Using a Stock Screener to Choose Dividend Stocks

Choosing dividend stocks for your portfolio can be a daunting task. You want stocks that will help you reach your goals for investing, income and for life. But how do you know which stock to choose? There are thousands of dividend stocks out there, and it can be difficult to decide which ones are best for you.

Enter the stock screener. You can use a stock screener to help you find dividend stocks that fit your requirements. Many web sites and brokerages offer stock screeners that can help you get an idea of what is available to you. Some of the qualifications you can screen for include:

  • Dividend Yield
  • PEG ratio
  • Price/book ratio
  • Market capitalization
  • Profit margin

Some dividend stock screeners also let you see dividend growth over the past few years. These qualities let you quickly narrow down your options. If you are looking for a stock to add to your dividend growth portfolio, you might look for a small cap with a high yield and with good estimated five year EPS growth. For those looking for other qualities in a dividend stock, your requirements might be different.

Different stock screening tools provide a variety of qualifications that can be used to pare down the offerings. Once you specify which stocks you want to include, the stock screener will return companies that match your parameters. This gives you a good place to start, and some ideas that appeal to you.

Once you have used the stock screener to narrow down your options, you can begin investigating the companies. Look closely at the fundamentals. How is the stock doing? Is it lower because of short-term factors? If so, you can get a really good deal. You can also look at the dividend history to see whether the company increases payouts regularly. If you are interested in regular dividend growth, dividend aristocrats can be a good place to start.

You don’t have to wade through piles of paperwork and read tons of reports to narrow down your stock options. With the help of an online stock screening tool, dozens of ideas can be delivered to you in seconds. This provides you with a way to pinpoint the stocks that are most likely to do you the best good in your portfolio, and help you reach your dividend investing goals. Find a dividend stock screener that you trust, and start your dividend stock search from that point.

JNJ Top Dow Dividend Stock, AAPL Considers Dividend

Dividend Channel has names Johnson & Johnson the “Top Dividend Stock of the Dow,” due to its long history of dividend increases, as well as its possibilities for the future. JNJ is a top dividend stock because of its profitability. Additionally, since the company specializes in consumer goods, there is a good chance that the future of JNJ is fairly solid. This is because many of the products the company makes are “needs” that see solid demand over time. With such credentials, it’s not hard to see why many consider Johnson & Johnson a solid dividend stock.

The other big news today is that it appears that Apple is seriously considering paying a dividend. AAPL shareholders have been asking for a dividend since the death of Steve Jobs (who was notorious for cash hoarding), and it appears that company leaders are seriously considering the idea of a dividend. No one is sure whether there will be a regular dividend, or whether there will be a special one-time dividend. And, of course, there might be no dividend at all. Cash rich Apple has a lot to think about, and it will be interesting to see what happens next.

Other dividends are making the news as well. W&T Offshore is doubling its regular cash quarterly dividend. WTI is boosting the payout from four cents a share to eight cents a share. The common shares will be affected. The company is an oil and natural gas company, developing deepwater and deep shelf reserves. With oil prices rising right now, it is little surprise that an oil company is seeing good profits.

Kaydon is offering a special dividend right now. KDN.N announced the dividend shortly after it posted earnings that missed expectations. The announcement of the special dividend provided a little spike for Kaydon, which makes specialty ball-bearings.

5 Tips for Building Your Dividend Income Portfolio

One of the most difficult aspects of building an income portfolio with dividend stocks is the patience needed to succeed. Creating a portfolio that offers reasonable returns that meet your monthly cash flow needs is, for the most part, a work of time. Here are 5 tips that can help you get started building your dividend income portfolio:

1. Don’t Assume You Need a Large Amount of Capital

Dividend investors don’t need a large amount of capital to get started. Indeed, it’s possible to open a brokerage account with as little as $0. Some brokers won’t require an initial deposit. You don’t even have to buy whole shares in many cases. It’s usually possible to purchase partial shares, so you can use whatever money you have to make a purchase. Start small, and you might be surprised at what you can accomplish.

2. Invest Consistently

If you want to build an income portfolio using dividend stocks, you need to invest consistently. This means that you invest on a regular basis, whether it’s once a week or once a month. Set up a regular schedule so that you are investing at regular intervals. Consistency is key if you want to take advantage of dollar cost averaging, and if you want to ensure that your portfolio grows.

3. Use DRIPs During the Building Phase

You can boost your power to build your portfolio if you make use of dividend reinvestment plans during your building phase. While you are building up your portfolio, use DRIPs, to help you accelerate the process. The dividend payouts will automatically buy more shares, so that you see bigger payouts, so you can buy more shares. This process will help you build your portfolio faster. You can stop using DRIPs once you are done building the portfolio and you are ready to receive the payouts for your regular expenses.

4. Consider Stocks that Regularly Raise Dividends

While the past can’t predict the present, you can still get an idea of a company’s dividend practices by considering the history. Look for stocks that consistently raise dividends. One good place to start is the list of safe dividend stocks. These are stocks that raise dividends at least once a year for the past 25 years. If you hold stocks that show regular dividend increases, you have a better chance of building your portfolio faster. Combine regular increases with a DRIP, and you have a potentially winning portfolio.

5. Be Realistic about Your Time Frame

Finally, you have to be realistic about the time it takes to build an income portfolio. You’re not going to end up with enough shares to generate the payouts you need for regular income in a short period of time. It takes planning and time. You can expect to take between seven and 10 years to build an income portfolio. It might even take longer, if you have to start with smaller capital. Be realistic about your time frame, and plan accordingly.

You can start a dividend portfolio now, and reap the benefits later. A dividend income portfolio is meant for the future, and not something you can expect to see regular cash flow from right now.

AAPL Dividend Hoopla; KO, JWN, ENB Dividend Increases

Since the death of Steve Jobs, Apple shareholders have become increasingly insistent about accessing some of the cash Apple has been hoarding. The most recent balance sheet shows that Apple has about $100 billion in cash just sitting there — and many shareholders think they have a right to some of it.

AAPL’s leaders have said they are considering what to do with the cash hoard, and trying to determine the best course of action. Some shareholders, though, are starting to murmur about legal action and forcing a dividend. There are some legal precedents in the past for forcing companies to pay dividends, but the circumstances aren’t the same as the current situation with AAPL. Over the next quarter or two, it should be interesting to see what happens with the company.

Dividend Increases from KO, JWN and ENB

Also this week, a few companies announced dividend increases. Some of the increases came from venerable dividend payers that continue to provide generous payouts to their shareholders. Some of those include:

  • Coca Cola: Once again, KO has proved why its on the list of dividend aristocrats. The quarterly dividend has been raised to 51 cents a share from 47 cents a share. The company’s revenues continue to grow, and the dividend indicates that KO is confident in its cash flow.
  • Nordstrom: The high-end retailer is looking to put its cash back into shareholder pockets with a 17% dividend increase. Additionally, JWN also announced a stock buy back program worth $800 million. The company appears to be benefiting from a renewed demand for designer goods as the economy begins its recovery.
  • Enbridge: Canadian pipeline company Enbridge also announced that it is increasing its quarterly dividend. In this case, it is boost its payout by 15%. ENB builds pipelines in the U.S. and in Canada, and is expected to continue to see profits.

HealthCare REITs with Strong Dividend Growth

Healthcare REITs have been gaining a lot of attention in recent weeks. Many of these stocks have been upgraded by analysts due to the positive outlook they have on the sector. Healthcare REITs are generally companies that buy, develop and manage properties and facilities that provide healthcare services. These facilities can be long term care facilities or offer nursing and other health services.

Healthcare REITs dominate the list of Real Estate Investment Trusts that have maintained dividend growth over the last 5 – 10 years. Many of these trusts are well positioned to take advantage of the expected senior living demand the US will face as the baby boomer generation begins to retire. We found 5 REITS with at least 4 years of consecutive dividend growth and a dividend yield over 4%.

Health Care REIT, Inc. (HCN)

Health Care REIT has increased its dividend for 4 consecutive years and has a dividend yield of 5.1%. Their 5 year dividend growth rate is 2.4%. HCN tends to raise its dividend every other quarter and it has increased its dividend again in the first quarter of 2012. Health Care REIT’s properties include skilled nursing facilities, senior housing, inpatient and outpatient medical centers and medical office buildings.


HCP has increased its dividend for 19 consecutive years and had a dividend yield of 4.7%, well below their 5 year average of 6.1%. Their 5 year dividend growth rate is 2.4%. HCP develops and manages a diverse set of healthcare real estate. Its properties include senior housing, medical offices, life science, skilled nursing and hospitals.

Omega Healthcare Investors (OHI)

Omega Healthcare Investors has increased its dividend for 8 consecutive years and has a dividend yield of 7.3% and a strong 5 year dividend growth rate of 10%. OHI invests in income producing healthcare facilities. Most of its investments are made in long-term care facilities in the US. The company also provides leas and mortgage financing for skilled nursing facilities.

Senior Housing Properties (SNH)

Senior Housing Properties has increased their dividend for 10 consecutive years and has a dividend yield of 6.6%. Their 5 year dividend growth rate is 2.6%. Senior Housing Properties owns over 200 senior living properties located in the US. It also owns 2 rehab hospitals and 82 medical offices.

Universal Health Realty Income (UHT)

Universal Health Realty Income has increased its dividend for 20 years. It has a dividend yield of 6.2% and a 5 year dividend growth rate of just 1.4%. UHT invests in a wide range of healthcare facilities that include surgery centers, rehab hospitals, acute care hospitals and medical office buildings. UHT also invests in childcare centers and preschools.

Bonus Stock: LTC Properties, Inc. (LTC) only has 2 consecutive years of dividend increases but we wanted to mention it here anyway because it is also a healthcare REIT with solid dividend growth. LTC has a dividend yield of 5.3% but was downgraded earlier this month by Stifel Nicolaus over valuation concerns. LTC pays its monthly dividends.

Should You Sell a Dividend Cutter?

One of the reasons that many people sell dividend paying stocks is because the company decided to cut its dividend. However, immediately selling a dividend cutter may not always be the best choice. In some cases, the cut might be temporary. Before you give up on a dividend stock, consider the circumstances surrounding the cut, and make sure that you are really sure that selling is the best option.

Will You Be Taking a Big Capital Loss?

Sometimes, a dividend is cut because of tough economic times, or because of some other external issue. If you sell in the middle of a market drop, you could very well be taking on a huge capital loss. In some cases, selling in order to harvest a loss for tax purposes might be worth it – as long as you do so after some careful thought.

However, in some cases dividend cuts are temporary. There is a chance that dividends will be raised again after market conditions stabilize. Many companies go through dividend cuts, and then raise them against later. You will need to decide whether or not you think the dividend cut is a symptom of a fundamental problem, or a defensive response to difficult times.

If you think that the stock will recover, and that dividends will be reinstated, don’t be too hasty in selling the stock. You don’t want to take a large capital loss on top of the loss of the dividend income.

Evaluate the Fundamentals

Of course, not every company cuts dividends during difficult times. Dividend aristocrats show consistency in raising dividends – even during times of economic recession. When considering which stocks to add to your portfolio, it can help to look at the fundamentals of the company. The management, balance sheet, cash reserves, and other items can be assessed in order to determine whether or not the company is still solid.

Deciding to Sell

It is difficult to decide to sell any investment, including a dividend stock. However, you do need to do what’s best for your portfolio. In some cases, investors choose to wait and see if a dividend will be reinstated, or at least wait to see if the stock price rises again in order to reduce some of the capital losses that come with selling.

Another indicator that it might be time to sell is if the company has cut the dividend several times in a row. A cut, and then holding steady, might not mean that a long term problem is on the way. However, several cuts in successive quarters, or the elimination of the dividend altogether, might give someone pause.

Ultimately, it’s up to you to decide what is going to work best in your portfolio, as well as whether you think it’s time to sell a dividend stock. Consider your position, and consider whether you think that the dividend stock will recover.

More Greek Drama and Dividend Increases: TKR, EFX, HUB.B

Earlier this week, it appeared that a deal would be done in Europe, with Greece receiving a bailout that would prevent a default. Greek leaders presented an austerity plan, and the markets rejoiced. Things changed, though, after Eurogroup leaders decided that the plan presented by Greek leaders didn’t go far enough.

After reviewing the plan, Eurogroup leaders asked Greece to increase austerity measures, as well as put it to a vote in the parliament so that it would pass and the measures would be guaranteed to be followed — not matter who wins the upcoming election in Greece.

The news has thrown investors into a panic, and the Dow saw its worst day of the (admittedly short so far) year. The news wasn’t all bad, however. Unemployment claims dropped last week, and that is providing some hope that the labor market is ready to improve. Consumer sentiment, though, slipped.

Dividend Increases

More companies announced dividend increases this week. Indeed, even with some of the uncertainty, many companies continue to pay dividends — and even to increase payouts. And, of course, there are plenty of people still calling for Apple to start paying a dividend. With so much cash, AAPL seems an ideal candidate to offer dividends. Three of this week’s dividend increases include:

  1. Timken (TKR): The quarterly dividend has been boost to $0.23 a share, representing an increase of 15%. Additionally, TKR announced that it will buy back up to 10 million shares.
  2. Equifax (EFX): Equifax is increasing its quarterly dividend by 12.5%, bringing the payout to $0.18 per share. The move comes as EFX continues to do its best to target a return to shareholders.
  3. Hubbell (HUB.B): A new dividend of $0.41 a share is being offered by electrical components make Hubbell.

Even during uncertain times, it is clear that some companies are doing well enough to continue returning cash to shareholders.

Stocks with the Best Dividend Growth

One of our favorite dividend lists that we build for our premium top dividend members is the dividend growth list.  To qualify for this list a stock must have a 5 year dividend growth rate of 5% or more and a 3 year net income growth rate of 10% or more.  The idea being that income growth and dividend growth combine to drive stock prices higher.  Today we are highlighting the 5 highest yielding stocks from the dividend growth stocks list.

It is possible to have a high 5 year dividend growth rate even if you cut your dividend or haven’t raised it in the last few years so we’ve eliminated any stocks that have had recent dividend cuts.  Each of these stocks has a dividend yield over 6%.

1. Natural Resource Partners – NRP

NRP is a limited partnership that owns and manages mineral properties in the US.  They also own coal reserves in the US.  NRP has a dividend yield of 8.3% and a 3 year net income growth rate of 14%.  They have increased their dividend for 8 consecutive years.

2. NuStar Energy – NS

NuStar stores and transports petroleum products but they also have an asphalt business as well.  Their dividend yield is 7.5% and they have increased their dividend for 10 consecutive years.  Their 5 year dividend growth rate is 5.2% and their 3 year net income growth rate is 16.2%.

3. AFA Provida – PVD

PVD administers pension funds in Chile.  They focus on collecting contributions, investing and managing benefits.  PVD has a dividend yield of 7.2% and has incrased their dividend for 3 years in a row.  Their 5 year dividend growth rate is 44% and their 3 year net income growth rate is 23%.

4. WestPac Banking Corp – WBK

WestPac Banking provides finanacial services to retail, business and institutional investor customers mostly based out of Australia and New Zealand. WBK has a dividend yield of 7.1%. They did cut their dividend in 2009 but since then have resumed dividend increases.  They raised their dividend by 25% in 2011.  WBK has a 5 year dividend growth rate of 14.1% and a 3 year net income growth rate of 21%.

5. California First National Bank – CFNB

California First National is focused on leasing, commercial bank loans and business loans to purchase assets leased by others.  CFNB has a dividend yield of 7% and has increased their dividend for 6 consecutive years.  They have a 5 year dividend growth rate of 24% and a 3 year net income growth rate of 16%.

6. Chevoit Financial – CHEVD

Chevoit Financial used to be under the symbol CHEV but recently changed to CHEVD.  Chevoit focuses on originating construction, multi-family and commercial loans. Their dividend yield is 6.7% and they have increased their dividend for the last 7 years.  Their 5 year dividend growth rate is 11.4% and their 3 year net income growth rate is 28%.

7. Holly Energy Partners – HEP

Holly Energy is a limited partnership that operates crude oil and petroleum pipelines in the US.  HEP has a dividend yield of 6.3% and has increased their dividend for the last 7 years. Their 5 year dividend growth rate is 5.7% and their 3 year net income growth rate is 14%.

Could Rapidly Growing Yields Mean Problems for Your Dividend Stock?

When looking at dividend stocks, it is tempting to pay attention only to yield. When you are building a dividend growth portfolio, seeing how many stocks are showing yield increases is exciting. Your wealth really is growing!

While this can be exciting, it’s important not to get too hung up on yield. You should also consider that a rapidly growing yield could be an indication of problems to come.

Is the Stock Price Dropping Too Rapidly?

One of the first things you have to ask yourself is whether or not the stock price is dropping too rapidly. Yes, during times of economic turmoil (like the uncertainty over Europe right now) it is common to see stock prices drop. However, you want to be wary of too large of a drop.

Before you congratulate yourself on an increase in your dividend yield, find out the cause. Is it because the company just raised its dividend? Or is it because the stock price has fallen quite far? A dividend yield is a ratio of the dividend payout to the stock’s share price. As such, anytime the stock price falls far enough, the yield is likely to rise. So, paying attention only to the yield could cause you to miss out on important clues that the stock might be in more trouble than you thought.

Consider the source of the dividend yield increase. If the yield increase is due to increases in payout, that is usually not such a bad thing. However, if the yield increase appears to originate mainly from the fact that the stock is losing value quickly, it might be time to consider your options, and consider selling.

Research Company Fundamentals

As you make a determination about your dividend stock addition to your portfolio, research the company fundamentals. Has something changed about the company since you bought the stock? Dividend cuts are one indication that a company might be headed for trouble. But you can also look at the balance sheet to get an idea of where the company stands financially.

Maintaining a dividend stock portfolio doesn’t necessarily require that you are very active in trading, but it does require that you pay attention. You should periodically review your holdings, and make sure that your portfolio continues to meet your needs and your financial and investing goals. When you notice that a dividend yield seems to be rising quickly, inquire into the cause. While it might mean your good fortune, the downside is that it could be an indication that big trouble is on the way.

Facebook IPO and Dividend Increases: JBHT, AVA,

This week, it’s all about the Facebook IPO. It’s all anyone can talk about. This week, Facebook announced that it has filed with the SEC for an IPO. Expectations are for an IPO of $5 billion. That’s huge. And everyone is wondering whether or not Facebook will be able to hack it. The SEC filing amounts to more than 200 pages, and provides insight into what Facebook considers weaknesses as well as its strengths.

Eager investors are probably poring over the filing and hoping to figure out how they can get in on the ground floor with Facebook. However, before investing it’s important to do the research and figure out what drawbacks any company might have. This is especially true with social media companies. Making money as a social media company is challenging, and Facebook will have to meet that challenge head on in order to survive and bring returns to stockholders. It will be interesting to see what happens with the Facebook IPO — as well as what fate ultimately befalls other social media companies that go public.

Dividend Increases

A few companies announced dividend increases this week as well. Three of the companies that have announced dividend increases include:

  1. J.B. Hunt Transport Services (JBHT): A dividend increase to 14 cents per share, paid quarterly, has been announced by J.B. Hunt. The transport services company has increased dividends each year since 2008, and the company has remained relatively stable throughout the recession.
  2. Avista Corp. (AVA): The quarterly dividend at Avista has been bumped up to 29 cents per share. The new dividend brings the annual yield to 4.5%.
  3. Farmer Mac (AGM): The Federal Agricultural Mortgage Corp. has announced that it is doubling its dividend rate on all common stock (Class A through Class C shares). This brings the dividend up to 10 cents per share. Farmer Mac is the government-chartered institution designed to help keep the agricultural and rural real estate markets moving with the help of facilitating a secondary market.