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Dividend Stocks: Where to Find the Best Performers by Mark Hulbert

When it comes to dividends, more isn't always better. A company isn't necessarily more attractive just because it pays a higher dividend. That is the clear lesson I draw from the dividend-oriented newsletter with the best long-term record among the 200 services in the Hulbert Financial Digest rankings: Investment Quality Trends, edited by Kelley Wright. "Higher" or "lower" for him have meaning only when comparing a company's current dividend with what it paid in the past. He believes that comparisons with other companies are unhelpful.

Consider CVS Caremark, the drug retailer, and HCP, the health-care real-estate investment trust. Mr. Wright rates CVS Caremark more highly than HCP, even though CVS's dividend yield - the annual dividend as a percentage of the stock price - is just 1.6%, while HCP has a 4.0% yield.

Mr. Wright believes CVS is the better bet because its current yield is at the high end of the range of its past yields, which have extended from a low of 0.4% to its current at 1.6%. HCP's current yield, by contrast, is at the low end of its historical range, which has gotten as high as 12.4%. So, in terms of relative dividend yield, CVS's is higher than HCP's.