The Brightman, Kalesnik and Kose also screened for quality, or distress risk and accounting red flags, and found that the high-quality firms typically outperformed low-quality businesses. However, investors had to give up some dividend growth rates when picking high quality companies.
Investors can also track high-quality, high-dividend stocks through ETF options.
For instance, the iShares Core High Dividend ETF (NYSEArca: HDV), which tracks high-quality U.S. companies that have been screened for financial health and relatively high dividends, has a 12-month yield of 3.40%.
The Vanguard High Dividend Yield ETF (NYSEArca: VYM) targets the largest and highest dividend-paying stocks and comes with a 2.84% yield. VYM does not sacrifice quality for its quest for yield. Instead, the ETF includes a blend of both approaches and includes about 50% of its assets in stocks with wide economic moats, according to Morningstar.
For more information on dividend stocks, visit our dividend ETFs category.
Max Chen contributed to this article.