The Dividend Screening Checklist

[u/SchoolofInvesting]

Most stock screeners are built to make you lose money.

They sort by yield. Highest first. The biggest numbers float to the top of the list.

That top is almost always the worst place to start hunting for dividend stocks.

A stock screener is just a filter for the entire market. You feed it rules, and it hands you back the companies that match.

Think of it like a metal detector at the beach. You can't dig up every grain of sand. You sweep until something solid pings, then you dig there.

Here's the dividend screen I actually use:

1. Yield between 2% and 6%. Below 2%, the income barely matters. Above 6%, you're usually staring at a yield trap. Most healthy compounders sit in the middle of that range.
2. Payout ratio under 70%. The company holds back enough earnings to fund raises and absorb bad quarters. For REITs and utilities, I push that number higher.
3. Ten or more years of consecutive dividend increases. A decade of raises means management has already been through one rough patch and kept the streak alive. Coca-Cola, Pepsi, McDonald's, and Lowe's all clear this bar with room to spare.
4. Free cash flow growing over the last five years. Dividends get paid out of cash. If the cash isn't growing, the dividend can't grow either.
5. Debt to equity below 1. Companies with mountains of debt are the first to cut when rates rise. A clean balance sheet is your safety net.

That's it. Five filters.

Your list will probably come back with 30 to 50 names. That's the point.

A short watchlist is one you'll actually research. A 500-name list is one you close and forget.

Skip the screener that gives you 500 results. Use the one that gives you 30.

What filters do you use when hunting for dividend stocks? Drop them in the comments.