NEW YORK ( TheStreet) -- Pushing aside the regressiveness of dividend double taxation, along with the upcoming increase in the tax, many investors will continue to allocate portfolio capital to yield-based stocks.
After all, high taxes or low taxes, as investors we still want to make money. Historically, dividend-paying stocks have performed well. There are some recent notable exceptions to the rule though. Hewlett-Packard (HPQ) comes to mind rather quickly.
HP isn't a rising stock paying a large dividend though, and that's what separates the zeroes from the heroes in my opinion.
When I examine stocks that pay large dividends, I want to avoid the "yield-traps" and stick with companies that are solid fundamentally. Take a look at these winners in both share price and dividend yield. CAG Dividend Yield data by YCharts
Conagra Fooods (CAG - Get Report) Background: ConAgra Foods has transformed itself into an industry-leading, branded and value-added food company. 52-Week Range: $23.64 to $28.80* Book Value: $11.22 Price To Book: 2.5 Earnings Payout Percentage: 63% ConAgra currently has an annualized dividend of $1 with a yield of about 3.5%. After announcing a large special dividend and buyout, shares jumped higher. ConAgra is a great stock, but don't chase this one higher. Wait for profit-taking and a lower price (less than $29) before entering.
Eight of 15 analysts now rate the company a hold while seven recommend buying and no analysts recommend selling. For a company analysts are mostly rating a hold, the stock really appreciated, gaining more than 20% in the last year, and consensus analyst target price is $30.17. Watch for rising price targets if shares maintain the $30 price range after the ex-dividend date. The last reported short interest is paltry and only 1.6% of the average trading float. The relative payout percentage of earnings towards dividends is small enough to consider the dividend safe. CAG Payout Ratio TTM data by YCharts