3 Dividend Buys and 1 You Need to Avoid: Altria Group, Inc. (MO), CenturyLink, Inc. (CTL), ConocoPhillips (COP)

Currently, CenturyLink has a yield of 7.2% and $19.5 billion in long term debt. The firm’s total debt to equity ratio of 1.03, ROI of 1.6%, and ROA of 3.5% are not the most encouraging numbers. Regardless, the company is take proactive steps to develop their fiber network and offer new products which eventually will bring up their earnings and revenue. CenturyLink offers a high yield and yet it does not appear to be overly risky.

Altria Group, Inc. (NYSE:MO) sells “sin” goods like tobacco and alcohol. The company has a number of strong brands like Marlboro. In the first three quarters of 2012, Marlboro increased its market share by 0.5% relative to the same period in 2011.

Altria’s payout ratio of 92% is rather high. Its ROI of 20.8% and ROA of 10.5% are healthy, but its revenue has shrunk a total of -12.8% over the past five years, a concerning trend. Regardless, it offers a high yield of 5.2% and a strong position in the tobacco market.

Conclusion

Over longer time frames, dividend stocks can offer a much greater total return than non-dividend paying stocks. Dividends put cash in your pocket right now, and help to force the company to be responsible with its income. The latter three dividend stocks above are good ways to add a little bit of growth and cash flow to your portfolio.

The article 3 Dividend Buys and 1 You Need to Avoid originally appeared on Fool.com and is written by Joshua Bondy.

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