Investors are always hunting for the next big stock -- the dream stock whose price increases several times over when the market finally discovers it. It's easy to look back and discover the 10 best stocks of the past decade. But I'm more interested in the tools that can help me evaluate tomorrow's greatest companies.

Motley Fool CAPS offers a variety of resources to aid Fools in finding tomorrow's leaders. Our 135,000-member community is full of investors helping each other beat the market.

We'll enlist CAPS to screen for dividend-paying companies, then get the story behind some of its more highly rated stocks. CAPS' nifty screener will 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.

Then we'll tap the collective intelligence of our CAPS members to see whether these companies present real opportunities -- or whether the numbers fail to tell the true story.

Opinions with the numbers
Below is a sample of stocks our screen returned. You can run this screen yourself -- remember, though, that your results may differ from ours as the market changes.


Dividend Yield

LT Debt-to-Equity Ratio

CAPS Rating (out of 5)

Royal Dutch Shell (NYSE:RDS-A)








Merck (NYSE:MRK)




Data and star rankings from CAPS.

Royal Dutch Shell joined other big oil players such as ExxonMobil, BP, and ConocoPhilips in reporting a decline in earnings recently, but many CAPS members remain bullish on the future of oil and energy in general. Members also like the company's solid dividend and see evidence it will continue to pay out generously -- while Italy's Eni cut its dividend recently, Shell recently joined Chevron (NYSE:CVX) in raising its dividend by 5%. And the company's CFO said it can easily continue to raise its investor payout in line with inflation. There's more to like, too: Citigroup's outlook on Shell's project delivery in the next one to two years elicited an upgrade on shares, and its CEO expects its recent restructuring program to save billions of dollars. While not everyone is sold on Shell, nearly 97% of the 232 CAPS members rating Shell expect it to outperform the market.

Chemical and sporting ammunition manufacturer Olin recently declared its 331st consecutive quarterly dividend, a record that earns it many a green thumbs-up in CAPS. Its Chlor Alkali division, which competes with Dow Chemical (NYSE:DOW) and Occidental Petroleum's OxyChem, saw lower chemical shipment volumes in its recent quarter. But its Winchester ammunitions business reached its second-highest quarterly sales and record operating earnings, thanks to recent strong demand that's also helped firearms manufacturers like Smith & Wesson (NASDAQ:SWHC). The company has struggled with free cash flow over the past 12 months, though, and it recently announced a $150 million debt offering, which would give some dividend investors pause. Recent results look better, however, as positive free cash flow in the second quarter helped boost the company's cash and equivalents to $192.2 million. As such, almost 97% of the 461 CAPS members rating Olin are bullish today.

Merck and Schering-Plough (NYSE:SGP) came one step closer to completing their merger when both companies' shareholders recently voted in favor of the deal. The pairing still needs antitrust clearance, which Merck is trying to obtain by agreeing to sell some animal health assets to sanofi-aventis. When and if the dust settles, investors anticipate significant cost savings and potential growth to follow, as Merck will be gaining access to Schering's strong pipeline of drugs, including Schering's recent FDA approval for its schizophrenia and bipolar drug, Saphris. The company is also fighting to keep its Remicade drug from reverting back to Johnson & Johnson due to a still-disputed possible change in control. In CAPS, nearly 93% of the 2,437 members rating Merck agree with other analysts and expect it to beat the broader market.

Let 135,000 members be the jury
The collective wisdom of a huge pool of investors can help give context to a page of numbers from a stock screen -- but individual investors are still the best judges. Fools should always perform their own due diligence.

And it's easy to chime in with your own opinion: If you agree that these companies present dream opportunities -- or disagree and see more of a nightmare -- simply add your comment to the article in the box below. No one's two cents are ever turned away!

Many solid companies that pay great dividends have made the "recommended" list at the Motley Fool Income Investor service. To see all the dividend-paying stocks that have the service beating the market by more than 5 points on average, take a free 30-day trial.

Fool contributor Dave Mock dreams of stocks and sugarplum fairies, but not together. He owns shares of Johnson & Johnson and ExxonMobil in dividend reinvestment plans. Johnson & Johnson is an Income Investor recommendation. The Fool's disclosure policy screens the good, the bad and the ugly.