Given that common stock is the most subordinate form of capital in a company’s capital structure, equities are of higher risk than bonds. Prospective returns are highest, but at the expense of a disproportionate amount of risk. There are, however, a couple basic ways to cut down on this risk: 1) Look for companies that are profitable and/or have positive cash flow 2) Invest in companies with stable dividends, which suggest that management has a high level of confidence that at least some portion of a company’s earnings are essentially guaranteed These criteria will ensure that you’re investing into companies that are currently carrying out the long-term goal of all businesses (make a profit) and have a relatively stable financial profile. Below are the 179 companies within the S&P 500 that fulfill this criteria, ranked in order of dividend yield, from high to low. I did not check through each listing for accuracy and this list is always subject to change. Will this list beat the market in terms of absolute returns? It’s tough to say. Micro caps tend to outperform the broader equity market as defined by the S&P, though mostly due to a few companies turning into home runs (or outright grand slams) with the majority being duds. Since January 1993, micro caps have returned 12.5% y/y at 18.3% annualized volatility while the S&P has returned 9.4% y/y at 14.5% annual vol. Hence the micro caps outperform in both absolute and risk-adjusted terms. But if you’re looking for returns that are higher than what you’d get with a 40% stocks 60% safe bonds portfolio (projected 4.5% nominal returns over the long-run), but still safer than the broader US equities market, going with a portfolio of profitable dividend-paying stocks is an option. There will still be painful periods where 30%+ drawdowns will occur. But if you’re using a cash-only account and have a multi-decade time horizon it’s not a terrible strategy. Or, of course, can be used as the equities portion of a more diversified allocation across different asset classes.