MarketWatch's van Doorn: Consider Dividend Stocks

With the S&P 500 index plunging 11 percent from Aug. 17 to Aug. 25 and then rebounding 6 percent, how does an investor cope with the volatility? "You might consider common stocks for dividend income," writes MarketWatch columnist Philip van Doorn. "But be careful: If a common stock has a very high dividend yield, it can be a sign that the company is in serious trouble."

One way to determine the safety of a company's dividend is to look at its free cash flow yield, he says. If that yield is higher than the dividend yield, the company might have room to increase its dividend. Van Doorn put together a list of the 10 S&P 500 stocks (excluding oil shares and REITs) with dividend yields above 4 percent that have the most room to boost dividends further, based on their free cash flow over the past year. Navient, the student loan company; Ford Motor; Viacom; and specialty chemicals company Lyondell Basell topped the list.

Source: Newsmax

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