An impressive current-year dividend yield and a strong dividend yield history are the primary criteria for identifying strong dividend stocks. Also, earnings per share (EPS) growth plays an important role in such stocks as dividend is part of the company’s profits that are distributed among its shareholders. So dividend paying companies with historically strong earnings performance and solid EPS estimated growth for the coming years are crucial to our strategy.
However, many of these stocks are overvalued at the current levels thanks to the significant increase in their demand over the past few years. In order to eliminate the risk of picking overvalued stocks, one should look for favorable value criteria such as low price to earnings (P/E) and PEG ratios. Moreover, the addition of favorable Zacks rank for screening stocks increases the possibility of high returns irrespective of the market environment. Here are 5 stocks: Camden Property Trust (CPT), The Travelers Companies, Inc. (TRV), Banc of California, Inc. (BANC), KAR Auction Services, Inc. (KAR) and Johnson Controls Inc. (JCI).
Source: Zacks
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