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Posted by: Howard Silverblatt on February 11, 2009

Dividends are expected to have their worst year since 1942, with the S&P 500 payment declining 13.3%, and that’s my optimistic estimate clich here.

And while companies that can’t afford to pay dividends shouldn’t, after all this is the year of the cash flow, I find many issues that can and should continue to pay and increase. Linked is file of 142 S&P 500 issues that have paid increased cash dividends for at least ten years in a row or have paid increased cash dividends in at least 20 out of the last 25 years. I’ve also added a coverage column for issues where their current earnings (net income) covered their dividend rate by at least twice, as well as where their 2009 street estimated earnings are at least twice. The file is a starting point for dividend investors, not a buy list, and was produced by screening historical data. While these issues have a strong dividend history, the current economic climate has drastically changed things; investors need to cautious. Higher yields are a product of the generally distressed stock prices, but much higher yields are a sign of stress. Picking a dividend stock today means picking an issue with current product that produces sufficient cash flow (those words again, get use to them) to cover the business, the dividend and grow both of them. The screened 142 dwindle down quickly as your safety concerns increase, but there are attractive issues on the list, just not the starting 142 click here.

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Bloomberg Businessweek’s Ben Steverman focuses on the latest moves in financial markets and emerging trends in stocks, bonds, and funds, always with an eye toward giving readers a better understanding of the sometimes confusing and often chaotic world of money. Standard & Poor’s senior index analyst Howard Silverblatt will also provide his take on companies’ finances and the markets. Voted one of the “Top 100 Finance Blogs” in 2007.

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