Editors' pick: Originally published Sept. 7 and updated and republished with market activity midday Sept. 8.
Every dividend investor wants the highest yields and fastest income growth.
It's even better if the stock has a low payout ratio and a below average price-to-earnings ratio. Super high yields can be great, but sometimes it is better to drop down a notch in yield to find the perfect balance.
Using our Dividend Safety Scores, we found 10 stocks that fit this description, including a number of financial companies that stand to benefit from higher interest rates.
1. Viacom (VIAB)
Viacom is a global entertainment industry colossus making programs for TV, motion pictures, video games, consumer products and a whole lot of other entertainment content.
Its Media Network brands are especially geared to the prime youth market and include MTV, Comedy Central, VH1, SPIKE, BET, Nickelodeon and many others.
Filmed Entertainment includes Viacom owned Paramount Studios. This group covers a wide swath of financing and production of motion pictures both for theatrical and TV release.
At first glance, it may appear that Viacom is in one line of business: entertainment. However, the Media Network side that accounts 80% of revenues is the bread and butter business currently making all the money. It is sensitive to advertising revenues but otherwise provides a relatively stable income.
The Filmed Entertainment business on the other hand is a boom and bust proposition with a few successful releases offsetting the majority of films that either have little or nothing to show in the way of profits.
Viacom faces the same industry challenges as competitors such as The Walt Disney Company, 21st Century Fox, and Time Warner. The entertainment audience is increasingly fragmented.
The Internet and alternatives such as YouTube are shortening the attention span as well as the size of audiences. A broad base of programming and motion pictures is a handy weapon during these times.
Viacom gets very solid marks for Dividend Safety, Growth and yield. This is highly unusual for any company in the entertainment industry. This stability makes for appeal even to conservative investors seeking safe retirement income.
The current $1.60 per share annual dividend payout offers investors a well above average 4.1% yield. The company began paying quarterly dividends in 2010, so there is a lack of established policy to base payment expectations.
Thus far, dividend investors have been treated well. The company's quarterly dividend has increased 60% since 2011, and management last raised the dividend by more than 20% in 2015.
Having a low payout ratio that has held around 20% of free cash flow is very good. It shows the company has enough remaining in the bank to finance operations and service its $12 billion in long-term debt that amounts to 73% of total capital.