Thanksgiving is just around the corner and if you are looking for extra reasons to be thankful this season you might consider adding a few dividend-paying stocks with solid fundamentals to your portfolio. Each of these stocks has an ex-dividend date coming up in the very near future. To qualify for a dividend distribution you must own the stock at the close of trading the day before the ex-dividend date. Many investors prefer to buy dividend stocks before they go ex-dividend so that they don't miss out on the upcoming payout.
We have evaluated each of these stocks against our DSO rating system which rates stocks based on dividend yield, free cash flow yield, payout ratio, 5 year dividend growth rate, 3 year net income growth rate and 12 month return. We have provided the DSO rating for each stock.
Chevron Corporation (CVX)
Ex-Dividend Date: 11/14. Chevron is ranked #5 on our top 100 list and for good reason. Chevron has a dividend yield of 3.2% and a payout ratio of just 28%. The stock has a free cash flow yield of 5.4 adding further support for the dividend. CVX has a 5 year dividend growth rate of almost 10% and over the last year the stock is up over 12%. Even after all of those great stats, what we like best about Chevron is its dividend history. The year 2012 will be its 20th consecutive year of increasing its dividend. Chevron has a DSO rating of 99/100. The only factor keeping it from having a perfect 100 rating is the yield.
Diebold, Incorporated (DBD)
Ex-Dividend Date: 11/14. Diebold has been a long time favorite of ours, mostly because of its 58 years of consecutive dividend increases. The company started paying dividends in 1954 and has increased its dividend every year since. Very few companies have that track record. DBD has a dividend yield of 3.8% and a payout ratio of just 43%. It has a 5 year dividend growth rate of 4.3% and a three year net income growth rate of 17%. Diebold was recently downgraded by Gabelli and has seen a recent downturn in stock price but if you are looking for an entry point on a long-term investment, this could be it. It currently has a DSO rating of 93/100 due to its weak performance overall in the last 12 months.
Ex-Dividend Date: 11/19. If you are an avid dividend investor, you probably already have an opinion on Target's stock. But if you are looking to add more TGT to your portfolio make sure to buy on or before 11/18 to qualify for the next dividend payout. Target has a relatively low dividend yield of just 2%, but its strength as a dividend stock is in its 40 consecutive years of increasing its dividend. It has also shown incredible dividend growth over the last few years with a 5 year dividend growth rate of 20% and a 3 year dividend growth rate of 25%. That is exactly what we dividend investors want to see; strong and steady dividend growth. TGT has a DSO rating of 97/100. It will be rated higher when the yield rises, which we expect to see.
Aqua America (WTR)
Ex-Dividend Date: 11/14. Aqua America is a leader of most other utility stocks, with its 20 years of consecutive dividend increases. There are not many utility stocks out there with that kind of consistent growth. WTR has a dividend yield of 2.6% and a payout ratio of 56%. The company has a 5 year dividend growth rate of 7%. WTR stock is up over 20% in the last 12 months. The DSO rating is 93/100 because we'd like to see the cash flow yield increase from just .43%.