How to Find Stocks That Pay Dividends

How to Find Stocks That Pay Dividends
Find dividend paying stocks.

Go to www.google.com/finance and click on the Stock Screener link next to the search box. If you haven't used this tool before, check the resource section below for an article about using the Google screener.

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Choose the criteria for your search. The simplest search as shown in the image would include only the desired dividend yield and market cap of the stock. Dividend yield is the amount of the dividend per share divided by the share price. The higher the yield - the better, 5% or more is considered pretty good. Higher market cap is also better because bigger companies tend to be more stable, which is important when buying dividend stocks. The search as shown, returned 225 stocks with market cap higher than a billion and dividend yield of 5% or more.

To narrow down this list, choose other criteria that characterize solid companies. You may want to check:

the EPS (earnings per share) - $1/share or more is considered good;

the forecast long term EPS growth for the next 5 years - 5% or more is good for dividend stocks;

the return on equity (ROE) for the past 5 years -10% or more is good;

recent price behavior - ideally you want a stock that has been moving up in the past quarter, although in the tough economic times, this might be hard to find. You might do well to consider stocks that haven't dropped more than 15% in the past 13 weeks.

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Try running all the criteria mentioned above through the stock screener. At the moment of writing this article, the search returned a list of 58 stocks.

Examine this list of the dividend stocks or tighten the requirements to narrow the stock list even further.

Remember, that nothing in the stock market is guaranteed, and thus you should examine every stock closely before buying it.