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Dream Stocks for Dividend Investors

By Dave Mock - Updated Apr 5, 2017 at 7:59PM

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No need to pinch yourself -- these high-payout stocks are the real deal.

Investors are always hunting for the next big stock -- the dream stock whose price increases several times over when the market finally discovers it. In hindsight, it's easy to pick out the 10 best stocks of the past decade. But I'm more interested in the tools that can not only help me find new stock ideas today, but also evaluate tomorrow's greatest companies.

Motley Fool CAPS, a 120,000-member community of investors helping each other beat the market, offers a variety of resources to seek out tomorrow's market leaders. We've enlisted CAPS' nifty screener to help us find stocks with:

  • A market cap of at least $1 billion.
  • A long term debt-to-equity ratio of less than 0.5.
  • A dividend yield of at least 4%.
  • A price-to-earnings ratio of less than 25.

Once we've found our candidates, we'll tap our CAPS members' collective intelligence to see whether these companies present real opportunities -- or whether the numbers fail to tell the true story.

Opinions with the numbers
Here's a sampling from the list of stocks our screen pulled up today.


Dividend Yield

CAPS Rating (out of 5)

Manulife Financial (NYSE:MFC)



Total (NYSE:TOT)



StatoilHydro (NYSE:STO)



Emerson Electric (NYSE:EMR)



Data and star rankings from CAPS. All data as of Dec. 12.

Manulife Financial
Since AIG's collapse in September, shares in Canadian life insurer Manulife Financial, and other insurance companies like Prudential Financial (NYSE:PRU), have been hammered. Fear by association isn't sellers' only motivation, though -- many feel the insurance industry faces risks associated with long-term care products, which could make earning a profit difficult.

But many contend that the downside of long-term care products is already priced into the stock, and that rival insurers actually have potential to pick up business from AIG. Many CAPS members are also bullish not only on the company's position in Canada and the U.S., but also on its opportunity for growth in China's underdeveloped life-insurance market. As such, 97% of the 373 CAPS members rating Manulife Financial expect it to outperform the market.

Total SA
Shares of many oil companies have been sinking lately, including integrated oil and gas heavyweight Total. The current price of crude makes certain new developments -- particularly oil sands -- less financially attractive. But this deep-pocketed firm is in a position to capitalize on the turmoil, with rumors swirling about a possible bid for mid-sized Canadian oil company Nexen.

Many CAPS members are bullish on Total for its large oil reserves and its global footprint. The company also has a strong record of performance, handily beating the S&P 500 over the past five years. When you add in today's healthy dividend yield, more than 96% of the 583 CAPS members rating Total expect it to continue outpacing the broader market.

Norwegian oil company StatoilHydro recently partnered up with Chesapeake Energy, buying a stake in its Marcellus Shale project. The deal grants StatoilHydro access to a huge amount of land and the experience of Chesapeake's drilling and completion techniques, allowing the two companies to grow together.

As a backstop to diminishing growth opportunities, Statoil Chief Executive Helge Lund committed to a focus on capital discipline and controlling costs to weather the energy industry's downturn. More than 97% of the 802 CAPS members seem to like Lund's plan, rating StatoilHydro a market-beater.

Emerson Electric
While many companies like National City (NYSE:NCC) have cut or eliminated their dividends this year, others appear more stable and likely to continue payouts. Serial dividend payer 3M (NYSE:MMM) and Emerson both have levered free cash flow payout ratios at 45%, indicating a solid cash flow cushion to maintain payments.

Emerson also has a solid history as a well-run, diversified, international manufacturer that is poised to bounce back from a downturn better than many others. In CAPS, more than 98% of the 996 members rating Emerson expect it to beat the market in the future.

Let 120,000 members be the judge
The collective wisdom of a huge pool of investors can help give context to a page of numbers developed through a stock screen. But even with an entire community of qualified opinions acting as the judge, individual investors are still the jury. Make sure you perform your own due diligence.

Run your favorite factors through the Motley Fool CAPS screener. It's totally free, and we think you'll like the results.

The Motley Fool Income Investor service scours the market for solid investments that pay investors to hold shares. See which dividend-paying firms have the service besting the market by four points today with a free 30-day trial.

Fool contributor Dave Mock dreams of stocks and sugarplum fairies, but not simultaneously. He owns shares of 3M. Total SA and StatoilHydro are Income Investor picks. 3M and Chesapeake Energy are Inside Value recommendations. The Fool's disclosure policy screens the good, the bad, and the ugly.

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Stocks Mentioned

Emerson Electric Co. Stock Quote
Emerson Electric Co.
$87.46 (1.00%) $0.87
TotalEnergies Stock Quote
$52.16 (0.64%) $0.33
Statoil ASA Stock Quote
Statoil ASA
$37.45 (0.74%) $0.28
Manulife Financial Corporation Stock Quote
Manulife Financial Corporation
$18.88 (3.00%) $0.55
Prudential Financial, Inc. Stock Quote
Prudential Financial, Inc.
$101.58 (3.05%) $3.00
3M Company Stock Quote
3M Company
$149.54 (1.15%) $1.70
National City Corporation Stock Quote
National City Corporation

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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