Batman v. Superman: Dawn of Justice enters theaters on March 25. Credit: Warner Bros. and DC Entertainment.

During nearly five years of ownership, my stake in Time Warner (TWX) stock has more than doubled, easily beating the S&P 500 during the same period. Reinvested dividends are at least partially to thank for the win.

You'd think I'd be arguing for buying Time Warner stock given how it's done for me, and my all-too-obvious interest in the sorts of genre entertainment Warner's DC Entertainment division produces and licenses. So why aren't I? Every investor needs a diversified portfolio that includes dividend stocks, and according to S&P Global Market Intelligence, there are 10 whose dividends offer more than what Time Warner is willing to pay. Each is defined by:

  • A market cap above $500 million.
  • A primary listing on one of the major U.S. exchanges (i.e., NYSE or Nasdaq).
  • Revenue growth above 5% annually over the past five years.
  • Total debt equal to 50% or less of equity.
  • A current dividend yield above 3%.
  • Dividend per-share growth above 15% annually over the past five years.

Time Warner stock falls short in many of these areas, yielding 2.49% as of this writing. Revenue, too, has grown just 0.9% annualized over the past five years, while dividends per share have expanded 10.5% annualized over the same period. Debt sits at 100% of equity.

The following three stocks have their problems, but they're better positioned than Time Warner to win at the dividend game:

  1. Cummins (CMI -1.40%). Tough times in the industrial sector have made for two tough earnings reports for the maker of diesel and natural gas-powered engines and related equipment. Per-share profits came in well short of Wall Street's estimates in each period. The good news? Cummins handily beat revenue forecasts last quarter, while an apparent turnaround in commodity prices had investors cheering, leading to an 8% jump in the stock on the day of the earnings report. Cummins stock also yields just more than 4% as of this writing, as the company has raised its per-share dividend payout by 32% annually during the past five years.
  2. Qualcomm (QCOM -2.19%). Holder of the most lucrative royalty agreements in the mobile phone business, Qualcomm is making big efforts to improve Wi-Fi and other forms of wireless communications. The company could certainly use the catalysts; revenue growth disappeared last year, and is down more than 11% during the trailing 12 months. Despite that, earnings have come in ahead of analyst estimates in each of the last four quarters. Qualcomm's mobile chipset business may not be as strong as it used to be, but it's been around too long to simply displace. Also, the dividend yields 3.89% as of this writing, as Qualcomm management has raised the per-share payout by 20% annually during the past five years.
  3. Waddell & Reed (WDR). Few studios are as well known as Warner Bros., and yet you could argue that one-time financing partner Legendary may be in a better position, thanks to its production and distribution deal with Universal. Recent box-office hits include the acclaimed biopic Straight Outta Compton, and former opening weekend champ Jurassic World. Sound good? Unfortunately, you can't directly buy shares of Legendary, but you can buy stock in Waddell & Reed, which owns a near 20% stake in the rising studio. If there's bad news here, it's that the asset management firm has been as badly hit as anyone by recent downturns in the stock market, forcing an executive shakeup and cost cuts. Both could take a toll on Waddell & Reed's dividend story, but it would have to get positively whacked to still not outperform what Time Warner offers right now. Waddell & Reed stock yields a sparkling 8.3% as of this writing, no doubt a consequence of raising the per-share dividend payout by 17.8% annually over the past five years.

Now it's your turn to weigh in. Would you buy Time Warner stock now? What about my three alternatives? Tell us which dividend stocks you're buying now, and why, in the comments section below.