As an investor, it doesn't pay to follow the crowd.

In this series, though, we highlight a possible exception -- the collective wisdom of our CAPS community. Read the next section if you're unfamiliar with our methodology. Skip it if you want to go straight to the results.

Why this crowd is different
Jumping into a stock because your rich neighbor did, or because you heard about it from your friend's uncle who used to work on Wall Street, or because CNBC has been talking about it nonstop is a recipe for disaster.

If there's one thing I've learned as a stock analyst, it's that any stock can be gussied up to sound like a world-beater. If there's a second thing I've learned, it's that being a smart person doesn't make you a good investor.

In the hands of a smart person with good communication skills, the never-were and never-will-be stocks sound like tickets to instant fortune. The ancient Greek philosophers made the distinction between rhetoric and knowledge. The former is convincing; the latter is true.

That's why we factor in track record in our Motley Fool CAPS community. We invite everyone to give stocks an outperform (akin to a "buy" call) or underperform rating (akin to a "sell" call) in CAPS. We then use those opinions to calculate a rating for each stock -- from one to five stars (five being the best). But -- and this is a big distinction -- we give more weight to the opinions of folks whose picks have performed well in the past.

The most popular health services high yielder
So, with that methodology as prelude, I present to you the top four- and five-star-rated health services stocks that yield 2% or more that have garnered the most outperform ratings by CAPS members. I used a minimum market capitalization of $100 million and the proviso that it must be listed on a major U.S. exchange. Remember, stocks are rated on a five-star scale by our CAPS community, so four- and five-star stocks are consensus outperforms.

Company

Market Capitalization (in millions)

P/E Ratio

 

Dividend Yield

CAPS Rating (out of 5)

Outperform Picks

China Medical Technologies (Nasdaq: CMED)

$350

NM

4.9%

*****

     1,417

Medtronic (NYSE: MDT)

$34,871

10.2

2.8%

****

     1,293

Becton, Dickinson (NYSE: BDX)

$16,139

13.6

2.1%

*****

     1,012

Pharmaceutical Product Development (Nasdaq: PPDI)

$2,801

29.8

2.5%

*****

      638

Baxter International (NYSE: BAX)

$25,403

16.8

2.7%

****

      635

Covidien (NYSE: COV)

$18,131

14.6

2.0%

****

      363

Mine Safety Appliances (NYSE: MSA)

$846

20.8

4.3%

*****

      153

Source: Motley Fool CAPS. NM= not meaningful.

The most popular stock is small-cap medical device maker China Medical Technologies, which has a nice 4.9% dividend yield, but negative trailing earnings to support that dividend. Two medical device big boys follow it in the rankings -- Medtronic and Becton, Dickinson. They have much lower yields, but have some earnings backup.

Which is your favorite health services stock? Is it one of these or is it a more hidden gem? Make your thoughts known in CAPS by clicking here. Or just go there to do further research on one of these stocks.

Anand Chokkavelu does not own shares of any company mentioned here. Becton and Covidien are Motley Fool Inside Value choices. Pharmaceutical Product Development is a Motley Fool Stock Advisor recommendation. The Fool owns shares of Medtronic. Try any of our Foolish newsletter services free for 30 days. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. The Motley Fool has a disclosure policy.