A Few Dividend Bargains

Dividend-paying stocks have had a good run lately, but some of them may be getting a little frothy. A screen for value-priced dividend stocks is a good starting point for bargains and should help find the froth -- if there is any.

To see if there are any deals on the discount aisle, I ran a CAPS screener with the following settings:

  • P/E ratio positive and less than 15.4, the current value for the S&P 500 index.
  • Dividend yield greater than 2.3%, the current value for the S&P 500.
  • Long-term debt-to-equity ratio less than 1 to eliminate companies with high debt levels.
  • Revenue and earnings growth each greater than 3% over the past three years.
  • Market capitalization greater than $5 billion.
  • Rated by our CAPS community at four or five stars (out of five).

The screen kicked out 50 matches spread across seven of the nine sectors as listed below.


Number of screen matches

Basic Materials 18
Technology 12
Financial 6
Health Care 5
Industrial Goods 5
Services 3
Conglomerates 1

Interestingly, there were no hits from consumer goods or utilities, which are typically known for defensive, dividend-paying stocks. Turning knobs on the screener revealed that the P/E ratio limit was bouncing many consumer goods companies that would have otherwise passed. P/E and debt-to-equity ratios kept the gate closed for utilities.

The U.S.-based company from the screen with the highest CAPS rating and dividend yield from each sector is listed below.

Company Name

LT Debt-to-Equity Ratio

Dividend Yield



CAPS Rating
(out of 5)

Chevron 0.07 3.3% 8 Basic materials 5
3M (NYSE: MMM  ) 0.28 2.6% 14.8 Conglomerates 5
Aflac (NYSE: AFL  ) 0.01 3.0% 8.6 Financial 5
Baxter International 0.66 2.4% 13.8 Health care 5
Eaton (NYSE: ETN  ) 0.42 3.9% 9.7 Industrial goods 5
Walgreen (NYSE: WAG  ) 0.16 3.2% 11.9 Services 4
Intel (Nasdaq: INTC  ) 0.15 3.3% 10.8 Technology 5

Source: CAPS Screener results. TTM = trailing 12 months.

I have CAPScalls on Chevron, Aflac, and Intel and own Chevron and Intel. Based on the screen and article research, I'll be adding Eaton to my scorecard with an outperform call.

Screen results should always be considered a start for further research, not outright buy recommendations. However, this screen shows there are still some dividend-paying values out there and that it's tough to find bargains in traditional defensive sectors.

Fool contributor Russ Krull owns shares of Chevron and Intel. You can follow his CAPS picks here.

The Motley Fool owns shares of Intel. Motley Fool newsletter services have recommended buying shares of 3M, Chevron, Aflac, and Intel. Motley Fool newsletter services have recommended creating a diagonal call position in 3M. The Motley Fool has a disclosure policy.
We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Read/Post Comments (12) | Recommend This Article (24)

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 July 23, 2012, at 6:08 PM, mobil4 wrote:



  • Report this Comment On July 23, 2012, at 10:26 PM, awallejr wrote:

    mobil4 check out my suggestions here:

    The problem with Russ's screen is it wouldn't pick-up MLPs because they would never meet his screen criteria yet they are some of the best yield plays out there.

  • Report this Comment On July 23, 2012, at 10:33 PM, awallejr wrote:

    mobil4 check out the stocks I suggested in response to Russ's article in this blog at here:

    The problem with Russ's screen criteria is these types of stocks won't be picked up but are great yield plays.

  • Report this Comment On July 23, 2012, at 10:52 PM, portefeuille wrote:

    Pretty low dividend yields. You can get >5% p.a. for many European blue chip stocks (ignoring the "caps" rating) and quite a few of those have a dividend yield >10% p.a. if you relax the "debt criterion" a little ;) ...

    some of them are positions in my "fund".

  • Report this Comment On July 23, 2012, at 10:58 PM, portefeuille wrote:


    Europe dividend outlook set to close gap with U.S.

    Mon Jul 23, 2012 7:07pm IST


    Across all business sectors, average dividend payouts in Europe are running at around 42 percent of earnings, far higher than the 33 percent seen in the United States, which means investors in Europe get a bigger slice of the bottom line.

    Financials, telecoms and utilities - the biggest euro zone dividend payers - are handing out more than their five-year average. The dividend yield, which measures a company's payout relative to its share price, on the Euro STOXX 50 is 5.3 percent, compared with S&P 500 companies on 2.6 percent and negative real yields on government bonds.

    European payouts may even pick up, as cash-rich companies baulk at investing in new factories and hires, given the weaker backdrop, and instead look to keep investors sweet by passing on excess profits.



  • Report this Comment On July 23, 2012, at 10:59 PM, portefeuille wrote:
  • Report this Comment On July 23, 2012, at 10:59 PM, portefeuille wrote:
  • Report this Comment On July 24, 2012, at 8:58 AM, BarneyRubbel wrote:

    Yeah lets' just go for yield, why don't you screen for highest yield and low prices? Forget about risk, it's overrated!

  • Report this Comment On July 24, 2012, at 7:36 PM, rd80 wrote:

    Many thanks for the comments.

    This screen was run more to look for values than specifically targeting high yield. Between some of the parameters used and picking US-based stocks, several higher yielding tickers that made the screen didn't get a mention in the article.

    Based on the feedback here and at my blog, I'll take another stab at something like this, but with more focus on yield and without limiting the results in the article to US companies.

    Thanks for reading.

    Fool on!


  • Report this Comment On July 26, 2012, at 9:38 PM, GW1000 wrote:

    I like this list. I own all except AFL and BAX, and I would like to own them also. I bought ETN today. I like their impressive, diversified mix of products.

  • Report this Comment On July 28, 2012, at 8:56 AM, Allwin2 wrote:

    Russ, Nice article. Love the companies listed. is it possible to share (i.e. to make available) with readers the original list of 50 companies which passed the screen?

  • Report this Comment On July 28, 2012, at 10:32 PM, rd80 wrote:

    Hi Allwin2,

    It's possible, but the easiest way to get the list would be to re-run the screen. There's a link to CAPS screener and all the parameters I used are in the bullet list above the table in the article.

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