Screening for Stocks With High Relative Dividend Yields
Many respondents to a July AAII survey said they were favoring dividend-paying stocks over pure growth or value stocks. The reasons are not surprising. The stream of income offered by dividends provides some comfort in volatile market conditions. Furthermore, Treasury yields have fallen to low levels. During July and August, yields on the 10-year note were below 3%. Dividend-paying stocks can offer comparable yields with the possibility of dividend growth and capital appreciation.
Not all dividends are created equal, however. Many companies have either cut or eliminated their dividends since 2007. Therefore, it is important that investors pay attention to how committed management has been to ensuring dividends are paid and whether the size of the dividend has increased, stayed the same or been cut.
In this article
- High Relative Dividend Yields
- Screen Performance
- Sector Breakdown
- What It Takes: Screen Criteria
- Passing Companies
- Dividend Reinvestment Plans (DRPs)
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High Relative Dividend Yields
AAII tracks a high-yield screen that seeks companies with characteristics that include:
- An established history of rising dividends;
- A high dividend yield relative to its historical norm;
- Earnings growth that outpaces industry norm; and
- Liabilities below the industry norm.
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