Dream Stocks for Dividend Investors

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 140,000-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.

Data and star rankings from CAPS as of Nov. 6, 2009.

Enerplus Resources
Enerplus Resources is a Canadian energy trust that, similar to others like Harvest Energy Trust (NYSE:HTE), pays a generous monthly cash distribution. The company has a conservative payout ratio, and a good following of investors still like the stock's potential even after changes to the tax structure are due to take effect in 2011. With its Marcellus shale acquisition, the company is partnering with some experienced proven producers in a top U.S. drilling location, which the company and many CAPS investors see as an opportunity for significant growth. Nearly 97% of the 622 CAPS members rating Enerplus Resources expect it to outperform the market.

Bristol-Myers Squibb
Many CAPS members take comfort in Bristol-Myers Squibb's large cash balance and ability to generate solid free cash flow, which also gives them confidence in its ability to consistently pay a healthy dividend. It also helps the company make acquisitions as part of its strategy to acquire key biotech assets -- the company picked up biotech drugmaker Medarex in the third quarter and expects to announce new deals in the fourth. Its revenue-boosting drug Plavix, which it sells domestically and in foreign markets with sanofi-aventis (NYSE:SNY), faces patent expiration in the U.S. in 2012. But while other drugmakers have been diving in to large megamergers this year, Bristol-Myers Squibb hopes to reap long-term benefits by focusing on smaller deals and new drugs.

Despite generic competition now coming into international markets, Bristol-Myers Squibb recently experienced higher average drug prices and strong sales for Plavix. Excluding a one-time gain in last year's comparable quarter, Bristol-Meyers Squibb reported a 64% increase in third-quarter profit and $5.49 billion in revenue compared to $5.25 billion last year. About 94% of the 1,468 CAPS members rating Bristol-Myers Squibb expect it to beat the S&P.  

Maxim Integrated Products
Maxim provides linear and mixed signal products to end-markets such as industrial and communications, and competes with major players like National Semiconductor (NYSE:NSM) and Texas Instruments (NYSE:TXN). It's been seeing some substantial improvement as the semiconductor cycle churns out of the downturn -- it grew its sequential revenue in its fiscal first quarter by a double-digit percentage for the second straight quarter. Many CAPS members like Maxim's competitive position and dividend track record and as such, 93% of the 284 members rating Maxim Integrated Products are bullish.      

Let 140,000 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 of what to do with their own money. Fools should always perform their own due diligence.

Happily, it's easy to chime in with your own opinion. If you agree that these companies present dream opportunities -- or see more of a nightmare instead -- simply scroll down and add your thoughts in the comments box.