5 Dividend Paying Stocks to Watch


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Dividend yields will often fall in low interest rate environments (usually due to a slow economy) and bull markets (stock returns tend to outpace dividends.) When you combine those two factors over the last 18 months the average dividend yield available in the S&P 500 has only been lower during the stock bubble of 2000-2001. This is not a great sign for stocks over the long term but it does mean that there are a few firms who are really standing out in contrast. We should expect to see dividend yields remain low while the Fed keeps interest rates near zero.

We have listed the criteria we used to develop the search for these stocks below. You can also run the search yourself at  finviz.com . Try to modify the criteria yourself to meet your specific investing style.

Dividend Yield
A dividend is a signal that not only is the firm likely making profits that are increasing its cash balance but that management is working on the shareholder's or owner's behalf. Funding growth is a good thing but returning a payment to your shareholders as well will reduce account volatility and can increase the chances of a profitable position over the long term.

Optionable and Shortable
We use this criteria to filter out stocks that have liquidity problems and may be expensive to trade. It is usually safe to assume that if the stock has listed options and is easy enough to borrow that it can be shorted that there will be enough liquidity to accommodate most tradings strategies.

Looking for a stock with a return on equity (ROE) metric set to Positive limits our search to companies making a profit. If we were to deconstruct ROE you would see that it includes most of the important information from the income statement and balance sheet.

Unless you are a true contrarian, most traders would agree that "the trend is your friend". We've narrowed our search to stocks that have a positive growth of over 10% this year, then further narrowed it down to those stocks that are up this month. The better the trend the better the momentum for a potential trade.

Dividend Yield: 3.78%  ROE: 13.27%   Performance (YTD): 20.09%


Knightsbridge Tankers ( VLCCF )
Dividend Yield: 8.92%  ROE: 17.93%   Performance (YTD): 81.24%


Duke Energy ( DUK )
Dividend Yield: 5.36%  ROE: 5.60%   Performance (YTD): 10.79%


Breitburn Energy Partners ( BBEP )
Dividend Yield: 7.94%  ROE: 5.10%   Performance (YTD): 77.37%


HJ Heinz ( HNZ )
Dividend Yield: 3.64%  ROE: 51.73%   Performance (YTD): 18.91%


Investing for dividends can be a productive way to smooth returns over the long term. It represents a pro-shareholder attitude from management and can be compounded for even higher returns over the long term. You can learn more about investing in dividend paying stocks in the videos below.

BASICS Turbocharge Your Dividend Strategy

BASICS Dividends or Growth - You Don't Have to Choose

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing Stocks
Referenced Stocks: BBEP , DUK , HNZ , NST , VLCCF

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