MarketBeat pal Howard Silverblatt — the high priest of the S&P 500-stock index — has cobbled together yet another helpful dividend screen. Here’s dividend data as of the close of trading Monday, Jan. 31. Silverblatt writes: The list below consists of S&P 1,500 issues that have paid increasing annual cash dividends for the past ten years, have an actual 2009 dividend coverage rate of at least 2, and have 2010 and 2011 dividend coverage rates of at least two based on street estimates. This list not a buy list, but a starting point for dividend investors, based on screened historical data.
Silverblatt’s “coverage rate” represents his attempt to capture a sense of dividend sustainability. Simply put, this is a formula that plots earnings per share versus dividend payouts, and the minimum level of coverage to make this list is 2.0. So for example if a company pays out $1.00 in dividends, it has to make at least $2.00 in earnings per share. “They’re still making enough to significantly cover their dividends and have some cash left over,” Silverblatt has told us of the coverage rate. So, the stocks in this list have a dividend coverage rate of at least 2.0 for 2009, and an estimated coverage rate of at least 2.0 for both 2010 and 2011.
Source: Wall Street Journal
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