Please ensure Javascript is enabled for purposes of website accessibility

Dream Stocks for Dividend Investors

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

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

Company

Dividend Yield

CAPS Rating (out of 5)

Manulife Financial (NYSE:MFC)

5.1%

*****

Total (NYSE:TOT)

5%

*****

StatoilHydro (NYSE:STO)

4.2%

*****

Emerson Electric (NYSE:EMR)

4.1%

*****

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.

StatoilHydro
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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

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

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

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
373%
 
S&P 500 Returns
122%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/10/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.