Dividend Stock Screener

dividend stock screener

We use a basic dividend stock screener to help identify undervalued dividend growth stocks.  We have found it very helpful to have a consistent set of metrics to apply to all stocks.   Once a stock passes the screener stage, we begin to roll up the sleeves and perform detailed stock analysis.  Our three metrics are as follows:

Metric #1 P/E Ratio Less than the S&P 500

Price to Earnings is well documented as a quick metric to identify stocks that may potentially be undervalued. We use this to identify stocks that may be discounted compared to the overall stock market. The S&P P/E ratio is currently above 20X on any given day.  So we set our screener at a PE of <15 to identify stocks that offer a pretty decent discount from the market.  This is not the only way we use PE though. You also need industry comparisons to unlock further value of the metric. Once a stock is identified, we compare the stock’s PE to their competitors to provide an apples to apples comparison. The <15 metric just helps me identify the companies.

Metric #2 Payout Ratio of Less than 60%

Can a business sustain a business model that uses all (or the majority) of their earnings to pay shareholders a dividend? We do not believe so. There is a healthy balance of rewarding shareholders and reinvesting profits in the company. Through research, reading article, reading books, etc., we believe a Payout Ratio of <60% is a healthy ratio that will allow a company to sustain its current dividend.

We love finding companies that have payout ratios well below our 60% benchmark (<30%). This shows the company has a lot of room to grow their dividend in future periods. Couple a very low payout ratio with a large Cash per Share total and we begin to salivate at the prospects of a future large dividend increase. Conversely, if a dividend ratio spikes above 60%, the stock’s current dividend may be in some serious trouble for the reasons mention at the beginning of the paragraph. Here is a REAL LIFE example of how this worked.  In 2014, Lanny successfully identified the decrease in FirstEnergy‘s dividend earlier in the year using this metric. Their payout ratio at the time of the decrease was above 100%. Within weeks, the company announced a drastic dividend cut that slashed both of our forward dividend incomes’ at the time.  

Metric #3 Increasing Dividends

It is important for our portfolios to invest in stocks that continue to grow their dividend. If a company’s dividend is stagnant, the yield has the potential to decrease if the stock suddenly has a period of strong price appreciation. In addition, increasing dividends is a signal of strong financial performance by the company.  Why?  More dollars become available to shareholders!

Lastly, who doesn’t love an investment that historically raises their return to shareholders? It provides a nice little increase to their annual income. Ideally, we would like to see a company grow their dividend at a rate greater than inflation to avoid losing purchasing power on future dollars. However, the growth rate greater than inflation is not the end all be all for us as we own several stocks in  our portfolios (T) that do not follow this.

Examples of Applying the dividend Stock Screener:

The following are links to articles in which we have applied the stock screener to various companies.   For a few, the application of the screener has helped sway us to initiate a position in the company.  We have also written several stock analyses on the website Seeking Alpha.  So if you are looking for other examples for our Dividend Stock Screener in action, please check out some of the articles we have written on their website.

International Paper Company Dividend Stock Analysis

Coca-Cola Dividend Stock Analysis

Waste Management Stock Analysis

Delta Airlines Stock Analysis

Apple Inc. Dividend Stock Analysis



29 thoughts on “Dividend Stock Screener

  1. Which resource do you typically use to find a companies payout ratio? ETrade and Yahoo Finance have slightly different numbers for payout ratio, typically a percentage or two wouldn’t make a difference for your screener but one example where it would is Coca-Cola (59% Etrade & 61% Yahoo). Do you find any of the sights you use to have more accuracy than others in terms of payout ratio?

    Also, thanks for sharing FinViz on here. Will definitely test it out.


  2. I created a website which predicts dividend yields (http://idivs.org) might be of use to you? Perhaps it’ll just make your process more complicated, either way I love to know what you think – as I am more of a risk analysis guy… Thanks.

  3. Hi DivDiplomats,

    I was tired to filter stocks throught finviz, yahoo or google stock screener. Most of these screeners were made for technical analysis more than anything. So I’ve coded a free dividend growth screener. It’s on my website at QuitYourDayJob101. It’s still in the beta phase but it’s focused on dividend growth investing only so it might interest you.

    Best regards,

  4. I would also add another metric, namely P/E. Some research indicates that low P/E stocks tend to outperform high P/E stocks over the long term. I guess this goes for dividend stocks as well.

    • Hi Paul! P/E ratio is actually included under the first metric where we compare the stocks current metrics to the broader markets. I would be interested to read your research, do you have a link to articles that you were referencing?


  5. Hi guys,
    nice site, nice portfolios you have. Maybe this dividend stock screener may be usefull, too:
    It’s a little bit like FastGraphs including a stock screener and yes, it is my little web page (start-up). First I wanted to write you an e-mail instead of comment, but I did not find you mail address.
    If you like, contact me.
    May rising dividends be with you both!

  6. This site is just gret. I’ve search these info a great deal and I view it that is good written, easy to understand.

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  7. What do you think about long term debt ? I think We should check whether its going to be hard to keep up with dividend increse plus managing the debt.

    • Sagar,

      We consider debt and have written about some of the pros/cons of debt in the past. But it is not our primary screener. If a company passes the three metrics, we will review to make sure that debt levels don’t appear too high and could potentially lead to a dividend cut.

      Thanks. Hopefully this helps!


  8. For Metric #3 – Increasing Dividends, what is the equivalent metric in finviz to determine if a company has had a history of increasing dividends over time?

  9. I completely agree on the metrics, and find it refreshing that you ‘only’ stick with 3.

    A quick question as I debate with myself to invest in them or not. With metric 2 you quickly screen out REITs. I have looked at O that has increased its dividends since 1996. What are your thoughts on REITs and sometimes going against your metrics?

    Thank you

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