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.
But there is much more to a quality dividend stock than just this income. Earlier this month, I featured 10 dividend stocks that should be sold right away. Now, 20 days later, all but two of those clunkers still fail my Portfolio Grader screening test. (The two exceptions are barely hanging on at C-rated holds). If you haven’t taken a look at this list, I recommend you do so because they’re all big names on Wall Street.
The fact is that the constantly changing market has made things more complicated for yield seekers. In a different market environment, I’d usually have no problem unearthing dividend stocks that are ripe for the picking. However, right now I’m being especially picky with my high-yield recommendations due to the uncertainty surrounding interest rates. You can’t be too careful in this market, so to get you started, I’ve crunched the numbers and have uncovered top eight dividend stocks fresh out of Portfolio Grader.
Here are my criteria for selecting today’s top eight 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 eight superb dividend stocks that have an average dividend yield of 3.8%:
|Ticker||Company Name||Dividend %||Total Grade||Quantitative Grade||Fundamental Grade|
|AEP||American Electric Power Company, Inc.||3.8%||B||A||B|
|AVB||AvalonBay Communities, Inc.||3.0%||A||A||B|
|FTR||Frontier Communications Corp.||6.0%||A||A||B|
|GAS||AGL Resources, Inc.||3.7%||A||A||B|
|HCN||Health Care REIT, Inc.||4.8%||B||A||B|
|LMT||Lockheed Martin Corporation||3.0%||B||A||B|
|SPG||Simon Property Group, Inc.||3.1%||A||A||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!