Everyone knows that dividend stocks pack a one-two punch of security and profit opportunity. As a holder of dividend stocks, you receive a steady stream of income from your investment. The cash payments these companies provide give investors the confidence they need to keep buying pressure behind the stock and keep volatility low.
Of course, the end of 2013 has made things a little more complicated for yield seekers. I say that because dividend stocks have gotten more volatile as bond yields have risen. In a different market environment, I’d usually have no problem recommending dividend stocks that are ripe for the picking. However, right now I’m being especially picky with my high-yield picks due to the uncertainty surrounding when the Fed will end Quantitative Easing. Some dividend stocks are experiencing some near-term choppiness as a result, but I expect this volatility to pass soon enough. So I’m at the ready looking for more high-yield opportunities and advise you do the same.
To get you started, I’ve crunched the numbers and have come up with the Top Five dividend stocks fresh out of Portfolio Grader.
Here are my criteria for selecting today’s Top Five dividend stocks:
- A dividend yield over 3%—after all, this is a profit maximizing exercise!
- A dividend yield that isn’t substantially higher than competitors’—remember, that’s a red flag for fundamental problems.
- At least a B rating—there’s no point in looking into it if it’s a C-rated stock, which makes it an automatic hold.
- A significant increase in dividend payments over the years.
Keeping these criteria in mind, I have a list of five superb dividend stocks that have an average dividend yield of 3.2%…
|Symbol||Name||Yield||Quantitative Grade||Fundamental Grade|
|CLX||The Clorox Co.||3.0%||B||C|
|LMT||Lockheed Martin Corporation||3.8%||A||B|
|WM||Waste Management Inc.||3.3%||B||B|
Despite some of the macro forces weighing on dividend stocks right now, there still are a handful of premium income plays on the market right now. All I recommend is that you continue using Portfolio Grader to help you separate the wheat from the chaff (and if you subscribe to any of my newsletters, continue to follow the recommendations I post there because those will truly be the best of the best). Happy hunting!