"Dividend Turdaken": Wolfe Research names 12 high-yielding stocks

Investment research firm Wolfe Research has developed a strategy for selecting stocks with sustainable dividend payouts and high potential for investors. Barron's has called this approach a "dividend turducken" - analogous to a dish in which the chicken is placed in the duck and the duck is placed in the turkey. This symbolizes a multi-layered, compounding approach to investing. Wolfe compiled a list of stocks according to this principle, from which Barron's selected 12 companies that offer a dividend yield of at least 2%. Among them were, for example, Chevron and IBM.

Wolfe Research Chief Investment Strategist Chris Sanyak suggested a "multi-layered" approach to selecting dividend stocks: they should combine "dividend aristocrat" status (paying dividends over a long period of time), high free cash flow yields, and dynamic growth in distributions to investors, Barron's wrote. Such a mix both ensures the company's financial strength and demonstrates management's willingness to share profits with shareholders, Sanyak said.

Barron's called the method a "dividend turducken" - analogous to a dish in which chicken is placed in a duck and the duck in a turkey. Such combined screening, according to the publication, helps find stable stocks with a lower risk of dividend cuts.

Sanyak traditionally avoids the highest-yielding stocks because of the risk of falling stock prices and dividend cuts, as was recently the case with chemical company Dow, which cut its quarterly payout from $0.7 to $0.35. He favors "second tier" companies, which historically show more stable dynamics than the leaders.

- Oil giant Chevron

- Developer of IBM IT systems

- FMCG manufacturer Procter & Gamble

- PPG Industries, manufacturer of paint and varnish materials

- Industrial gas manufacturer Air Products

- Illinois Tool Works Industrial Holding Company

- Manufacturer of personal care products Colgate-Palmolive

- Medical device manufacturer Becton Dickinson

- Natural gas distributor Atmos Energy

- Logistics operator C.H. Robinson Worldwide- Provider of HR services Automatic Data Processing (ADP)

- Home goods retailer Lowe's

This group has an average dividend yield of 2.5% while paying out about 50% of earnings and a moderate debt load: the ratio of net debt to earnings before interest, taxes, depreciation and amortization (EBITDA) is about 2.3, Barron's noted. The stock trades at about 19 times projected 2026 earnings (P/E): that's lower than dividend-paying stocks in the S&P 500 index (21).

This article was AI-translated and verified by a human editor