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What are we looking for?

Dependable U.S. dividend stocks for 2011.

More about today's screen

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This is the continuation of a screen we did with CPMS a couple of weeks ago with Canadian dividend stocks. Today, we'll look for U.S. stocks that have a strong history of dividend and earnings growth, as well as stable dividend and earnings prospects for the coming year.

To pass the screen today, stocks must have a market float of at least $1-billion (U.S.) and a dividend yield of at least 2 per cent. In addition, the dividend payout ratio must not exceed 80 per cent of the 12-month earnings estimate, dividends growth must be positive over the last year, total annualized dividend growth cannot be negative over the past five years, and the five-year earnings growth rate must exceed the median of the 2,100 U.S. companies that CPMS tracks. The expected price return on the stocks also must be higher than 5 per cent based on the median of analyst price targets.

More about CPMS

CPMS is a Toronto-based equity research and portfolio analysis firm owned by Morningstar Canada. It maintains a database of the largest and more liquid Canadian stocks, plus another 2,100 U.S. stocks, and spends a lot of time adjusting for unusual accounting items in each company's quarterly results to make sure screens can perform correctly.

What did we find out?

"This is an interesting list for investors looking to get a little more conservative in 2011 given that the S&P 500 is up 46 per cent over the last two years including dividends," said Jamie Hynes, senior consultant at CPMS. "The stocks on this list have relatively stable dividend yields of at least 3.9 per cent, far higher than short-term and even 10-year government bond rates, plus expected price returns of at least 5 per cent. With this said, there are no guarantees with equities. Three of the names on this list had a negative total return in 2010 despite ranking highly on this screen."

Stock in this column include: AT&T Inc. , Reynolds American Inc. , Lorillard Inc. , GlaxoSmithKline PLC, Bristol-Myers Squibb , American Electric Power , CenterPoint Energy Inc. , AGL Resources Inc. , DPL Inc. , Vodafone Group PLC , Entergy Corp. , CMS Energy Corp. , Public Svc Enterprise , Xcel Energy Inc.

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