5 Candidates for 2013's Best Dividend Stocks

Though in reality it can be a pretty arbitrary choice of times, the end of each calendar year usually serves as a good time to look toward the future. Many of our Foolish contributors have been giving their thoughts on Things to Come in 2013.

Not wanting to miss out on the party, I've gone searching for some of the best dividend stocks to consider buying for the upcoming year. Read below to find out what the five candidates are, and at the end I'll offer up access to a special premium report on one of them.

Our five candidates
There are many things to consider when looking for a good dividend stock. A payout that's sizable enough to make a difference over time is nice; so is the potential for the stock's overall price to go up; and most important, the dividend needs to be sustainable.

To measure these characteristics, I've included a number of metrics below.

• The dividend yield tells you how much a stock is paying out relative to its price.
• The PEG ratio gives a rough estimate of how over- or undervalued a stock is. If it's above 1, the stock is considered overvalued; below, and it's generally undervalued.
• The payout ratio from free cash flow lets you know the percentage of money it brings in that it's paying out to shareholders. Anything above 100%, and its paying out more than it takes out, usually a recipe for disaster.

So here's how 2013's candidates stack up.

Sources: Yahoo! Finance, SEC filings. N/A = not available, due to negative profitability or negative free cash flow. All payout ratios are for the first nine months of 2012. *Apple's fiscal year ended in September, but only two dividend payments were made. The total of those payments were doubled to roughly reflect four quarterly payments.

Some solid picks from technology
Both Apple and Intel are kings of the ever-changing technology field. A decade ago, it would have seemed silly for these companies to be offering up dividends; but the fact of the matter is, these two have done well for long enough that they have enough cash left over to be able to give some back to shareholders.

While Intel is a slower-growing company, I'm looking at it for its attractive 4.4% dividend yield, its history of consistent dividends, and the fact that it looks relatively underpriced.

Apple, on the other hand, is more of a pure play of the stock's price right now. The fact that it's offering a dividend is somewhat incidental to my thesis, though it doesn't hurt as a nice bonus. I laid out my reasoning for why Apple is such a good buy earlier this month, when I bought it for my Roth IRA.

A turnaround play
Veolia is actually my pick as dividend for this current year. And though the stock hasn't beaten the market over the past 12 months, I'm not bothered. One year is hardly enough time to see if an investment thesis can play out; it's just that when the beginning of 2012 came around, I considered Veolia to be the best dividend company available.

The company is currently restructuring, as current CEO Antoine Frerot is trying to clean up the mess of debt created by his predecessor. The company is exiting the waste business in North America, and is focusing on reducing its debt and concentrating on meeting the water and environmental needs of its customers. I think Frerot has done a pretty good job so far, and there's potential for both a higher dividend in the future and a higher stock price.

Two smaller companies
Compared to the previous three companies, StoneMor and Textainer are much smaller outfits.

StoneMor, though relatively small, is the second-largest cemetery company in the United States. It appears to be losing money hand over fist, but this is largely because accounting procedures don't allow the company to put revenue on the books until the final product is delivered -- which, as we all know, can be unpredictable. Because of this, its dividend and underlying business are healthier than the balance sheet may have you believe.

Textainer, on the other hand, focuses on global trade by leasing out cargo containers. In any such business, macroeconomic cycles can play an outsize role in how the company performs. But as the economy is recovering, the company is using lots of money to buy new containers, which explains the negative free cash flow. If global trade continues to pick up, that will look like a wise move in hindsight.

Prepare for the upcoming year
Check back later this week to find out which of these five companies will be my choice. In the meantime, if you'd like to know more about Apple, whose stock has fallen almost 25% in the past three months, we've got just the thing for you.