For a stock screen emphasizing safe and growing dividends, Barron’s pulled together a handful of criteria, such as consistent dividend growth and attractive yields.
With the help of Simply Safe Dividends, which publishes a newsletter and website dedicated to equity income investing, we started with a dividend yield of 3% to 4.5%. When yields get above the upper end of that range, it can signal problems for a stock, possibly a dividend cut in the offing.
Another requirement was that a stock had a price-earnings ratio in line with or below its five-year average, based on Simply Safe Dividends’ data. We also favored stocks with dividend safety scores above 60. Under Simply Safe’s rating system, 99 is the top possible score. A stock deemed safe by the company can score from 61 to 80; for very safe, it’s 81 to 99.
Barron’s additionally searched for companies that have grown their dividends for at least five years, again based on data from Simply Safe Dividends. The screen eschewed small-cap stocks, relying instead on mid and large caps. We narrowed down our final list of companies to five, based on market capitalization—the larger the better.
These stocks, based on criteria such as reasonable P/E ratios and yields from 3 to 4.5%, should provide steady and growing income ahead.
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