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When a company raises their dividend, while their payout ratio falls over the same time period, it is an especially good sign because it implies that earnings are rising, and dividends are being raised, without any compromise to dividend sustainability.

We ran a screen on stocks exhibiting these trends, with increases in dividend per share year-over-year and decreases in payout ratio, comparing the trailing-twelve-month ratio to the company’s three-year average. We screened these stocks for those with strong corporate governance ratings from RiskMetrics.

RiskMetrics Group gives ratings for four areas of corporate governance, on risks related to: the board, the audit committee, the compensation committee, and shareholder rights.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.



We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.


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Do you think these stocks pay attractive dividends? Use this list as a starting-off point for your own analysis.

List sorted by corporate governance ratings.

1. The Bank of New York Mellon Corporation (BK): Asset Management Industry. Market cap of $24.69B. Dividend yield at 2.60%, payout ratio at 18.68%. Current year dividend per share estimate at $0.51 vs. last year dividend per share at $0.36. TTM payout ratio at 18.68% vs. 3-year average at 71.18%. According to RiskMetrics, the company has "low risk" in all corporate governance categories. Might be undervalued at current levels, with a PEG ratio at 0.76, and P/FCF ratio at 5.91. The stock has performed poorly over the last month, losing 20.2%.

2. Packaging Corp. of America (PKG): Packaging & Containers Industry. Market cap of $2.37B. Dividend yield at 3.43%, payout ratio at 31.76%. Current year dividend per share estimate at $0.78 vs. last year dividend per share at $0.60. TTM payout ratio at 31.76% vs. 3-year average at 40.45%. According to RiskMetrics, the company has "low risk" in all corporate governance categories. The stock has performed poorly over the last month, losing 13%.

3. Wells Fargo & Company (WFC): Money Center Banks Industry. Market cap of $130.73B. Dividend yield at 1.94%, payout ratio at 7.65%. Current year dividend per share estimate at $0.49 vs. last year dividend per share at $0.20. TTM payout ratio at 7.65% vs. 3-year average at 31.05%. According to RiskMetrics, the company has "low risk" in all corporate governance categories. Might be undervalued at current levels, with a PEG ratio at 0.74, and P/FCF ratio at 4.68. The stock has performed poorly over the last month, losing 12.97%.

4. Marriott International, Inc. (MAR): Lodging Industry. Market cap of $9.63B. Dividend yield at 1.47%, payout ratio at 23.33%. Current year dividend per share estimate at $0.31 vs. last year dividend per share at $0.21. TTM payout ratio at 23.33% vs. 3-year average at 48.04%. According to RiskMetrics, the company has "low risk" in all corporate governance categories except "medium risk" in Shareholder Rights. The stock has performed poorly over the last month, losing 17.98%.

5. Tyco International Ltd. (TYC): Diversified Machinery Industry. Market cap of $18.48B. Dividend yield at 2.51%, payout ratio at 30.50%. Current year dividend per share estimate at $0.98 vs. last year dividend per share at $0.86. TTM payout ratio at 30.50% vs. 3-year average at 249.82%. According to RiskMetrics, the company has "low risk" in all corporate governance categories except "medium risk" in Compensation. The stock has performed poorly over the last month, losing 11.04%.

6. Domtar Corporation (UFS): Paper & Paper Products Industry. Market cap of $3.09B. Dividend yield at 1.92%, payout ratio at 6.54%. Current year dividend per share estimate at $1.20 vs. last year dividend per share at $0.75. TTM payout ratio at 6.54% vs. 3-year average at 12.25%. According to RiskMetrics, the company has "low risk" in all corporate governance categories except "medium risk" in Compensation. This is a risky stock that is significantly more volatile than the overall market (beta = 2.69). The stock has performed poorly over the last month, losing 17.74%.

7. U.S. Bancorp (USB): Regional Banks Industry. Market cap of $42.93B. Dividend yield at 2.24%, payout ratio at 16.75%. Current year dividend per share estimate at $0.48 vs. last year dividend per share at $0.20. TTM payout ratio at 16.75% vs. 3-year average at 43.96%. According to RiskMetrics, the company has "low risk" in all corporate governance categories except "medium risk" in Compensation. The stock has had a couple of great days, gaining 6.07% over the last week. The stock has performed poorly over the last month, losing 14.76%.

*Dividend per share and payout ratio data sourced from Screener.co, RiskMetrics ratings sourced from Yahoo! Finance, all other data sourced from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: 7 Stocks With Rising Dividends, Falling Payout Ratios, And Strong Corporate Governance