Dividends and US stocks paying a reasonable, sustainable yield

Occasionally in the financial press, various people both try to educate people and to offer their services and in one such piece Ian Tam of Morningstar Research offer advice on 15 stocks with reasonable and sustainable yields.

Mr. Tam used his company’s software to rank the companies through the S7P 500 total return index based on the following metrics:

5 year deviation of earnings – it shows how volatile a company’s earnings are, low is good.

Yield on expected dividends, based on dividends announced by not yet paid

Annual cash flow momentum  based on the last 4 quarters vs the previous 4 quarters

5 year historical beta – shows sensitivity of a stock versus the index, low is good

Payout ratio must pay out less than 80% of their trailing earnings or less than 60% of their trailing cash in the form of dividends.

The yield of the stock must be higher than the median of the S&P 500 index. When the report was published the median  was 2.3%

Company                  Mkt Cap     Div     5 Yr   5 Y EPS  Ann of   Payout          Recent

in $bil        Yield  Beta    Deviat   Mome    Ratio Earn    Close

Altria Group           92.279       6.5       0.41      4.6          67.3      75.1                 49.11

Duke Energy           62.604      4.2       0.04       2.5          27.7      74.9                 87.82

Western Union          8.152     4.1       0.95       2.6        135.1      40.6                18.41

Southern Co             50.014      4.9     0.18       3.8            13.4      70.9                48.61

Wells Fargo            230.937     3.7     1.10        1.7             54.0      37.8               49.06

Dominion Energy    46.805     5.1      0.20      3.3                0.2      82.7               71.45

AT&T                       215.501      6.9     0.56       3.9              10.8      56.8               29.61

Hershey                    22.183       2.7     0.11      2.8              14.3      51.4               105.73

Clorox                        20.217       2.4    0.29       2.4             13.5        61.5             158.38

AbbVie                     118.126      5.5    1.17       7.9              50.1        45.4              78.53

Other stocks on the list

Verizon Comm. Merck, H&R Block, Broadcom and Darden Restaurants

Linking to dividend paying stocks, the data from Morningside reveals a wide range of industries, but the important thing is what metrics besides the stock price going up is important to you. Every year there are more metrics, knowing why allows you to decided to keep or find other alternatives and there are always other alternatives or opportunities in the market.

There are more questions than answers, till the next time – to raising questions.

 

 

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