Our Dividend Stock Rating System

Dividend Stock Rating System

Dividend.com was founded to provide long-term and income-seeking investors with in-depth investment research. Much of our dividend stock research is compiled in our proprietary rating system.

DARS, or Dividend Advantage Rating System, is comprised of five distinct factors:

  • Relative Strength,
  • Overall Yield Attractiveness,
  • Dividend Reliability,
  • Dividend Uptrend, and
  • Earnings Growth.

Each dividend-paying stock receives a rating of one to five stars for each of these influential factors. Read more about our rating criteria below.

How to Interpret Dividend.com Ratings

Each dividend stock receives one of four basic classifications based upon its Overall Rating:

Overall Rating Classification Explanation
0.0 - 2.4 Avoid for Now Stock is not investable at the current time (also known as a "Sell").
2.5 - 3.4 Neutral Stock is considered a mediocre dividend-paying stock (also known as a "Hold").
3.5 - 3.7 Recommended Stock is a good dividend-paying stock to own at current levels (also known as a "Buy").
3.75 - 5 Highly Recommended Stock is an outstanding dividend-paying stock investment (also known as a "Strong Buy").

Remember, when we remove a name from our "Recommended" dividend stocks list, that downgrade generally means that we no longer recommended adding to existing positions, or establishing new positions in that stock. All investors should develop their own sell strategies to limit losses.

Breakdown of Dividend.com Ratings Criteria

1. Relative Strength

The relative strength of a dividend stock indicates whether the stock is uptrending or not. One major determining factor in this rating is whether the stock is trading above its 50- and 200-day moving averages.

2. Overall Yield Attractiveness

This rating reflects our personal opinion about a stock's ability to continue to make its current dividend payout. High dividend yields (usually over 10%) should be considered extremely risky, while low dividend yields (1% or less) are simply not very beneficial to long-term investors.

3. Dividend Reliability

A stock's dividend reliability is determined by the number of years the company has been paying dividends. The longer a company has been reliably paying dividends, the higher its rating.

4. Dividend Uptrend

A stock's Dividend Uptrend rating is dependent on the company's history of regularly increasing its stock dividends.

5. Earnings Growth

A stock's Earnings Growth rating indicates a company's projected earnings for the next four quarters.