A checklist for finding reliable dividend stocks

This is the final piece in my mini series of checklists highlighting the characteristics I look for in different types of shares. I’ve previously published pieces looking at quality stocks and growth stocks.

In this piece I’ve focused on the approach I’d use to find reliable dividend shares.

Checklist for reliable income

If I’m screening for new dividend stocks, I will probably restrict my search to companies with a market cap of at least £100m.

There are a few good, small companies that pay dividends, but in general I find most suitable opportunities are above £100m market cap. I don’t use an upper limit, as the FTSE 100 and FTSE 250 are home to many reliable income stocks.

Dividend history

Past performance is not a guide to future returns. But in general, I have found that companies with a long history of shareholder payouts are likely to have an established dividend culture and will try to maintain this record.

The pandemic led to a one-off break in many companies’ dividend histories. I tend to ignore this, if payouts have resumed at more or less constant levels following a brief pause. This does make screening for long...