U.S. dividend stocks looking for stability

Today, we’ll look for U.S. stocks that have a strong history of dividend and earnings growth, as well as stable dividend and earnings prospects for the coming year. To pass the screen today, stocks must have a market float of at least $1-billion (U.S.) and a dividend yield of at least 2 per cent. In addition, the dividend payout ratio must not exceed 80 per cent of the 12-month earnings estimate, dividends growth must be positive over the last year, total annualized dividend growth cannot be negative over the past five years, and the five-year earnings growth rate must exceed the median of the 2,100 U.S. companies that CPMS tracks. The expected price return on the stocks also must be higher than 5 per cent based on the median of analyst price targets.

“This is an interesting list for investors looking to get a little more conservative in 2011 given that the S&P 500 is up 46 per cent over the last two years including dividends,” said Jamie Hynes, senior consultant at CPMS. “The stocks on this list have relatively stable dividend yields of at least 3.9 per cent, far higher than short-term and even 10-year government bond rates, plus expected price returns of at least 5 per cent. With this said, there are no guarantees with equities. Three of the names on this list had a negative total return in 2010 despite ranking highly on this screen.”

Source: Globe and Mail

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