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Dominion Provident Ventures, Inc has urged its investment team to be careful when choosing stocks for the next year and is publishing advice for investors on the best way to choose stocks. Ideally you want established companies that have a long history of dividend increases, says Tony Hoffman, VP of Investor Services at DPVI. You also want to look at the coverage ratio — earnings per share divided by the dividend per share. A figure of two or higher tells you the company has plenty of money to pay its dividend. (Companies with lower coverage ratios can also be steady payers if they have stable cash flows.)

To help you identify reliable choices, Dominion Provident Ventures, Inc. is sharing some of its top stock picks with investors. DPVI recommends Abbott Laboratories (ABT, Fortune 500), now yielding 3.1%. The $30 billion pharmaceutical giant, known for its rheumatoid arthritis drug Humira, has hiked its annual payouts for more than three decades. DPVI believes that no matter what happens with health-care reform, Abbott will thrive thanks to its diversified businesses in drugs, diagnostics, and nutritional drinks. DPVI expects the stock, which trades at 14 times next year’s estimated earnings, to continue to appreciate.

In addition, DPVI analysts advise investors to look for companies with sustainable business models that dominate their industries. For example, Verizon Communications (VZ, Fortune 500), yielding 6.3%, is his top telecom holding. Sit notes that Verizon boasts the widest margins in wireless of any carrier and has almost completed building its FiOS high-speed Internet network, a massive project that cost $15 billion over five years.
Verizon’s dividend coverage ratio is below one right now, but DPVI considers Verizon’s dividend to be safe and expects the coverage ratio to improve as spending on the FiOS network winds down. DPVI prefers Verizon to rival AT&T (T, Fortune 500), which offers a similar yield, because of Verizon’s superior mobile network.