This marked the 17th consecutive year the company’s board approved a quarterly dividend increase. Investors should be sure to look for companies with healthy financial fundamentals in addition to competitive dividend yields and payout ratios to maximize their investment potential. Let’s say you can tolerate some risk and you want to generate cash quickly.
The stocks in the chart may have high yields, but that doesn’t necessarily mean that they’re the best dividend stocks for any investor. The ideal portfolio varies person to person, based on individual goals and timelines for those goals. Besides, many investors are better off buying index funds rather than individual stocks. Dividend ETFs or index funds offer investors access to a selection of dividend stocks within a single investment — that means with just one transaction, you can own a portfolio of dividend stocks. The fund will then pay out dividends to you on a regular basis, which you can take as income or reinvest.
As a REIT, the company is obligated to pay out 90% of its taxable profits as dividends. Traditionally, companies that pay dividends (especially steady or growing ones) are larger, more established firms. Newer and growing businesses tend to keep their profits and reinvest trading diary them into growth. That’s why you’ll see massive names like Coca-Cola and Procter & Gamble paying dividends while growing tech firms like Uber don’t. The income can be used to live off of or reinvest to purchase more shares, increasing your overall return.
Why build a monthly dividend portfolio?
The materials producer pays a quarterly dividend of $0.70 per share in March, June, September and December. Between 2011 and 2017, Dow’s quarterly dividend rose from $0.25 to $0.46, but the company paid no dividend in 2018. Diamondback also pays a quarterly dividend with base and variable components. In May 2022, the company raised its annual base dividend 17% to $2.80 per share.
The stock is trading off its 52-week high, but it’s outpaced the S&P 500 by an average of eight percentage points per year for the last decade. Our editors are committed to bringing you unbiased ratings and information. We use data-driven methodologies to evaluate financial products and companies, so all are measured equally. You can read more about our editorial guidelines and the investing methodology for the ratings below.
What Are Dividend Stocks and Why Are They Appealing?
And of course, a lot of high dividend-paying stocks within value that we see as really being 4- and 5-star-rated. To help navigate this tricky but rewarding market niche, we talked to five top fund managers and analysts from investment firms such as Neuberger Berman, T. Rowe Price, Eaton Vance and more. Coca-Cola (KO) has long been known for quenching consumers’ thirst, but it’s equally effective at quenching investors’ thirst for income. The company’s dividend history stretches back to 1920, and the payout has swelled for 61 consecutive years. The most recent hike, announced in February 2023, lifted the quarterly dividend by 4.5% to 46 cents per share. The Dow component’s quarterly distribution remained unchanged in 2020 amid the COVID-19 crisis.
- It operates more than 2,000 stores under the Tractor Supply and Petsense banners.
- A ratio of 60% or less indicates that a company’s dividend is sustainable.
- The best dividend stocks provide investors with dependable income over the long term.
- That makes American Express very appealing to investors who like owning a top financial services company but who are also concerned about economic conditions.
- But the real selling point here is the company’s industry-leading digital engagement.
Real estate saw explosive growth in 2020 and 2021 but saw that growth slow or even turn into price drops in 2022 when interest rates spiked as the Fed took on the fight against inflation. That led Realty Income Corp stock to fall from a peak of $75 to a low of $55 in October. When building your dividend portfolio, you want to ensure you invest in high-quality stocks. If you only focus on the dividend amount, you could lose a lot of money if the stock loses value. In fact with the stock currently around $255, Huber thinks it should be more properly valued around $305 to $310, which would be a very healthy boost for new investors. Its defensive nature, coupled with reliable income, should give recession-wary investors some comfort as a place to hide out while still enjoying growth potential.
How Has the U.S. Equity Market Performed in 2023?
But you must ask why a dividend is high in dollars or in percentage terms as you decide whether to buy that stock that pays that income. Its dividend is the second lowest on this list, and it also has the lowest yearly dividend growth rate, near 7%. LMT has an “A” rating for financial health and has been growing EPS at more than 20% per year. That growth is expected to slow, but it should remain a respectable 10.9% per year (average) for the next five years. The stock is off its 52-week high, but it’s still outperformed the S&P 500 by an average of seven percentage points per year over the last decade.
Real estate investment trusts such as Federal Realty Investment Trust (FRT) are required to pay out at least 90% of their taxable earnings as dividends in exchange for certain tax benefits. Thus, REITs are well known as some of the best dividend stocks you can buy. Target paid its first dividend in 1967, seven years ahead of Walmart, and has raised its payout annually since 1972. The last hike came in June 2023, when the retailer raised its quarterly disbursement by 1.9% to $1.10 a share. The discount retailer, which operates approximately 11,400 stores and e-commerce websites under 54 banners in 26 countries, is a cash machine. WMT has generated average annual levered free cash flow of more than $13 billion over the past five years.
Coterra Energy (CTRA) is an oil and gas company that develops, explores and produces gas, natural gas and natural gas liquids in the U.S. Coterra also https://bigbostrade.com/ operates natural gas and saltwater disposal gathering systems in Texas. These companies have increased their dividends every year for 50+ years.
Ares Capital
It has a “B” financial rating from Morningstar, and it has grown EPS at 13.4% per year over the last five years. The stock is trading close to its all-time high, and has outperformed the S&P 500 by a massive average of 26 percentage points per year over the last 10 years. To understand how to select the top dividend stocks, you’ll need to be familiar with some commonly used terms. If you’re new to dividend investing, here’s a brief explanation of what those terms mean. Easterly Government Properties arguably ranks as one of the safest dividend stocks on the market.
Becton, Dickinson and Company (NYSE:BDX)
Indeed, 68 consecutive years of annual dividend increases is proof positive of the company’s commitment to returning cash to shareholders. Decades of annual dividend increases have helped NDSN become a long-time market beater. Indeed, shares have outperformed the broader market on an annualized total return basis over the past five, 10, 15 and 20 years. It first paid a dividend in 1924 and its dividend growth streak is long-lived too, at 50 years and counting. The last payout hike came in December 2022 — an 8.5% increase to 51 cents per share quarterly. Nucor (NUE) is the largest U.S. steelmaker, but it’s perhaps even more well known for its almost unrivaled commitment to dividend growth.
Investors who believe that oil and gas will remain expensive may consider Chevron, which offers a solid dividend yield of 3.25%. This gives the company additional flexibility as it could opt not to buy back shares and instead pay that cash as dividends instead. The company has raised its dividend by nearly 20% per year over the last three years. Analysts expect 13.3% earnings growth next year and 10.6% EPS annual growth over the next five years.
Companies that pay a regular dividend are usually profitable on a recurring basis and have previously navigated their way through one or more downturns. Likewise, Verizon was one of the worst-performing Dow Jones stocks in 2021. However, investors should love the telecom giant’s juicy dividend. With the increased adoption of 5G networks, Verizon should have solid prospects over the coming years. However, investors should focus more on where the chipmaker will be in 10 years or more than how its stock fared in one 12-month period. More importantly for income investors, the company’s dividend should be safe.
Investing For Income
The average price target comes in at $4,031, which is roughly 6.5% higher from where we closed as of this writing. Marsh & McLennan provides a variety of services including insurance brokerage, risk and reinsurance, human resource consulting and management consulting for a wide range of industries. It offers employer, individual and government-sponsored healthcare plans.
While those concerns aren’t completely unfounded, the market is certainly “pricing” them in now, with the dividend yield well above 5% as of July 2023. With stable, contracted cash flows and strong tailwinds of future demand, Clearway is a compelling risk-reward choice for dividend investors. Financial services such as consumer and business lending are another place to find a handful of top dividend stocks, and American Express (AXP 0.49%) is one of the best. Although not on the list of every-year dividend raisers, American Express has a decades-long track record of either raising or maintaining its dividend through every economic environment. The big lesson here is that when other banks and lenders are cutting their dividends, Amex has proven able to stand pat during the downturns. With dividend growth at 50 years and counting, and shares trading for a steep discount to their all-time highs, dividend investors should put Target on their shopping list.
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