Six Bullish Stocks Will Pay You High Dividends

NEW YORK (TheStreet) -- I like dividend stocks because it's the one way to know for sure how hard the CEO is working for you. Stocks that don't pay a dividend let management off too easy.

Sure, start-ups and growth companies can make a strong case for not paying a dividend now, but after 10 years if a company isn't paying or growing quickly, something may be wrong. History is clearly on my side when comparing dividend-paying companies and nonpayers.

Stocks that pay a dividend on average perform much better than stocks that don't. Even after accounting for micro-caps and pinksheet stocks, dividends are your easiest path toward a stable and appreciating portfolio.

Finding the right ones is no easy task. You want as big of a yield as you can find, but if the company cuts the dividend, not only do you own a lower yielding stock, but probably one worth much less too (ask the RadioShack ( RSH) dividend hounds how it's working out for them).

I include stocks I already either trade or follow and that have a large dividend. I add in a screen for large-yield stocks and add the ones that are appropriate:

GIS Chart GIS data by YCharts

General Mills ( GIS)

Background: General Mills manufactures and markets branded consumer foods worldwide. The company also supplies food products to the foodservice and commercial baking industries. The company was founded in 1928 and is based in Minneapolis, Minn. General Mills trades an average of 4 million shares per day with a marketcap of $26 billion.

52-Week-Range: $36.75 to $41.06

Book Value: $10.31

Price to Book: 3.9

Payout Percentage: 49%

Investors are receiving $1.32 in dividends for a yield of 3.20% after General Mills raised the dividend amount from 30.5 cents a share up to 33 cents per quarter. If General Mills is able to reach the current fiscal year estimated earnings of $2.67, the dividend payout is below 50%, essentially alleviating worries about a dividend cut absent a major catalyst.

The five-year dividend growth rate is negative; however, the company increased the dividend twice after cutting the dividend to 28 cents in early 2010. After two increases, I am comfortable they are on the right track.

The average analyst target price for General Mills is $42.31, allowing considerable upside before analysts may rethink the premium. The last reported short interest is paltry and not meaningful with only 1.9% of the average trading float.

The daily chart isn't the prettiest girl at the dance, and if I only looked at daily charts I may take a pass. General Mills appears notably strong on the weekly chart, plus did I mention they raised the dividend twice in the last two years? A 3% dividend is sweeter than Cinnamon Toast Crunch, but another dividend increase is healthier for your portfolio than the Green Giant.

TheStreet's Christopher Versace writes about General Mills in The Week Ahead: Excessive Risk Unlikely.

GIS Dividend Chart GIS Dividend data by YCharts

WAG Chart WAG data by YCharts

Walgreen ( WAG)

Background: Walgreen, together with its subsidiaries, operates a chain of drugstores in the U.S. The company was founded in 1901 and is based in Deerfield, Ill. Walgreen trades an average of 8.1 million shares per day with a marketcap of $32 billion.

52-Week Range: $28.53 to $37.35

Book Value: $21.24

Price to Book: 1.8

Earnings Payout Percentage: 39%

Walgreen pays $1.10 a year in dividends for a respectable yield of 3%. While 3% is great, Walgreen has an average of 50% increases in dividend payments over the last five years. No one considers the incredible growth rate sustainable, but with less than a 40% payout rate, there is plenty of room to grow.

TheStreet's Gary Morrow writes about Walgreen on Real Money in Walgreen Moving Well Ahead of Earnings.

WAG Dividend Chart WAG Dividend data by YCharts

Shares are slowly but steadily climbing in the last 30 days. Shares are now 2.8% higher than last month.

The chart is a solid bull trend. In fact, the stock appreciated over 9% in the last year, and the average analyst target price for Walgreen is $38.82.

Currently, the short interest based on the float is inconsequential and not a big concern. Short interest is 2.6%, just enough to keep short sellers up at night.

LLY Chart LLY data by YCharts

Eli Lilly ( LLY)

Background: Eli Lilly discovers, develops, manufactures and sells pharmaceutical products worldwide. The company was founded in 1876 and is headquartered in Indianapolis, Ind. The stock trades an average of 8.4 million shares per day with a marketcap of $60 billion.

52-Week Range: $35.46 to $53.99

Book Value: $12.33

Price to Book: 4.2

Earnings Payout Percentage: 54%

In the last month, the stock has really moved higher with a 10.8% increase. Investors are receiving $1.96 in dividends for a yield of 3.65%. The story gets even better looking at the monster 33% rise in share price over the last 52 weeks. Analysts are calling for a price target of $50.46.

This isn't the first time I brought up Eli Lilly. At the end of August, I wrote about the company in Six Bullish Stocks That Pay High Dividends. I liked the company then and I continue to like it now. I would not chase it though and allowing for a pullback before entry may be prudent.

TheStreet's Jim Cramer writes about Eli Lilly in Watch out for the Tightrope.

LLY Dividend Chart LLY Dividend data by YCharts

It doesn't take Tom DeMark at MarketStudies.com to figure out Lilly is running up the chart fast. The moving averages are rock-solid bullish and money is pouring into this equity. One note of caution, once the sugar high of the Affordable Care Act wears off, the health industry may face serious headwinds. Investors should obviously keep a little closer eye on the makeup of Washington next year.

The last reported short interest is paltry and without reason to consider it a meaningful influence at only 1.7% of the average trading float.

BMY Chart BMY data by YCharts

Bristol Myers Squibb ( BMY)

Background: Bristol-Myers Squibb, a biopharmaceutical company, engages in the discovery, development, licensing, manufacturing, marketing, distribution and sale of biopharmaceutical products that help patients prevail over serious diseases worldwide. The company was founded in 1887 and is headquartered in New York City.

52-Week Range: $30.10 to $36.34

Book Value: $9.59

Price to Book: 3.6

Earnings Payout Percentage: 49%

The company currently pays $1.36 per share in dividends for a fat yield of 4%. I reviewed back to the 1970s and the regular dividend is like the energizer bunny, it keeps going and going higher.

BMY Dividend Chart BMY Dividend data by YCharts

Shares are slowly but steadily climbing in the last 30 days. Shares are now 2.1% higher than last month.

The stock appreciated slightly last year, but not enough to be considered noise on the chart. Bristol-Myers climbed 1% in the last year. The average analyst target price for Bristol Myers Squibb is $34.47, and if analysts begin raising their price targets since "we are here."

GE Chart GE data by YCharts

General Electric ( GE)

Background: General Electric operates as a technology and financial services company worldwide. The company was founded in 1892 and is headquartered in Fairfield, Conn.

52-Week Range: $14.68 to $23.18

Book Value: $11.38

Price to Book: 2

Earnings Payout Percentage: 55%

Investors receive 68 cents a year in dividends for a yield of 3%. After slashing the dividend in 2009, GE has come back strong. About three years ago, GE started moving the dividend rate higher again, and you just can't buy a more global, solid company with a bigger yield. If you want to improve your long-term investing success, you really should take a look at GE's history.

GE Dividend Chart GE Dividend data by YCharts

The one-year return is 39%. The average analyst current target price for General Electric is $24.69. Short sellers are not interested in betting against this one. Short interest is a nonfactor at a rate of 0.7% of the float.

This time next year I expect to write about GE and what a great buy it was under $30 a share.

JPM Chart JPM data by YCharts

JPMorgan Chase ( JPM)

Background: JPMorgan Chase is a financial holding company. The company was founded in 1823 and is headquartered in New York City.

52-Week Range: $28.28 to $46.49

Book Value: $52.56

Price to Book: 0.9

Earnings Payout Percentage: 24%

Investors are receiving $1.15 in dividends for a yield of 2.7%. Paying a yield of "only" 2.7% (compared to essentially zero at the local bank), Morgan may not have attractiveness of some higher yielding companies; however, the stock chart indicates to me that a new 52-week high isn't far off.

Along with capital appreciation, another dividend increase is certainly in the cards if the analysts earnings projection for 2013 are even close.

The daily chart is bullish, and who wants to be against the golden CEO Jamie Dimon? Not short sellers that's for sure. Only about 1.2% of the float is betting against Dimon and crew. Morgan moves around enough to allow opportunities to jump on board during dips. No need to chase this one, just wait for bad economic news to spark selling for the day and boom, you're in at a sale price.

JPM Dividend Chart JPM Dividend data by YCharts

Shares are slowly but steadily climbing in the last 30 days. Shares are now 2.7% higher than last month, and 32% higher over the last 52 weeks. Analysts are calling for a price target of $46.10.

At the time of publication, the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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