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I am an independent investor writing at Scott's Investments ( My site is dedicated to discussing and publicly tracking historically successful investments strategies and sharing free investment resources. I emphasize empirical, historical, and quantitative... More
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  • 10 Top Dividend Stocks 0 comments
    May 24, 2011 12:04 AM | about stocks: RBCAA, UVV, PRE, STR, ALTE, T, SXL, COP, SBSI
    I write extensively on the U.S. Dividend Champion list maintained and updated by DRIP Investing. The list is comprised of stocks that have increased their dividend payout for at least 25 consecutive years.

    My initial Dividend Champion articles focused on just the Dividend Champions. However, DRIP Investing also maintains a Dividend Contenders list which is comprised of stocks with a history of raising dividends for the past 10-24 years.

    Combining May's Dividend Champions and Dividend Contenders into one list gives us a strong starting point of 244 stocks with long histories of raising dividends. Historical tests have also shown that stocks with higher yields and lower payout ratios have tended to outperform other stocks.

    With this information in tow, I ranked the yields and payout ratios of the 244 stocks with histories of 10+ years of dividend increases. The yield and payout ratio ranks were added to create an average overall rank for each stock.

    We are left with a list of stocks for further research. The top 10 stocks based on yield and payout rank are listed below. The list is similiar to one published last month; however, one notable addition is Questar (NYSE:STR).

    Questar engages in the gas and oil exploration and production, midstream field services, energy marketing, interstate gas transportation, and retail gas distribution businesses. The company has a market cap of $3 billion and currently yields 3.57% and is a current holding in my Dividend Champion Portfolio.  However, the company currently has a debt/equity ratio above 1 which leads to high interest expenses. In addition to interest expenses, excessive natural gas supplies could suppress future earnings.  Finally, the company is guiding earnings of $1.07-$1.11 for 2011, so the payout ratio could increase if earnings fail to grow.  Nevertheless, the company is a low beta stock with a healthy yield, so for income investors looking for dividend growth and yield in the natural gas sector it may be worth consideration.

    For those interested in creating a system of their own for free using Finviz and Excel, Open Office, or Google Docs, please see a recent article providing in-depth step-by-step instructions.

    Company Symbol
    Chesapeake Financial Shares CPKF
    Republic Bancorp KY RBCAA
    Universal Corp. UVV
    PartnerRe Limited PRE
    Questar Corp. STR
    Alterra Capital Holdings Ltd. ALTE
    AT&T Inc. T
    Sunoco Logistics Partners LP SXL
    ConocoPhillips COP
    Southside Bancshares SBSI

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