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 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.

Data and star rankings from CAPS as of June 5.

Penn West Energy Trust
Many CAPS members are big fans of Canadian Energy Trusts such as Harvest Energy (NYSE:HTE) and Penn West Energy, which still yield strong monthly dividends even after cutting back on their distributions in recent months. Penn West picked up a couple of acquisitions in 2008 and is the largest of the energy trusts. Even with the recent volatility, its massive oil reserves hold lots of long-term potential for Penn West, even after Canadian tax structure changes in a couple of years. Backed by a juicy dividend, Penn West is expected to outperform the market by 97% of the 1,268 CAPS members rating it.

BP
In its most recent quarter, BP posted 62% lower earnings than last year due to the drop in crude prices, but like ConocoPhillips and Occidental, it posted better-than-expected results. Its huge Thunder Horse field in the Gulf of Mexico helped it bump up production to more than four million equivalent barrels a day, at the same time the company is slimming down. The company reduced costs by more than $1 billion in the quarter in order to help ride out the demand slump and was even able to raise its quarterly dividend payment by 4%. Many CAPS members like BP's strong dividend and the long-term demand outlook for oil, and nearly 96% of the 3,090 members rating the energy giant believe it will beat the broader market.

Novartis
Along with Teva Pharmaceuticals (NASDAQ:TEVA), Novartis is one of the top generic drug makers in the world, although other drug companies such as sanofi-aventis (NYSE:SNY) and Pfizer (NYSE:PFE) are making moves to expand further into generics. Novartis recently dove deeper in the generic pool, with a $1.2 billion acquisition of EBEWE Pharma's generic injectable cancer drugs business -- a potentially lucrative market that has drugs worth about $9 billion in annual sales coming off patent in 2015.

Novartis is continuing to show good progress on new drugs as well, and it recently reported positive phase 3 results for its smoker's lung treatment, QAB149. It also received FDA approval in the United States for its Reclast drug for use as a biannual osteoporosis treatment, which had already been approved as a once-a-year therapy. All the potential in generics and new drugs has many CAPS members feeling good, with 97% of the 1,322 members rating Novartis bullish.

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 judge. Fools should always perform their own due diligence.

Run your favorite factors through the Motley Fool CAPS screener. It's totally free, and we think you'll like the results.