I'm a big fan of the google stock screener; it's simple and allows you to quickly screen companies based on desired fundamentals. For this screen I was looking for dividend plays with the potential for modest outperformance in the future. These are large caps that provide necessary products/services, aren't going to drop 10% tomorrow, and have a healthy dividend.
Screener Results
I've set a debt/equity ratio of 50% and minimum interest coverage of 2x to weed out unstable businesses. There is also a max 20 P/E to ensure our companies aren't significantly over-valued and a minimum net profit margin of 10% to demonstrate they are profitable.
When looking through the list you should first recognize the 'house hold' names. These would include 3M, Johnson and Johnson (JNJ), Mastercard (MA), and Procter and Gamble (PG). Their average dividend yield is 2.27%, without Mastercard it's closer to 3%. This may not seem like much but it beats inflation and the potential upside for these businesses is still something to consider.
Of the above mentioned my pick is Johnson and Johnson (JNJ). Compared to Mastercard, 3M, and Procter and Gamble it's got the highest net profit margin and the lowest P/E. It's also a classic Buffet holding.
Good luck on the hunt for those safe blue chips, its not as hard as you may think.
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