The U.S. economy continues to have significant headwinds (e.g., high unemployment, end of QE2, weak housing market, high debt levels, etc.) and signs are definitely pointing toward further weakness in the equity market.
In the current market environment, it is important for income investors to choose their dividend stocks wisely. A good place to start your analysis is a Company's financial statements. In general, companies with low levels of debt and stable cash flow will tend to have the stability to weather an economic storm.
With that in mind, we did a screen with the following parameters to find companies that had high dividend yields, low debt levels, and stable cash flow:
- S&P 500 Stocks
- Dividend Yield > 5%
- Avg. 3m Volume > 1,000,000
- Stock Price > $10.00
- EBITDA > $500MM
- Debt/EBITDA < 2.0x
The stocks below meet the parameters above. Use this data as a starting point for your own analysis. Click to enlarge:
Altria Group, Inc. (MO) engages in the manufacture and sale of cigarettes, smokeless products, and wine in the United States and internationally. It offers cigarettes under the Marlboro, Virginia Slims, Parliament, Benson & Hedges, Basic, and L&M brands; smokeless tobacco products under the Copenhagen, Skoal, Red Seal, Husky brands, and Marlboro snus brands; and machine-made large cigars and pipe tobacco.
AT&T Inc. (T) provides telecommunication services (wireless and wireline) to consumers, businesses, and other service providers worldwide.
Cincinnati Financial Corporation (CINF) operates in the property casualty insurance business in the United States. It operates in four segments: Commercial Lines Property Casualty Insurance, Personal Lines Property Casualty Insurance, Life Insurance, and Investment.
Eli Lilly and Company (LLY) develops, manufactures, and sells pharmaceutical products worldwide. The Company distributes its products through independent wholesale distributors, as well as directly to pharmacies.
Exelon Corporation (EXC) operates as a utility services holding company in the United States. The company primarily engages in the generation of electricity. It generates electricity from nuclear, fossil, hydroelectric, and renewable energy sources. The company also involves in wholesale energy marketing business; and purchasing and retailing electricity and natural gas, as well as in the provision of transmission and distribution services.
Reynolds American Inc. (RAI) manufactures and sells cigarette and other tobacco products in the United States. It offers cigarettes under the brand names of Camel, Pall Mall, Winston, Kool, Doral, Salem, Misty, and Capri. The company also provides smokeless tobacco products, including moist snuff under Grizzly and Kodiak brand names.
Verizon Communications Inc. (VZ) provides telecommunication services (wireless and wireline) to consumers, businesses, and other service providers worldwide.