Slide Show | February 2014

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Great Dividend Stocks for 2014

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Flush with cash, corporate America has launched a new golden age of dividends, pumping record sums into investors' pockets. But even as shareholders reap that windfall, some wonder how sustainable it is. Memories of the rash of dividend cuts during the Great Recession still loom large.

The good news: Many blue-chip companies have ample room to continue raising dividends. The "payout ratio" (the percentage of annual earnings paid out in dividends) is expected to be about 34% for Standard & Poor's 500-stock index in 2014, says Howard Silverblatt, senior index analyst at S&P. That would be well below the historical average of 52%.

Of course, the main reason to buy a stock is for capital gains. But if share-price appreciation slows — or even reverses course for a while — after the bull market surge of the past five years, dividends will become more important. And don't forget that dividends enjoy a tax advantage: They are taxed at a maximum federal rate of 23.8%, compared with a top rate of 43.4% on ordinary income, such as bond interest.

Here's a look at seven dividend stocks worth considering. Some have strong current yields, some promise strong dividend-growth potential, and some offer both. Take your pick.

Prices and related data are as of February 13, 2014.

Great Dividend Stocks for 2014
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