If you are considering dividend stocks as a source of income, be sure to include an analysis of cash flows in your search. Because dividends are paid in cash, companies with poor cash flow health are less likely to continue paying a high dividend yield.
We ran a screen on large-cap stocks with rapid dividend growth, comparing the current year dividend estimate to the trailing-twelve-month dividend. We then screened for companies with strong 5-year growth in free operating cash flows.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the 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.
Do you think these stocks pay reliable dividend yields? Use this list as a starting-off point for your own analysis.
List sorted by dividend yield.
1. International Paper Co. (IP): Operates as a paper and packaging company with operations in North America, Europe, Latin America, Russia, Asia, and north Africa. Market cap of $12.23B. Dividend yield at 3.76%, payout ratio at 24.88%. Current year dividend per share estimate at $0.97 vs. TTM dividend per share at $0.70. 5-year free operating cash flow CAGR at 0.89. This is a risky stock that is significantly more volatile than the overall market (beta = 2.21). The stock has had a couple of great days, gaining 6.92% over the last week.
2. CNOOC Ltd. (CEO): Engages in the exploration, development, production, and sale of crude oil, natural gas, and other petroleum products. Market cap of $78.99B. Dividend yield at 3.67%, payout ratio at 27.61%. Current year dividend per share estimate at $10.64 vs. TTM dividend per share at $5.59. 5-year free operating cash flow CAGR at 0.38. The stock is currently stuck in a downtrend, trading 8.27% below its SMA20, 15.39% below its SMA50, and 24.32% below its SMA200. The stock has lost 2.45% over the last year.
3. U.S. Bancorp (USB): Provides various banking and financial services in the United States. Market cap of $46.31B. Dividend yield at 2.08%, payout ratio at 16.75%. Current year dividend per share estimate at $0.48 vs. TTM dividend per share at $0.35. 5-year free operating cash flow CAGR at 0.31. The stock has had a couple of great days, gaining 9.59% over the last week.
*Dividend per share and free operating cash flow CAGR data sourced from Screener.co, 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.
