In the past year, it's felt like there are two kinds of
dividend stocks out there: those that have cut their
dividends, and
those that are about to.
And who can blame them?
In a credit crisis, companies with large dividend yields
are quickly reminded that they're giving away their most
readily available form of capital. And when companies' shares
are priced as if they won't survive the credit crisis,
shareholders sometimes see dividend cuts as positive
developments. After all, wouldn't you rather own shares in a
viable company that pays no dividend than in a bankrupt
company that declares high dividends all the way down into
oblivion?
As a result, we're on pace for the worst dividend cuts in
decades. From
Bank of America (NYSE: BAC) to
Pfizer (NYSE: PFE) to
Motorola , dividends have fallen like
dominoes. Earlier this year, things got so bad that stock
prices of companies including
JPMorgan Chase ,
CBS , and
General Electric actually
roseimmediately after the news of dividend cuts.
That's all well and good. But what if you're old-fashioned
like me, and you want to find companies that can actually
sustaintheir dividends?
Here's how to find them
We need to identify companies that:
Here are a few companies that meet those criteria:
Company
Recent Dividend Yield
Payout Ratio
Interest Coverage
Norfolk Southern
(NYSE: NSC)
3.1%
35%
6x
VF
(NYSE: VFC)
3.3%
49%
9x
H&R Block
(NYSE: HRB)
3.2%
42%
9x
Polaris
(NYSE: PII)
3.9%
49%
25x
Lockheed Martin
(NYSE: LMT) Continued... |