NEW YORK (TheStreet) -- Other than the Fountain of Youth, the most desired investor delight is to find high-yielding stocks in a strong bullish trend. Nothing lights up a portfolio statement like unrealized gains and received dividends.
Finding the right stocks with an attractive yield can at times challenge even the best of investors. The last thing anyone wants to do is invest in a stock that is about to lower its dividend. With careful research of industries, payout ratios, technical analysis and a lot of time reading SEC filings, you can move the odds more in your favor.
Or you can read through this short list of what I consider the "sweet spot" in dividends right now.
To make the cut, stocks must meet the following major considerations:
A stock must be highly liquid and trade with a small bid-ask spread to avoid slippage.
The company must have a history of dividend payments and increases in payments.
The company needs to demonstrate the ability to continue paying the current dividend or more.
The stock chart must be in a bullish uptrend; there is no point in looking for an oversized yield if the shares are expected to drop as much or more in the next year.
Johnson & Johnson (JNJ) Background: Johnson & Johnson is engaged in the manufacture and sale of a broad range of products in the health care field in many countries of the world. The company's worldwide business is divided into three segments: consumer, pharmaceutical and professional. Johnson & Johnson trades an average of 9.1 million shares per day with a market cap of $186.2 billion. 52-Week Range: $60.83 to $69.75 Yield: 3.6% I like J&J as a dividend holding or for capital appreciation. I like the brands J&J has along with the strong profits and dividend growth history. J&J also is trading in what I consider a buying dip right now. After topping over $69 a share a couple of weeks ago, the shares are trading under $68. Just under $67 a share is technical support, so if you're willing to take a "wait and see" approach, placing a buy near $67 may turn into a bragging rights type of buy. The stock has a lot of room to continue higher. The mean fiscal year estimate price-to-earnings ratio is 13.4, based on earnings of $5.06 per share this year. J&J pays $2.44 for a payout ratio under 50%. In a nutshell, the earnings multiple is letting you know the market isn't pricing in a premium for the company. Maybe their possible mistake is your gain because J&J's dividend has grown by an average of 9.1% per year. Not everyone agrees that J&J is a good bet. The current proportion sold short based on the float is 6.8%. While not too extreme, the short interest is interestingly high for such a big and well-known company. So far the shorts have suffered a lot of pain. Their exit will help lift the stock price higher. JNJ Dividend Yield data by YCharts
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
24/7 market commentary from Jim Cramer and 20+ veteran Wall Street gurus. Get access to the latest trading ideas on stocks, options, and ETFs as well as a real-time forum to see the pros exchanging their investment ideas.
- Jim Cramer + 20 Wall Street pros
- Intraday commentary & news
- Real-time trading forum
- Actionable trade ideas
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV