6 Dividend Divas

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"Do you know the only thing that gives me pleasure? It's to see my dividends coming in." 

-- John D. Rockefeller

Mr. Rockefeller's words resonate now, as investors, professional and amateur, stare at the market's abyss, wondering how to generate returns. Since price appreciation is no longer a viable option for producing returns in the short term, investors are turning to stocks with high dividend yields to eke out returns.

Dividends can be a sign of a company's financial health, but be sure to examine the viability of the business beneath the financials and its general performance in downturns. The underlying business can clue an investor in as to whether a company’s dividend is sustainable. For example, the health care or utilities sectors generally weather the worst times better than cyclical sectors like technology.

In this macro environment, investing in stocks such as Medical Properties Trust (NYSE: MPW  ) , which yields 17.6%, gives you a solid return sans price appreciation. The yield should remain intact, since the company’s underlying business should weather the recession. Medical Properties develops health-care facilities and leases them to health-care companies. It also underwrites mortgages for health-care operators, which are collateralized by their real estate. Because health-care companies aren’t likely to default on their mortgage payments, as people continue to pay health-care bills in a recession, Medical Properties’ revenue streams should continue flowing. However, some may argue that being exposed to commercial property puts the revenue flow at risk.

These days, roughly one-third of publicly traded companies in this country continue to pay a steady dividend. Mature companies that have more cash than they need are often some of the strongest ones out there.

How do you find solid companies with such high dividend yields? I did the dirty work for you using the Motley Fool's CAPS screener. To search for stocks with hefty dividends, I screened for companies with:

  • A minimum dividend yield of 5%.
  • Market caps of $250 million or greater.
  • Five-star ratings, the highest possible, from our 125,000-member CAPS community.

After running the screen, here’s what I came up with:


Market Cap

Dividend Yield

Amerigas Partners (NYSE: APU  )

$1.81 billion


Atlas Energy Resources (NYSE: ATN  )

$941 million


Brookfield Infrastructure Partners (NYSE: BIP  )

$307 million


Medical Properties Trust

$302 million


Omega Healthcare Investors (NYSE: OHI  )

$1.2 billion


Philip Morris International (NYSE: PM  )

$75.2 billion


Data from CAPS as of Feb 2, 2009. Yields may not reflect recent company events.

However, just because a company doles out dividends now, that doesn't necessarily mean it always will. Companies are increasingly becoming more cash-constrained.

Take Dow Chemical (NYSE: DOW  ) , for example. The chemical goliath boasts a dividend yield of 14.5%. However, the largest U.S. chemical company is missing crucial ingredients in its beaker, which could pose a threat to its dividend. The chemicals space has lost its luster as the global recession has halted the production of products that use chemicals as inputs, such as the production and manufacturing of plastics and agricultural equipment. To that, add Dow’s unraveled $17.4 billion joint venture with Kuwait’s Petrochemical. All of this could put pressure on the current dividend. In fact, the company's CEO recently raised the possibility of cutting the dividend.

In short, dividends are one way to search for quality companies, but it's important to dig deeper and see if that investment is right for your portfolio. The above table is a great place to start, but you really need to keep up-to-date with dividend payers, since many continue to cut their payouts in this cash-centric environment. Start your search today at Motley Fool CAPS.

For related Foolishness:

Jennifer Schonberger does not own shares of any of the companies mentioned in this article. Atlas Energy Resources is a Motley Fool Income Investor recommendation. Brookfield Infrastructure Partners is an Inside Value selection. The Motley Fool has a disclosure policy.

Read/Post Comments (2) | Recommend This Article (25)

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.

  • Report this Comment On February 03, 2009, at 8:09 AM, pondee619 wrote:

    "but it's important to dig deeper and see if that investment is right for your portfolio."

    While digging deeper, what would we be looking for?

    "However, just because a company doles out dividends now, that doesn't necessarily mean it always will. Companies are increasingly becoming more cash-constrained."

    You tell us to look for high paying dividend stocks, but to be carful because some may be cash contrained. Yet, you don't share with us any danger signs, what to be on the look out for, how to cull the wheat from the chaf.

    Looks like only half of the story.

    In todays's market, shouldn't the fool really be advising it's readers how to spot the dangers? Yet, this is what is left out.

  • Report this Comment On February 11, 2009, at 2:36 AM, BarbarianBabe wrote:

    I find too many Fool articles are just like this one - teaser articles that make me sorry I took the time to click and read it. I've actually tried to find a way to eliminate Fool articles from my yahoo news sweep (unsuccessfully) as they are great at writing headlines, short on delivering the meat.

    Thanks for posting pondee.

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