10 Top-Rated, Dividend-Paying Stocks

Stocks that pay dividends are an attractive choice for many investors because they have historically provided steady, if a bit unspectacular, returns over time. But it is wise to consider more than just dividends when selecting a stock.

Often, the income you generate with a stock’s dividend is offset by sluggish price performance. Simply put, the dividend may be paying a solid 4%, but if the stock has gone down 7%, you’re looking at a loss.

With this in mind, remember to look for stocks that not only carry strong dividend yields – but also have those characteristics that (IBD research has proven) winning stocks share before they make their big price moves. IA stock that pays solid dividends AND has strong earnings and sales numbers, institutional support from big mutual funds, and/or new ground-breaking products or services makes for a great addition to your watch list.

Remember, there are many great stocks out there with the makings of a strong price performer. Don’t look past them just because you’re looking for a stock that pays a good dividend. Try to find BOTH. The stocks on today’s list feature the characteristics we look for in potential winners. Plus, they all sport an attractive dividend yield (3% or higher).

In addition to Dividend Yield, we screened for an IBD Composite Rating of 90 or higher – ensuring that the stocks on the list are among the top 10% of performers right now. IBD’s Composite Rating represents a powerful combination of fundamentals and leading price performance within the company’s industry group. It combines all five IBD SmartSelect Ratings into a comprehensive score. Stocks with high Composite Ratings generally have top fundamentals and are leading price performers in their industry groups.

To ensure that the companies all met our criteria of solid sales and earning growth and leading price performance, we screened for stocks with Earnings Per Share (EPS*) and Relative Price Strength (RS**) Ratings of 70 or higher.

Only stocks with an Accumulation/Distribution Rating of “B-” or higher were included in the list. This rating tracks the amount of institutional buying (accumulation) and selling (distribution) in a stock over recent months by looking at daily price and volume changes. Price rises in above-average trading help lift the Acc/Dis Rating, while price declines in above-average volume hurt the rating. The higher the letter rating, the more that is being purchased by the “big guns,” and since professional traders drive the price of stocks, this is a good high-sign for investors to consider following suit.

The current price of the stocks on the list had to be higher than $10 with an average daily volume above 200,000.

* The Earnings Per Share Rating measures a company's earnings growth over the last five years. Then, the percentage change in the last two quarters' earnings vs. the same quarters a year earlier is combined and averaged with the five-year figure. The result is then compared to all other companies in Investor's Business Daily's stock tables (not, as some people think, to other stocks on the same exchange or stocks in the same industry group) and rated on a scale of 1 to 99, with 99 being best.

** The Relative Price Strength Rating that appears for each stock is calculated by comparing its price change over the past 12 months to that of all other stocks in the tables. Results are rated on a scale from 1 to 99, with 99 being best. An RS Rating of 99 is the highest possible and means the stock has outperformed 99 percent of all stocks in the past 12 months. An RS Rating of 1 means nearly all other issues have done better. Market leaders usually rate 80 or higher.

10 Top-Rated, Dividend-Paying Stocks