Dividend-paying stocks have had a good run lately, but some of them may be getting a little frothy. A screen for value-priced dividend stocks is a good starting point for bargains and should help find the froth -- if there is any.

To see if there are any deals on the discount aisle, I ran a CAPS screener with the following settings:

  • P/E ratio positive and less than 15.4, the current value for the S&P 500 index.
  • Dividend yield greater than 2.3%, the current value for the S&P 500.
  • Long-term debt-to-equity ratio less than 1 to eliminate companies with high debt levels.
  • Revenue and earnings growth each greater than 3% over the past three years.
  • Market capitalization greater than $5 billion.
  • Rated by our CAPS community at four or five stars (out of five).

The screen kicked out 50 matches spread across seven of the nine sectors as listed below.

Sector

Number of screen matches

Basic Materials 18
Technology 12
Financial 6
Health Care 5
Industrial Goods 5
Services 3
Conglomerates 1

Interestingly, there were no hits from consumer goods or utilities, which are typically known for defensive, dividend-paying stocks. Turning knobs on the screener revealed that the P/E ratio limit was bouncing many consumer goods companies that would have otherwise passed. P/E and debt-to-equity ratios kept the gate closed for utilities.

The U.S.-based company from the screen with the highest CAPS rating and dividend yield from each sector is listed below.

Company Name

LT Debt-to-Equity Ratio

Dividend Yield

P/E (TTM)

Sector

CAPS Rating
(out of 5)

Chevron 0.07 3.3% 8 Basic materials 5
3M (NYSE: MMM) 0.28 2.6% 14.8 Conglomerates 5
Aflac (NYSE: AFL) 0.01 3.0% 8.6 Financial 5
Baxter International 0.66 2.4% 13.8 Health care 5
Eaton (NYSE: ETN) 0.42 3.9% 9.7 Industrial goods 5
Walgreen (NYSE: WAG) 0.16 3.2% 11.9 Services 4
Intel (Nasdaq: INTC) 0.15 3.3% 10.8 Technology 5

Source: CAPS Screener results. TTM = trailing 12 months.

I have CAPScalls on Chevron, Aflac, and Intel and own Chevron and Intel. Based on the screen and article research, I'll be adding Eaton to my scorecard with an outperform call.

Screen results should always be considered a start for further research, not outright buy recommendations. However, this screen shows there are still some dividend-paying values out there and that it's tough to find bargains in traditional defensive sectors.

Fool contributor Russ Krull owns shares of Chevron and Intel. You can follow his CAPS picks here.

The Motley Fool owns shares of Intel. Motley Fool newsletter services have recommended buying shares of 3M, Chevron, Aflac, and Intel. Motley Fool newsletter services have recommended creating a diagonal call position in 3M. The Motley Fool has a disclosure policy.
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