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.

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.

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.