"Do you know the only thing that gives me pleasure? It's to see my dividends coming in."
-- John D. Rockefeller
Mr. Rockefeller's words resonate now, as investors, professional and amateur, stare at the market's abyss, wondering how to generate returns. Since price appreciation is no longer a viable option for producing returns in the short term, investors are turning to stocks with high dividend yields to eke out returns.
Dividends can be a sign of a company's financial health, but be sure to examine the viability of the business beneath the financials and its general performance in downturns. The underlying business can clue an investor in as to whether a company’s dividend is sustainable. For example, the health care or utilities sectors generally weather the worst times better than cyclical sectors like technology.
In this macro environment, investing in stocks such as Medical Properties Trust
These days, roughly one-third of publicly traded companies in this country continue to pay a steady dividend. Mature companies that have more cash than they need are often some of the strongest ones out there.
How do you find solid companies with such high dividend yields? I did the dirty work for you using the Motley Fool's CAPS screener. To search for stocks with hefty dividends, I screened for companies with:
- A minimum dividend yield of 5%.
- Market caps of $250 million or greater.
- Five-star ratings, the highest possible, from our 125,000-member CAPS community.
After running the screen, here’s what I came up with:
Company |
Market Cap |
Dividend Yield |
---|---|---|
Amerigas Partners |
$1.81 billion |
8.1% |
Atlas Energy Resources |
$941 million |
16.4% |
Brookfield Infrastructure Partners |
$307 million |
8% |
Medical Properties Trust |
$302 million |
17.6% |
Omega Healthcare Investors |
$1.2 billion |
8.2% |
Philip Morris International |
$75.2 billion |
5.8% |
Data from CAPS as of Feb 2, 2009. Yields may not reflect recent company events.
However, just because a company doles out dividends now, that doesn't necessarily mean it always will. Companies are increasingly becoming more cash-constrained.
Take Dow Chemical
In short, dividends are one way to search for quality companies, but it's important to dig deeper and see if that investment is right for your portfolio. The above table is a great place to start, but you really need to keep up-to-date with dividend payers, since many continue to cut their payouts in this cash-centric environment. Start your search today at Motley Fool CAPS.
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