Screening is the best way to find great, high yield dividend stocks. There are literally thousands and thousands of dividend stocks.
Screening allows us to narrow the universe down to a few hundred stocks that deserve to be thoroughly researched.
So how do investors find the best high dividend paying stocks?
Read below and find out!
345+ best dividend aristocrats
Through a proprietary screening method, I am providing you with a FREE list of high yielding dividend stocks.
I thoroughly screened for the best dividend stocks in the U.S. and Canada (at no cost to you!).
And guess what I found? I found 345+ stocks in the U.S. that yield a dividend between 3% and 14%!
The spreadsheet contains the following information about 345+ high yield dividend stocks:
- Ticker and company name
- Market capitalization
- Dividend yield
- Dividend payout over the past 5 years
- Sales growth for the trailing twelve-months (TTM) and past 3 years
- EPS growth for the TTM and past 3 years
- Gross margin, operating margin, and net margin on a 12 month basis
- Return on equity
- Price earnings (P/E) ratio
Why are dividends so important?
Dividends are important because they provide a source of passive income.
What exactly are dividends? Well, dividends are distributions of profits back to shareholders.
Let me ask you something…
What do you think outperformed the market over the past 10 years:
- (1) dividend paying stocks or
- (2) the S&P 500.
The answer might surprise you: it is dividend paying stocks!
In fact, according to Shark Tank investor, Kevin O’Leary, most of the stock market gains can be attributable to dividends:
“Over the last 40 years, 71% of the market’s returns came from dividends, not capital appreciation.”–Kevin O’Leary.
“I’ll never own a stock that doesn’t pay a dividend.”–Kevin O’Leary.
Now that sounds cool and everything, but you probably want to see some numbers before you believe me, right? Well here they are!
There is actually an index out there that tracks the performance of dividend paying stocks. It’s called the S&P 500 Dividend Aristocrats index.
This exclusive index only includes companies who have paid and increased their dividend every year for the past 25 years.
For comparison’s sake, we’ll compare their performance with the regular S&P 500 index. Alright, ready to see the results? They might shock you…
If you invested $100 in the S&P 500 index 10 years ago, you should have $197.91 today. Not bad. That’s a solid 98% return!
However, you would have missed out BIG time.
If you had invested that $100 into the S&P 500 Dividend Aristocrats index, it would be worth $254.25 today! That’s nearly 30% higher than the regular S&P 500!
Over the long-term dividend paying stocks outperform because they are financially strong companies. It takes a stable business to pay and increase dividends over many decades.
Many high flying tech companies are “cool” or “hip” for a few years, but they fizzle out after that. Dividend companies rarely go out of favor like that.
The dividends provide a steady source of passive income. And companies who regularly increase dividends every year will help you overcome the dangers of inflation (the tendency for everyday stuff to become more expensive).
This means you don’t have to sacrifice the quality of your retirement!
When your portfolio is big enough you’ll be able to sit back and collect on the periodic dividend payments!
Not only that, but dividends are granted preferential tax treatment in the U.S. This means qualified dividends are taxed below your ordinary income rate!
How to find the best dividend stocks
The 345+ Best High Dividend Stock List spreadsheet contains 25 metrics to help you pick out the top high yielding dividend stocks.
The top column contains all of the important dividend metrics you’ll need to evaluate stocks.
To screen through the criteria I provided, simply click on the drop down menu on the first row. Then select “number filters.”
Once you hover over the “number filters” option, you should see several rules where you can screen by. For example, you can search for stocks with dividend yields between 5% and 7%. Or you can search for stocks with a dividend payout of less than 70%.
Screening for dividend sustainability
Paying a high dividend is one thing. Being able to sustain a high dividend over multiple decades is another thing!
Sometimes, it’s smart not buying the absolute highest dividend paying stocks.
I’ve seen WAY too many companies cut their unsustainable high dividends over the years. And guess what? Their stock prices get hit HARD.
When a dividend stock cuts its dividend, people tend to bail out. It’s common to see a dividend stock collapse by 50% after cutting a dividend.
Check out what happened to Kinder Morgan (KMI) when it cut its dividend back in 2016! The stock cratered!
Many dividend growth investors were hit hard by the collapse of KMI.
DON’T let that be you!
The best way to screen for dividend sustainability with the 345+ Best High Dividend Stock List is to screen by dividend payout.
Dividend Payout = Annual Dividends-per-share / Earnings-per-share
Dividend payout measures how much of profits the company paid out to shareholders as dividends.
For instance, a dividend payout ratio of 40% means the business is paying 40% of profits to shareholders as dividends.
Typically, DGI investors want to avoid stocks with a very high dividend payout ratio (90%+). This is because when profits fall, the dividend may not be sustainable.
How do you screen for dividend payoutd with my amazing spreadsheet?
Click on the drop down menu over the top row under dividend payout. Then hover over the “Number Filters” line and then go to “Less Than Or Equal To”
After clicking on that, you should see a screen like this pop up! On the first line, enter in whatever dividend payout you want to screen for. In this case, I’m screening for stocks that have dividend yields at or below 80%.
Now, looking at dividend sustainability for one year isn’t too helpful. What matters more is looking over the past few years. That’s why I pulled data for 345+ of these best dividend paying stocks.
You’ll be able to look at the dividend payout for all of these stocks over the past 5 years!
High dividend yield sales and EPS growth
Looking at the dividend payout ratio is really important. But what’s also important is sales and earnings growth.
When you think about it, dividends (and dividend growth) is ultimately driven by profits. If profits don’t grow, a company can’t pay or increase its dividend payment.
That’s why I pulled data for both sales and earnings-per-share growth over the past 3 years. Now you can see which companies have been growing profits to pay even higher dividends!
How to value dividend stocks
DGI investors are always concerned about valuation (and they should be). Valuation just refers to how cheap or expensive a stock is trading for.
The most common way to measure the valuation of dividend stocks is price-to-earnings (or P/E) ratio.
Price-to-earnings ratio = Stock price / earnings-per-share (EPS)
Earnings per share is calculated as net income dividend by the diluted share count.
Diluted share count represents all shares outstanding plus any securities that can be converted into common shares.
P/E measures how expensive (or cheap) a stock is relative to its earnings. For instance, a P/E ratio of 15x means that investors are paying 15 dollars for every dollar of profit the business generates.
P/E ratio is typically the most commonly cited metric in the financial media. Currently, the S&P 500 trades at a P/E ratio of ~24x earnings.
Typically, we to buy stocks that trade at lower valuations. And the 345+ Best High Dividend Stock List can help you do that!
Where to find high yield dividends?
One last thing I wanted to go over the spreadsheet with you guys is using the sector search function.
Dividend investors should always construct a diversified portfolio. This means you want a little bit of exposure to each market sector.
The 345+ Best High Dividend Stock List has stocks in 11 different sectors. Keep in mind that certain sectors and industries will have higher yields.
For example, real estate investment trusts (REITs), master limited partnerships (MLPs), utilities, telecommunication companies, and financials will typically have higher yields.
Those are great places to start looking to increase the yield of your portfolio!
Learn more about Dividend Investing!
If you want to learn more about dividend screening and dividend investing, check out my Ultimate Dividend Investing Boot Camp course!
So what does this course include?
Valuable real world content: Over 2 hours of video (no fluff, everything you learn can be applied on day one)
Examples: Case studies and examples on selecting dividend stocks
Lecture notes: Multiple handouts and cheat sheets to help you analyze dividend aristocrats
Experienced instructor: I have over 7 years of investing experience consulting with large hedge funds and institutional clients)
BONUS content: Free books and valuable BONUS content!
What are you waiting for? 🙂
Learn how to invest in dividend stocks TODAY!
Click here to get my course and start your journey towards passive income retirement!