Dividends de Rigueur. A basket of dividend-producing stocks used to be called the old people’s retirement portfolio. The stocks had certain characteristics, sort of like the retirees themselves: consistent payouts, relatively stable dividend yields, decent appreciation over the long-term, not too volatile but rather, boring, bland, unexciting, but here’s the best word, predictable.Often made up of utility and very large corporate stocks, the old-style retirement portfolio was not considered exciting or mentally rewarding for investors in the hunt for the big pop.Retirees who invested in dividend stocks understood the dividend yield process. They were operating in a slower more confined investor time frame without rapid-fire quant trading, short-sellers, constant web chatter, day traders, and 24 hour access to volatile information.The lack of access to current investment valuations made them more cautious and cash diverse. That was a time, for those who wish to recall, that stock values were not reported until the next day (or week) in the finance section of the newspapers, in I might add, tiny, extremely tiny print.Corporate Dividend stocks are back in favour, perhaps, because it is not easy these days to produce a decent rate of return with say a batch of low-risk term deposits, or even higher risk hedge funds. Recently, the average dividend yield for the Dow Jones Industrial Average on August 29, 2012 was 2.7 percent with individual company returns ranging from 4.86 percent — 1 percent http://indexarb.com/dividendYieldSorteddj.htmlThe Dow Jones Industrial Average is a stock market index that shows how the stock of 30 very large, publicly owned companies based in the United States have traded during a standard trading session in the stock market.Here are some critical criteria recommendations that I use for evaluating dividend-producing stocks:Big, big, heavily capitalised companies. Some investors call these the “Alpha” stocks. They are massively huge with mountainous global presences. Their market capitalisation ranges from 120 billion to the top company in the world, Exxon, at 420 billion. Market capitalisation is defined as an estimation of the value of a business that is obtained by multiplying the number of shares outstanding by the current price of a share.Low debt as a percentage of assets ratio. A well-capitalised, low debt to asset ratio company will not have a problem paying out a dividend each year. Debt levels around or below 40% are comfortable. Beware of a high dividend payment associated with a company heavily in debt.Free cash flow — the more the better. Companies with lots of cash again have the resources to meet their dividend payments. Cash provides flexibility and contingency against lean times, and economic downturns.Dividend payout ratio. Each year that a company produces a profit, a percentage of that profit may, note I say may, be returned to the shareholders. A dividend payout ratio of 30 percent means that for every $100 dollars of net profit, $30 dollars is returned to the shareholders and $70 is kept in retained earnings for new products and research and development. A company that pays out its entire net profit for the year in dividends needs significant further research to understand why. High dividends may not necessarily be a good thing for the underlying ownership of the shares.What about the acquisitions and trading process. If readers are interested in taking the dividend investment project further, you will need to open a custody and trading account.Locally, Butterfield Bank offers a direct trading platform for individual investors. And no, I don’t receive a referral fee, or anything else for this notice mention.Internet trading accounts are also available, but we are offshore residents in a tax-neutral country. It is not known at this time if access is more restricted due to the effect of FATCA (the Foreign Account Tax Compliance Act) and the IntergovernmentalWarning caution. Foreign nationals using US trading accounts and owning US securities should be forewarned that their accounts may be subject to US federal estate tax law and tax liabilities.Next article we discuss dividend yields, total returns, kinds of dividend-producing securities, and why I am not a fan of mutual funds.Please see good resources to review the Dow Index, track your investments, and research these stock choices can be found in detail in The Royal Gazette electronic version of this article.http://www.investorplace.com/2012/04/top-10-dow-dividend-stocks-for-retirement-investors/view-all/http://indexarb.com/dividendYieldSorteddj.htmlhttp://observationsandnotes.blogspot.com/2010/03/valuation-price-dividend-ratio-history.html20 largest US companies by market capitalisation http://www.theonlineinvestor.com/http://www.theonlineinvestor.com/slideshows/safe-dividend-stocks/This investment article is for general information purposes only, and should not be, and cannot be taken for specific individual investment advice. Interested investors must do their own research before purchasing any investment product, while keeping the two investment rules in mind: Past performance does not guarantee future results and never, ever, fall in love with a stock — it may not return that devotion.Martha Harris Myron CPA PFS CFP (USA) TEP is Director of Tax Services at Patterson Partners Ltd providing integrated cross-border tax, estate, investment advisory and related strategic planning services through entities in Bermuda and the United States and a professional member of the American Citizens Abroad Professional Tax Advisory Council. http://www.aca.chFor additional information, please contact mmyron@patterson-partners.com or call 296 3528 http://www.patterson-partners.com