Screening Filters
is_index_component: ['GSPC', 'RUT', 'DJI', 'NDX']
- Purpose: Limit the search to stocks that are members of major U.S. indices:
- S&P 500 (GSPC)
- Russell 2000 (RUT)
- Dow Jones Industrial Average (DJI)
- Nasdaq 100 (NDX)
- Rationale:
- These indices collectively cover large-cap blue chips, mid/small caps, and major growth names in the U.S. market.
- Dividend investors typically prefer established, liquid, well-followed companies rather than illiquid microcaps or obscure listings.
- Using index membership as a filter improves quality and reliability of financial data, and focuses on companies that have passed basic size, liquidity, and listing standards.
free_cash_flow_ttm: { 'min': '0.0001' }
- Purpose: Require positive trailing twelve-month free cash flow (FCF).
- Rationale:
- Dividends are paid in cash; sustainably paying and growing dividends usually requires generating cash above what the business needs.
- Positive FCF helps avoid companies that borrow or issue shares just to fund their dividends, which is often a red flag for future cuts.
- This supports the goal of finding “best” dividend stocks by filtering for firms that can actually afford their payouts.
dividend_5yr_cagr: { 'min': '3' }
- Purpose: Include only stocks whose dividends have grown at least 3% annually on average over the last 5 years.
- Rationale:
- The user asked for “best dividend stocks,” which usually implies not only a good current yield but also growth and consistency.
- A 5‑year dividend CAGR ≥ 3% shows a history of increasing dividends, outpacing low inflation and helping preserve purchasing power.
- This helps filter out companies that pay dividends but haven’t grown them, which is less attractive for long-term dividend investors.
dividend_yield_ttm: { 'min': '3', 'max': '8' }
- Purpose: Target stocks with a moderate to high but not extreme dividend yield, between 3% and 8%.
- Rationale:
- Minimum 3%: Captures stocks that provide a meaningfully higher income than cash or broad index funds, aligning with “dividend stock” expectations.
- Maximum 8%: Very high yields (e.g., >10%) are often a sign of distress or that the market expects a dividend cut. Setting an upper limit reduces exposure to “yield traps.”
- This range aims to balance income attractiveness with dividend sustainability, consistent with the idea of looking for the “best” rather than just the highest yields.
dividend_payout_ratio: { 'min': '30', 'max': '70' }
- Purpose: Focus on companies paying out 30%–70% of earnings as dividends.
- Rationale:
- Below ~30% payout: The dividend may be very safe but also not a major capital return priority, potentially giving a low yield.
- Above ~70% payout: Leaves limited room to reinvest in the business or absorb earnings declines, increasing the risk of dividend cuts.
- The 30–70% band is a typical “sweet spot” for balanced capital allocation: enough payout to provide a solid yield, but enough retained earnings to fund growth and keep the dividend sustainable.
Why Results Match the User’s Request
- The screen is U.S.-focused and quality-biased by restricting to major U.S. indices, aligning with “best dividend stocks in the US stock market.”
- Positive free cash flow plus a reasonable payout ratio target companies that can sustain and grow their dividends, not just pay them temporarily.
- The 3–8% yield range ensures the selected stocks are genuinely income-oriented but avoids the riskiest high-yield names.
- The 5-year dividend growth requirement ensures that candidates are not just high yielders today, but have a track record of increasing dividends, a key hallmark of high-quality dividend stocks.
Together, these filters narrow the universe down to U.S.-listed, well-established companies with solid cash generation, attractive and sustainable yields, and a proven history of dividend growth—an appropriate interpretation of “10 best dividend stocks in the US stock market.”
This list is generated based on data from one or more third party data providers. It is provided for informational purposes only by Intellectia.AI, and is not investment advice or a recommendation. Intellectia does not make any warranty or guarantee relating to the accuracy, timeliness or completeness of any third-party information, and the provision of this information does not constitute a recommendation.