Long/Short Investments
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Long/Short Investments in L/S Equity: Valuation and Ideas,

796 Stocks With 2%+ Dividend Yields + 100%+ Dividend Coverage

Dividends are far from the most important aspect of a stock. As a whole, it truly doesn’t matter whether one owns a stock that pays a dividend or one that doesn’t.

For example, if a company grows its earnings at 5% per year, and it doesn’t pay a dividend to shareholders, it would be expected that the stock would appreciate by this 5% amount each year.

If we’re talking about the same stock – but this time it pays a dividend – and its free cash flow (i.e., net income + depreciation and amortization – capex +/- any change in working capital) is exactly on par with its dividend yield, then the stock would be expected to remain the same price on the market with shareholders receiving the dividend. In either case it’s the same.

Dividend yields can nonetheless be a positive signal.

It can signify a portion of earnings that a company believes to be guaranteed, as cutting a dividend generally denotes internal financial issues and a need to save cash. Accordingly, stocks that pay a dividend generally tend to be less speculative investments and come with less volatility as a whole than stocks that do not pay dividends.

On the same token, investors can prefer dividend-paying stocks for other reasons, such as the allure of having a constant revenue stream or preference for companies that put shareholders’ interests first (or at least high up the ladder), with the dividend being an indication of such.

Even so, buying dividend-paying stocks under the notion that a market can go sideways (or a little bit down) and one can still come out ahead is generally not the best rationale. If a company’s earnings are growing – or it is believed that they will do so at some point in the future relative to present levels – a stock would be expected to appreciate in excess of the dividend, if applicable. If one is simply looking for a revenue stream akin to a series of coupon payments, then adding bonds to the portfolio might be prudent and can provide the added benefit of higher risk-adjusted returns through the diversification benefit.

With that said, people do love dividend stocks, so below I’ve offered a list of nearly 800 stocks that:

a) provide at least a 2% dividend yield, and

b) have that dividend covered by earnings in at least a 1:1 ratio

If earnings lag behind the dividend, then it’s not sustainable indefinitely.

I will note that this is not necessarily a definitive list. Moreover, the information provided is not guaranteed to be wholly accurate. Financial information, including earnings, dividends, and dividend yields, changes over time. Each individual is strongly advised to do his or her own diligence before choosing to invest in any security.