5 Dynamic Dividend Stocks

The New York Yankees of the '50s and the Chicago Bulls and Dallas Cowboys of the '90s had one crucial element in common: consistent excellence in their organizations and performance. That's a rare accomplishment, but if you think it could never occur in your portfolio, think again. Carefully chosen dividend-paying stocks could be your key to superstar returns.

Build the next investing dynasty
These long-haul outperformers can help you build your fortune, as studies from investing gurus such as Jeremy Siegel have shown time and time again. Finding them is the mission of our Motley Fool Income Investor service.

Total (NYSE:TOT), for example, has beaten the S&P 500 by 35 points since December 2003, and it's currently rewarding investors with a 5.9% yield. Or consider Tupperware Brands, which has beaten the S&P by 84 points since October 2005, atop a current 2.5% yield. While these stocks happen to be Income Investor recommendations, you don't need to be a subscriber to get these great gains.

Identify new talent
With the help of Motley Fool CAPS, we'll search for the best dividend-paying stocks around. Here are several dividend picks that have also earned high ratings from the 135,000 members of our CAPS community:

Sources: Yahoo! Finance and CAPS, as of Aug. 20.

Any one of these quality companies would add some dividend excellence to your portfolio, but let's take a closer look at why CAPS members think that Philip Morris International is worth a hard look.

Does my dividend have a glass jaw?
The last thing we want in a dividend-paying company is the risk that the company will fall off a cliff and have to pull back its dividend. This kind of situation usually ends up being a double whammy, because not only do you lose your dividend payout, but many of the dividend-loving investors who own the stock will also run for the hills, causing the stock price to fall.

With that in mind, there are three things I immediately look for when kicking the tires of a dividend payer -- dividend history, financial statements, and business stability.

If there's one thing to like about Philip Morris International, it's the stability of the business. Sure, the health problems associated with its products mean that there's a definite damper on the company's growth potential. On the flip side, though, the company doesn't have to worry much about customers abandoning its products just because of some lousy recession. In other words, we could say that demand is pretty inelastic.

The company doesn't give us a whole lot to worry about from a financial standpoint, either. While it does carry a huge amount of debt -- particularly when compared to shareholder equity -- its profits are enough to keep interest payments very safely covered. Its cash flows are even more encouraging, with far more cash gushing out of its operations than it needs to invest in capital expenditures. That, of course, means that the company has plenty of money to cover its dividend payout.

If there's one hole we could poke in the company's dividend story, it's that it doesn't have much of a dividend history. But then, it's only been a standalone company since early 2008, when it was spun off from dividend dynamo parent Altria (NYSE:MO).

What the bulls say
Philip Morris International's stock is a clear favorite on CAPS, where it has a perfect five-star rating thanks to 1,888 outperform ratings from community members.

Included in this bullish group is CAPS All-Star AccountantMike, who gave the stock a thumbs-up back in April and said:

This is a major international tobacco seller. I've done lots of traveling in the developing world and people there smoke like chimneys. There are a lot fewer regulations about advertising cigarettes, selling to kids etc. internationally. Foreign governments have bigger problems on their minds than regulation of the tobacco industry, and no government wants to kill the golden goose of tax revenues. Furthermore, tobacco companies spend a ton of money and effort lobbying (bribing) bureaucrats and developing world politicos are not exactly paragons of integrity. [Read more.]

Get into the action
You can check out who else has been bullish on these stocks, as well as chime in with your own thoughts, by heading over to CAPS. While you're there, you may also want to check out a few of the other highly rated dividend payers we've mentioned above.

Dividend stocks could help you transform your portfolio from the flash-in-the-pan Florida Marlins into the dependable New York Yankees. And if you hate the Yankees, it's probably because they're so darn good, so darn often.

More CAPS Foolishness:

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