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5 Dividend Stocks You Should Know

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Finding new stock ideas is challenging for all investors, but it's particularly difficult for new investors who may have a limited understanding of key financial metrics and accounting.

Sure, stock screens are great, but they're only as good as their users' input. If, for example, you don't know what "return on equity" or "price to book" means, a screener is of little use.

It's about to get easier
With that thought in mind, we at the Fool combined the investing knowledge of our top analysts and data from our Motley Fool CAPS screener to come up with four pre-set model screens -- Value, Dividend, Small Cap, and High Growth.

For our Dividend screen, we asked Motley Fool Income Investor co-advisor James Early what he looks for in promising dividend payers. Among other things, he focuses on larger stocks with yields above 3%, strong business models, and four- and five-star CAPS ratings.

That last point is particularly important, because we've found that these highly rated stocks have outperformed the market as a group by 12 and seven points annually, respectively, from November 2006 to July 2008.

And now for the stocks
Using the pre-set Dividend CAPS screen, here are five stocks you should know about:


CAPS Rating (out of 5)


Companhia Siderurgica Nacional (NYSE: SID  )



Constellation Energy (NYSE: CEG  )



Royal Bank of Canada (NYSE: RY  )



Chevron (NYSE: CVX  )



DuPont (NYSE: DD  )



Source: Motley Fool CAPS, as of Aug. 19, 2008.

Are these stocks the next dividend winners? Only time will tell, of course, but in the meantime, we invite you to learn more about these high-yielding companies on Motley Fool CAPS. You can get started by heading to CAPS -- it's 100% free.

Constellation Energy Group is a Motley Fool Income Investor recommendation. Learn more about the dividend stocks we're recommending right now with a 30-day free trial.

Todd Wenning knows the price of nothing and the value of everything -- at least he thinks he does. Try any of our Foolish newsletter services free for 30 days. The Fool's disclosure policy keeps Fooldom running.

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Related Tickers

12/31/1969 7:00 PM
CEG.DL2 $0.00 Down +0.00 +0.00%
Constellation Ener… CAPS Rating: *****
CVX $101.28 Down -0.60 -0.58%
Chevron CAPS Rating: ****
DD $69.15 Down -0.31 -0.45%
DuPont CAPS Rating: ****
RY $63.24 Down -0.24 -0.38%
Royal Bank of Cana… CAPS Rating: ***
SID $3.24 Up +0.01 +0.31%
Companhia Siderurg… CAPS Rating: **