Each month, we review all of the dividend-paying stocks that trade on the NYSE, NASDAQ and AMEX and rate them based on key dividend fundamentals. The DSO dividend rating was updated this month to include free cash flow yield as a criteria to evaluate these stocks. We also use dividend yield, dividend growth, income growth, payout ratio and ROI. Below are the top 5 stocks from our best dividend list for May. Each of these stocks has a dividend yield of 2% or more.
RPM International (NYSE:RPM)
DSO Rating: 99. RPM International is a global chemical producer. RPM has a dividend yield of 3.1% and a free cash flow yield of 4.2%. It has a 5 year dividend growth rate of 5.8% and has increased its dividend for 38 years. RPM has a payout ratio of 56%. The dividend fundamentals are extremely solid for RPM, but we would like to see a slightly higher yield and dividend growth rate.
Abbott Laboratories (NYSE:ABT)
DSO Rating: 98. Abbott Labs develops and manufactures health care products. ABT has a dividend yield of 3.1% and a very solid free cash flow yield of 7.5%. The company has increased its dividend for 39 years and has a 5 year dividend growth rate of 10.2%. The payout ratio for ABT is 67% which is just slightly higher than we'd like to see. Income growth needs to improve before we can give this stock a higher rating.
Elmira Savings Bank (NASDAQ:ESBK)
DSO Rating: 98. Elmira Savings Bank is a federally chartered Savings Bank. ESBK has a dividend yield of 4.2% and a free cash flow yield of 7.1%. The company has just increased its dividend for the 2nd consecutive year and has a 5 year dividend growth rate of 7.1%. It has a payout ratio of 32. The stock is up over 30% in the last 12 months. We'd like to see more consecutive dividend increases before giving this stock a perfect rating.
Grupo Aeroportuario del Surest (NYSE:ASR)
DSO Rating: 98. Grupo Aeroportuario is a holding company that operates nine airports in Mexico. ASR has a dividend yield of 3.1%, a free cash flow yield of 5.1% and a payout ratio of 51%. The company pays its dividend once a year and has increased its dividend for 2 consecutive years. It has a 5 year dividend growth rate of 33.5%.
Intel Corp (NASDAQ:INTC)
DSO Rating: 98. Intel is a Semi-conductor that makes processor chips for mobile and PC devices. INTC recently announced another dividend increase to add to its 8 years of consecutive dividend increases. It has a dividend yield of 2.8% and a free cash flow yield of 7%. It has a 3 year net income growth rate of 35% and a payout ratio of 31%. Intel's recent boost is good but we'd like to see the company increase its dividend at a faster rate.
Disclosure: I am long (RPM).