Pick The Right Dividend Stocks With These Winners

This market presents a ripe environment for dividend-paying stocks. With rising interest rates threatening bond valuations, dividends provide income that makes more sense than ever. If you feel the market is due for a correction from its near record levels, dividend payers may also provide some of the safety you seek. But not all dividend payers are created equal. We want dividend stocks that can increase their payment, so that they can compete with rising interest rates. The best dividend stocks offer a combination of a high dividend yield, a low pay-out ratio, and growth prospects as well.

I've compiled a short list of the best stocks with dividend yields over 2%, pay-out ratio's under 60%, and growth prospects to boot. Surprisingly, they have a lot more than high yields in common: Campbell Soup (NYSE: CPB), PepsiCo (NYSE: PEP) and Coca-Cola (NYSE: KO). You can find high dividends everywhere, but they're not all created equal. Dividend paying stocks with low payout ratios, and growth catalysts, are more likely to increase their dividend payment going forward.

Source: Motley Fool

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