Bloomberg the Company

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Follow Us

Industry Products

Markets & Finance

Not Just Any Dividend Payer


By Michael Kaye, CFA In this choppy, uncertain market, dividend-paying stocks -- already made more attractive by tax-code changes in recent years -- have acquired even greater appeal. The notion of a steady cash payout can be a comfort amid equity-market gyrations. But how can an investor identify the most attractive issues among the dividend payers?

We thought we'd take a crack at the question in this week's screen. Our first thought: While it's nice to own a stock with a steady payout, it's even better to get one with a dividend yield well above the market average. So we looked for issues with a yield of 3.5% -- roughly double the average for the Standard & Poor's 500-stock index.

STRONG TRACK RECORD. But some caveats are in order. Investors should never buy a stock on the basis of yield alone, according to Joseph Tigue and Joseph Lisanti, authors of S&P's The Dividend-Rich Investor. In some cases, a higher-than-average yield may signal that a stock's price is depressed by factors like disappointing earnings or adverse news about a stock. "The high yield could signal either a dividend cut or dividend omission somewhere down the line," note Tigue and Lisanti.

That's where our second criterion comes in. We tried to get history on our side by looking for stocks with a long-term record of dividend growth. So we sifted for those issues that have increased their dividend in each of the past 10 years.

As a final filter we looked for stocks that are also attractive based on their potential for capital appreciation. So we screened for those issues ranked 4

STARS (accumulate) or 5 STARS (buy) by analysts from Standard & Poor's Equity Research Services. Stocks with those designations are expected to outperform the overall market on a total return basis over the next 6 to 12 months.

Our search yielded these 10 names:

Company

Ticker

S&P STARS Rank

Alllied Irish Banks

AIB

4

Altria Group

MO

4

AmSouth Bancorp

ASO

4

Colonial Properties Trust

CLP

4

EastGroup Properties

EGP

4

Hospitality Properties Trust

HPT

4

Hudson United Bancorp

HU

4

Macerich

MAC

4

National City

NCC

5

ProLogis

PLD

4

Kaye is an analyst for Standard & Poor's Portfolio Services


LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus