How You Find Really Good Dividend Bargains On The Market

What to look for when your try to find real dividend paying bargains that might deliver a solid return in the future? I've compiled a few essential factors to look at when you put your money into the market.

Once you've identified stocks that appear cheap for reasons that aren't company specific, it's time to do a little more digging. 

For starters, you'll want to ask the following questions:

- Does the company have a strong history of increasing its dividend? There are many companies that have increased their dividends for decades, but it's not a requirement. You simply want to verify that the company makes an effort to increase shareholders' income over time, and doesn't have a history of dividend cuts or suspended payments.

- Does the company have a reasonable payout ratio that will sustain the dividend? A payout ratio tells you how much of the company's income is paid out as dividends, and the lower this number is, the easier the dividend is to sustain. For example, if a company earns $3.00 per share and pays a dividend of $1.00, its payout ratio is 33% -- which leaves plenty of room for increases, as well as a nice cushion if income suffers during a recession.

- Is the company's debt load reasonable and manageable -- even if times get tough? A "reasonable" debt load is open to interpretation, and some companies can responsibly borrow more than others. A good metric to look at is the company's interest coverage, which tells you how much the company earns for every dollar in interest expenses. For example, if a company's interest coverage is five-to-one, it can absorb a huge drop in revenue before paying its debt becomes a problem.

- Is the company's income steady and (reasonably) predictable? While it's impossible to accurately project a company's future income, there should be a steady pattern of earnings growth, as well as absorbing tough times without much of an earnings drop.

However, attached are 20 dividend growth stock ideas that might fulfill some of the criteria to find an attractive investment target.

There is no perfect stock but some companies come close to it.

Which companies to you like?

20 Nearly Debt-Free Dividend Growth Stocks

In our personal finance lives we take great caution to eliminate debt. Whether that means paying down the mortgage, eliminating student loans or paying off your credit card balance in full each month, the message is clear: debt is the opponent. 

If you get in too deep, non-trivial matters start to occur like bankruptcy and consistent worry. 

Successful corporations are a bit different. Many of the most storied names routinely carry billions of dollars of debt. 

They use debt wisely for growth or return on investment optimization.

However, I believe that it could be good to have normal or low debt ratios due to a higher flexibility in the future. Non-debt companies don't need to use human resources for debt departments.

Attached is a nice selection of 20 stocks that work with nearly debt-free ratios in relation to equity. It's a great sign for long-term orientated investors.

Here are the biggest debt-free dividend growth companies....

19 Dividend Stocks With A Cash Return Yield Over 10%

Dividends and share buybacks help increase value for people holding a stock, and there's a lot of money to be had as companies shovel record amounts of cash back to shareholders.

We recognize activist investors often agitate for firms to return excess cash to shareholders via buybacks. However, while repurchases may lift share prices in the near term, they are a questionable use of cash at the current time when the median S&P 500 multiple is so high. In our view, acquisitions – particularly in the form of stock deals – represent a more compelling strategic use of cash than buybacks given the current stretched valuation of US equities.

I've compiled a list of the top 19 stocks, all with a total cash return yield of more than 10%. Below include how much of the return is from dividends or buybacks. You'll also find a comment about cash returns from company executives on the during their latest quarterly earnings call.

Check out the 19 stocks here...

A Quick View On The Dogs Of The Nasdaq 100

Recently, I wrote about the current Dogs of the Dow and gave you a nice overview about the cheapest and highest yielding stocks from the large cap index Dow Jones that offer growth potential.

Some of you have agreed by the names I've introduced these but the index members of the Dow Jones still offer true values and long-term growth.

However, today I would like to share the Dogs of the NASDAQ with you.

Right, the cheapest and highest yielding stocks from the technology exchange. A decent number of stocks also pay dividends there. In total, there are 55 dividend stocks, more than half of the members.

The initial yield of the technology dominated index starts at 0.75% and ends at 6.99%, paid by Mattel.

Check the top Dogs of the NASDAQ here:

Dividend Growth Stocks Of The Recent Week September 14 - 20, 2015

Attached, you can find a nice sheet with all dividend growth stocks that have raised dividends in the past week.

The biggest stocks below the latest dividend hikers are Microsoft, Philip Morris, Texas Instruments and Williams Companies.

Cheap by forward P/E are nine of the 20 stocks. My favorites of them are Microsoft, and PM and TXN. Which of the latest dividend growers to you like or would you consider to buy?

Dividend Growth And Share Buybacks

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Dividend Growth Stocks Of The Week September 14 - 20, 2015 Dividend Growth Stocks Of The Week September 14 - 20, 2015 (click to enlarge)

Check out the fundamental sheet here.... Dividend Growth Stocks Fundamentals (click to enlarge)