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5 Candidates for 2013's Best Dividend Stocks

Brian Stoffel
December 18, 2012

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.



PEG Ratio

Payout Ratio From FCF

Veolia Environnement (NYSE: VE)








StoneMor Partners (NYSE: STON)








Textainer (NYSE: TGH)




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