18 S&P 500 Dividend Stocks With Strong Corporate Governance

|
Includes: BK, CHTR, DD, ETR, FITB, GPS, HD, ITW, MDT, MKC, MMM, SEE, SPLS, SRE, SWY, TWX, UTX, WHR
by: Kapitall

Companies are valued at more than just their buildings and inventories – management teams also go into company valuations, and how well a company is run has big implications to its stock performance.

One way to evaluate this is by looking at the corporate governance policies of the company, such as its board composition and shareholder rights.

Institutional Shareholder Services (ISS) gives ratings for four areas of corporate governance, on risks related to: the board, the audit committee, the compensation committee, and shareholder rights.

We ran a screen on the S&P 500 (NYSEARCA:SPY) for stocks paying dividend yields above 2% that also received “low risk” ratings on all four corporate governance categories from ISS.

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.

(Click chart for more detail)

Do you think these companies are being run well? Use this list as a starting point for your own analysis.

List sorted by dividend yield.

1. Entergy Corporation (NYSE:ETR): Operates as an integrated energy company in the United States. Market cap of $12.61B. Dividend yield at 4.64%, payout ratio at 41.72%. According to ISS, the company has "low concern" in all corporate governance categories. The stock has gained 6.8% over the last year.

2. Whirlpool Corp. (NYSE:WHR): Engages in the manufacture and marketing of home appliances worldwide. Market cap of $3.56B. Dividend yield at 4.29%, payout ratio at 39.71%. According to ISS, the company has "low concern" in all corporate governance categories. The stock has performed poorly over the last month, losing 11.94%.

3. E. I. du Pont de Nemours and Company (NYSE:DD): Diversified Chemicals Industry. Market cap of $40.38B. Dividend yield at 3.75%, payout ratio at 44.07%. According to ISS, the company has "low concern" in all corporate governance categories. It's been a rough couple of days for the stock, losing 6.06% over the last week.

4. Sempra Energy (NYSE:SRE): Engages in the development of energy infrastructure, operation of utilities, and provision of energy-related products and services worldwide. Market cap of $12.65B. Dividend yield at 3.64%, payout ratio at 32.71%. According to ISS, the company has "low concern" in all corporate governance categories. The stock has gained 5.29% over the last year.

5. Illinois Tool Works Inc. (NYSE:ITW): Manufactures a range of industrial products and equipment worldwide. Market cap of $22.11B. Dividend yield at 3.15%, payout ratio at 34.48%. According to ISS, the company has "low concern" in all corporate governance categories. The stock has lost 9.01% over the last year.

6. Time Warner Cable Inc. (TWC): Operates as a cable operator in the United States. Market cap of $19.86B. Dividend yield at 3.08%, payout ratio at 42.59%. According to ISS, the company has "low concern" in all corporate governance categories. The stock has lost 0.77% over the last year.

7. Sealed Air Corporation (NYSE:SEE): Manufactures and sells packaging and performance-based materials and equipment systems worldwide. Market cap of $3.30B. Dividend yield at 3.02%, payout ratio at 33.84%. According to ISS, the company has "low concern" in all corporate governance categories. The stock has lost 29.41% over the last year.

8. The Home Depot, Inc. (NYSE:HD): Operates as a home improvement retailer. Market cap of $60.77B. Dividend yield at 2.94%, payout ratio at 43.89%. According to ISS, the company has "low concern" in all corporate governance categories. The stock has gained 15.6% over the last year.

9. Staples, Inc. (NASDAQ:SPLS): Operates as an office products company. Market cap of $9.81B. Dividend yield at 2.85%, payout ratio at 28.03%. According to ISS, the company has "low concern" in all corporate governance categories. Might be undervalued at current levels, with a PEG ratio at 0.8, and P/FCF ratio at 11.43. The stock has lost 36.9% over the last year.

10. 3M Co. (NYSE:MMM): Operates as a diversified technology company worldwide. Market cap of $55.27B. Dividend yield at 2.79%, payout ratio at 36.18%. According to ISS, the company has "low concern" in all corporate governance categories. The stock has lost 6.35% over the last year.

11. Time Warner Inc. (NYSE:TWX): Operates as a media and entertainment company in the United States and internationally. Market cap of $33.91B. Dividend yield at 2.77%, payout ratio at 32.41%. According to ISS, the company has "low concern" in all corporate governance categories. The stock has gained 11.48% over the last year.

12. The Bank of New York Mellon Corporation (NYSE:BK): Provides various products and services worldwide. Market cap of $22.82B. Dividend yield at 2.76%, payout ratio at 20.49%. According to ISS, the company has "low concern" in all corporate governance categories. The stock has lost 34.86% over the last year.

13. Safeway Inc. (NYSE:SWY): Operates as a food and drug retailer in North America. Market cap of $7.13B. Dividend yield at 2.76%, payout ratio at 36.54%. According to ISS, the company has "low concern" in all corporate governance categories. The stock has gained 0.19% over the last year.

14. Medtronic, Inc. (NYSE:MDT): Manufactures and sells device-based medical therapies worldwide. Market cap of $37.35B. Dividend yield at 2.74%, payout ratio at 29.29%. According to ISS, the company has "low concern" in all corporate governance categories. The stock has gained 0.37% over the last year.

15. Fifth Third Bancorp (NASDAQ:FITB): Operates as a diversified financial services holding company in the United States. Market cap of $11.01B. Dividend yield at 2.67%, payout ratio at 18.13%. According to ISS, the company has "low concern" in all corporate governance categories. This is a risky stock that is significantly more volatile than the overall market (beta = 2.18). The stock has lost 12.5% over the last year.

16. United Technologies Corp. (NYSE:UTX): Provides technology products and services to the building systems and aerospace industries worldwide. Market cap of $66.62B. Dividend yield at 2.61%, payout ratio at 34.03%. According to ISS, the company has "low concern" in all corporate governance categories. The stock has lost 4.77% over the last year.

17. McCormick & Co. Inc. (NYSE:MKC): Engages in the manufacture, marketing, and distribution of flavor products and other specialty food products to the food industry worldwide. Market cap of $6.56B. Dividend yield at 2.51%, payout ratio at 39.63%. According to ISS, the company has "low concern" in all corporate governance categories. The stock has gained 6.64% over the last year.

18. Gap Inc. (NYSE:GPS): Operates as a specialty retailing company. Market cap of $8.97B. Dividend yield at 2.45%, payout ratio at 24.20%. According to ISS, the company has "low concern" in all corporate governance categories. The stock has lost 11.65% over the last year.

*ISS 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.