But what are the most appealing dividend plays right now? High yields are nice, but we think investors should take a good look at a stock's underlying fundamentals first. So in this week's screen, we started out by looking for stocks with the potential for capital appreciation -- those ranked 5 STARS (strong buy) by S&P equity analysts. That means they're expected to outperform the overall market by a wide margin over the next 6 to 12 months.
BROAD APPEAL. You may be guessing the next step: Find the list of the 5-STARS with the highest dividend yield. That's logical, but this time we wanted to broaden our focus to take advantage of the breadth of sector coverage S&P offers. So instead, we selected the two 5-STARS stocks with the highest indicated dividend yields in their respective Global Industry Classification, or GICS, sectors.
The 20 stocks that turned up carry yields ranging from 0.43% to 9.86%, with an average yield of 2.75%. Here they are:
CBL & Associates
Burlington Northern Santa Fe
Automatic Data Processing
De Guia is an analyst for Standard & Poor's Portfolio Advisors