The CAPS Screen: 5 All-Star Dividend Stocks

I've noted before that dividend investing is a tried-and-true strategy for building long-term wealth. In fact, a study by Ned Davis Research found that dividend-paying stocks have outperformed their stingier counterparts 10% vs. 4% annually from 1972 to 2006.

In other words, you can generate sizable investment returns even during times of market turmoil if you can identify dividend stocks that will set you for life.

In order to find dividend studs like Wells Fargo (NYSE: WFC  ) and Caterpillar (NYSE: CAT  ) -- both of which have total returns of more than 13% annually over 20 years -- I used the Fool's new CAPS screening tool to look for companies that pay a strong dividend.

Below are five companies rated to outperform the market by more than 100 All-Stars, who are CAPS members whose track records rank them in the top 20th percentile of our 110,000-member investing community.

These stocks also have:

  • Market caps greater than $1 billion.
  • Dividend yields greater than 1%.
  • Five-star ratings, the highest possible, from our CAPS community.

Remember, in the first year for which we have data, five-star companies outperformed with an average gain of nearly 28%.

Company

Share Price

Sector

Market Cap (in billions)

All-Star Outperform Calls

ConocoPhillips (NYSE: COP  )

$84.82

Basic Materials

$130.8

1,393

Freeport McMoRan Copper & Gold (NYSE: FCX  )

$104.97

Basic Materials

$40.2

1,672

Frontline (NYSE: FRO  )

$61.82

Services

$4.6

479

PepsiCo (NYSE: PEP  )

$65.57

Consumer Goods

$104.0

829

Procter & Gamble (NYSE: PG  )

$64.35

Consumer Goods

$196.5

1,304

Data from Motley Fool CAPS and Yahoo! Finance as of July 15, 2008.

Remember, this screen is only a starting point in the research process. When selecting dividend payers, Fools know it's important to make sure a company has sufficient free cash flow to sustain and grow its dividends for years to come.

Come and join us on Motley Fool CAPS to dig into these companies further. Let our 110,000-strong (and counting) CAPS community help you make better stock selections.

For more Foolery:

Ilan Moscovitz doesn't own shares of any companies mentioned. He thinks the CAPS screen is the new four square. The Fool's disclosure policy calls spikes.


Read/Post Comments (0) | Recommend This Article (8)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 685758, ~/Articles/ArticleHandler.aspx, 11/26/2014 12:32:59 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement