What does an attractive stock look like to you? If you're like most people, you want one that'll make you money. For many, finding a pretty stock means chasing companies poised to deliver monster revenue growth -- ones with exciting new products or services.

Unfortunately, that tends not to work. Jeremy Siegel, Eugene Fama, and Kenneth French -- unbiased academics whose work has built the case for non-sexy stocks -- have done the research to prove it. They've shown that you don't need to find moon rockets to make big money in the market. In fact, it's better if you steer clear of them altogether.

For this article, I screened for stocks with strong financial positions that aren't betting the farm on wispy future dreams. Stocks with cash coming in. And stocks that can pay dividends. Why the last one? Because dividend payers have been shown to outperform. In fact, I specifically pursue them in my Motley Fool Income Investor newsletter. It's beaten the S&P 500 by more than eight percentage points since inception in 2003, and winning dividend stocks are the reason why.

Is a Brad Pitt hiding in your portfolio?
I ran this screen using Capital IQ (a unit of Standard & Poor's), which lets me dial in on some pretty specific variables. It doesn't yield recommendations per se, but stocks that can start you off on the right foot for further research. Here are the criteria:

1. Increasing operational returns. Why? Returns -- especially when compared with the costs of those returns -- are the lifeblood of an investment. We'll save the complicated cost comparison for another day, but I'll scope for stocks whose returns on equity have increased in the past year.

2. Price not too sexy. Why? The flavor of the month can be great, but for this screen, I'd prefer to stick with stocks without a lot of sizzle at the moment. I'll include stocks more than 10% off their 52-week highs.

3. A growing market for its products or services. Why? Although some of the best investments can be companies facing declining markets -- Income Investor has a few of these bets currently -- a market showing at least some growth is arguably an easier place to start for many investors. I'll use positive revenue growth as a proxy for a growing market.

4. Pays a dividend. Why? Ned Davis research showed that between 1972 and 2006, S&P dividend-paying stocks beat non-payers by six percentage points annually, assuming reinvestment of dividends. For this screen, I'll look for stocks yielding at least 1%.

5. Cash flows greater than earnings. Why? Other academic studies -- one by Richard Sloan in particular -- show that companies whose cash flows exceed accounting earnings perform better.

Company Name

Dividend Yield

TTM* Revenue Growth

Marathon Oil (NYSE:MRO)






Alcoa (NYSE:AA)



BHP Billiton (NYSE:BHP)



Whole Foods (NASDAQ:WFMI)



Halliburton (NYSE:HAL)






*Trailing 12 months.

But don't forget the decliners!
Are these the only interesting stocks the market has to offer? Absolutely not. Remember, stocks with declining revenues can make great investments if their prices have fallen out of proportion to their cash earnings power. After a big initial fall, it's possible for these stocks to creep back up for years afterwards. Why? Often, the best performers in a waning industry will retain what business there is while buying struggling competitors at deep discounts. Not a bad factor to have on your side when the market is looking the other way.

Because stock selection goes beyond screening, I invite you try my Motley Fool Income Investor service via a free guest pass. Our stock recommendations are beating the market by more than eight percentage points. Simply click right here to learn more.

James Early owns shares of CNOOC. Whole Foods is a Motley Fool Stock Advisor selection. 3M is an Inside Value recommendation. The Motley Fool has a disclosure policy.