As you may recall from our previous dividend-themed
articles, when we screen for top dividend-paying stocks among the
holdings of our Ultimate Stock-Pickers we try to hone in on the highest-quality
names that are currently held with conviction by our top managers. We do this
by taking an initial list of the dividend-paying stocks held in the portfolios
of our Ultimate Stock-Pickers and then narrow it down by concentrating on firms
that we believe have competitive advantages, which, in our view, should allow
them to generate the excess returns they'll need to maintain their dividends
longer term. We also look for firms where there is lower uncertainty on our
analysts' part regarding their future cash flows. We accomplish this by
screening for holdings that are widely held (by five or more of our top
managers), are yielding more than the S&P 500, represent firms with wide or
narrow economic moats, and have uncertainty ratings of either low or medium.
Once our filtering process is complete, we create two
different tables--one that reflects the top 10 stocks with the highest dividend
yields, and the another that represents the stocks that are the most widely
held by our top managers while also paying dividends in excess of the S&P
500. In our view, finding stocks that are yielding more than the benchmark
index and operate in more stable industries where there is less uncertainty
surrounding their future cash flows should offer some downside protection for
investors. With markets at or near all-time highs and interest rates still at
lower-than-normal levels, many investors are left searching for yield wherever
they can find it. We should note, though, that the dividend yield calculations
in each of these two tables are based on regular dividends that have been
declared during the past 12 months and do not include the impact of any special
(or supplemental) dividends that may have been paid out (or declared) during
that time.
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