Jon Bruner of Forbes has a screen of some value stocks that can continue to pay their dividend in an economic downturn. Value in Dividends

In a difficult economy and stock market, a healthy dividend can limit the downside damage to a stock and provide a modest amount of income. To that end, we have searched for companies that look like they can afford paying their dividends, seem capable of weathering the current economic storm and are not overpriced.

We used software from FactSet Research Systems and the Thomson IBES and Reuters Fundamentals databases to find companies that have been consistently profitable over the last five years and that security analysts expect to post earnings increases next year. We removed companies whose debt as a percentage of equity exceed 50%, whose dividend payout exceeded 50% of net profits and with ratios of price to last-12-month earnings greater than 20.

Several stocks on our list fall under the consumer staples category, a group that is often resilient during economic downturns. Consumers may put off buying new cars and taking fancy vacations, but they will still buy groceries. Our list includes processors J.M. Smucker (SJM) and Hormel Foods (HRL), as well as PepsiCo (PEP), a beverage and snack company. Between Sept. 1, 2000, and Oct. 9, 2002, a period when the S&P 500 index lost 49% of its value, PepsiCo gained 26%. Hormel's shares increased 53% during that period, and J.M. Smucker was up 102%.

The largest company on our list is pharmaceutical and consumer-products giant Johnson & Johnson (JNJ). Its stock yields 2.7%, its payout is 40% of earnings and it sells for 16 times its earnings from the last 12 months. Security analysts reporting to Thomson IBES expect the company to post 8% annual earnings growth over the next three to five years.

Company Name Industry
J.M. Smucker (SJM) Packaged Foods and Meats
Johnson & Johnson (JNJ) Pharmaceuticals
PepsiCo (PEP) Soft Drinks
The Buckle, Inc. (BKE) Apparel Retail
Hormel Foods (HRL) Packaged Foods and Meats
Family Dollar Stores (FDO) General Merchandise Stores
Wolverine World Wide (WWW) Footwear
Accenture (ACN) Consulting Services
Simpson Manufacturing Co. (SSD) Building Products
Qualcomm (QCOM) Communications Equipment

Disclosure: The Div Guy owns shares of JNJ and PEP at the time of this post.