

Citigroup (NYSE: C)

$19.60

Financial

$102.9

Harley-Davidson (NYSE: HOG)

$38.99

Consumer Goods

$9.2

Home Depot (NYSE: HD)

$26.54

Services

$44.6

JPMorgan Chase (NYSE: JPM)

$37.51

Financial

$128.5

Qwest Communications (NYSE: Q)

$4.52

Technology

$7.9

Data from Motley Fool CAPS and Yahoo! Finance as of June 9.

Are these dividend duds? Or are they simply misunderstood? Come and join us on Motley Fool CAPS to let us know what you think. Our 105,000-strong (and counting) CAPS community wants your opinion.

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Home Depot and Marsh & McLennan are Motley Fool Inside Value recommendations. JPMorgan Chase is an Income Investorselection. Try either newsletter free for 30 days.

Ilan Moscovitz’s gelato screen turned up strawberry and mango, flavors he's waiting for eagerly. He doesn’t own any companies mentioned in this article. The Fool's disclosure policy is always on the menu.

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Related Tickers

11/11/2009 1:34 PM
MMC $24.44 Up +0.36 +1.50%
Marsh & McLennan C… CAPS Rating: ****
HOG $26.89 Down -0.09 -0.33%
Harley-Davidson, I… CAPS Rating: **
HD $27.21 Up +0.39 +1.45%
The Home Depot, In… CAPS Rating: ***
F $8.34 Up +0.10 +1.21%
Ford Motor Company CAPS Rating: **
Q $3.82 Up +0.03 +0.79%
Qwest Communicatio… CAPS Rating: **
JPM $44.13 Down -0.04 -0.09%
JPMorgan Chase & C… CAPS Rating: ***
C $4.20 Up +0.02 +0.48%
Citigroup, Inc. CAPS Rating: **

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