Dividend stocks, which are stocks of companies that make regular distributions of cash to shareholders, are called dividend stocks. While dividend stocks can be a useful source of income for some, the best dividend stocks can also provide excellent opportunities to increase your long-term wealth.
However, not all dividend shares are great investments and many investors don’t know how to start their search. With this in mind, here are some dividend-paying stock options you might like to consider. Also, there are important things to watch out for in top dividend stocks.
Five dividend stocks for you to buy
Dividend Aristocrats are a great source for top dividend stocks. Dividend aristocrats are companies which are both in the S&P 500 Index or have paid and increased their base dividend for a minimum of 25 consecutive years.
Here are five great dividend stocks that you should be considering buying right away:
Lowe’s(NYSE:LOW). The home improvement company may not appear to be a very exciting stock. That is true if your preference is dividend growth. Since 1961 when the company went public, it has raised its dividend annually. It has also increased the payout by an astounding 556% in the past ten years. Don’t be concerned about the housing crisis that began in 2022. Housing supply is more limited, and people are more likely than others to invest their savings in homes they have. Lowe’s is also pleased with another important statistic. The average U.S. residence is between 31-60years old, depending upon its location. Lowe’s will continue to be the destination for DIYers of the future.
Walgreens Boots Alliance(NASDAQ:WBA). Walgreens is one among the largest retailers of pharmacy services in the world. Their turnaround plans are paying off. The company has made significant savings and its efforts are paying off. Add all of it up and the company is poised to be even more profitable. Management recently raised its longterm goal for its U.S. medical segment. Walgreens stocks offer a good dividend yield, well over 4.5%, and 47 years straight of payout growth.
Income – This stock may be the best way to make a quick investment in high-quality realty for income and growth. The company’s portfolio includes a number of properties that are not subject to e-commerce. It also earns strong cash flows through long-term leasing agreements from tenants. Realty Income is also known as a Dividend Aristocrat. The company has 27 years consecutively increased its dividends — this includes every year since 1994, when it went public — and 53 years straight of paying a month.
Johnson & Johnson NYSE JNJ: Johnson & Johnson holds a range of quality brands that make the products people want, particularly healthcare items. Johnson & Johnson, in addition to its well-known consumer brands has huge and consistently profitable operations within pharmaceuticals. The company has seen its dividend increase 60 times in a row thanks to this combination. This combination of medical devices, pharmaceuticals and consumer health brands has made the company a formidable profit engine. Management however believes this “conglomerate”, structure is restricting the company’s ability to focus its resources. Therefore, it announced plans in the late 2021 to divide the consumer products company into a separate business. The split will take place in 2023. Existing shareholders will get shares of both companies.
Target(NYSE:TGT). Target has been more profitable over its peers in years of posting some the highest gross margins, and operating margins, in retailing. While sales have grown steadily, Target’s focus has been on expanding its ecommerce business while also increasing in-store offerings. Target investors suffered a tough year in 2022. Very high expectations clashed against the harsh realities of retailing. Target shares plunged more than 36% through December. Target is one the best-run retailers in the world and remains profitable despite this difficult year. Target’s dividend growth is at its highest point in 50 years, and shares trade at a steep discount compared to its historic highs. This should make dividend investors think about Target.
There are four other dividend stocks worth considering.
Dividend Aristocrats shouldn’t be the only place that you look. Many outstanding companies aren’t paying dividends for as long as they should (or haven’t yet been publicly traded). However, these companies can still make excellent long term dividend investments.
Here are four other dividend-paying companies with great brands, loyal customers and favorable demographics that you should keep in your sights:
Brookfield Infrastructure Corp.. (NYSE.BIPC) (NYSE.BIP). The best stocks sometimes are the ones that aren’t obvious. Brookfield Infrastructure, which has assets in water, energy utility, transport, and communications around the globe, is one example. Brookfield provides a large portion of shareholder returns and generates steady, inflation-resistant cashflows. Brookfield Infrastructure is a hidden gem with a dividend yield in excess of 3.5% at recent prices. They also aim to raise the payout to 5% to 9 % every year. Since its public debut in 2008, Brookfield Infrastructure has generated almost 900% in total returns.
Microsoft, (NASDAQ:MSFT). Microsoft has grown to be one of world’s largest companies. Microsoft’s focus on subscription-based revenue is an attractive feature for dividend shareholders. The company has a solid balance sheet that includes more cash than debt, and a low payout percentage which gives it plenty of opportunity to increase its dividend. Microsoft’s 12-year history with dividend increases would make it no surprise to reach Dividend Aristocrat status. Although the stock’s low yield of 1.1% may not be appealing, and 2022 was a challenging year for it, it has a remarkable long-term track-record of exceeding market returns total returns.
American Express(NYSE:AXP). Financial services such business and consumer lending can be another source of top dividend stocks. American Express, however, is one of the best. American Express is not a Dividend Queen, but its long history of growing and maintaining its dividend in any economic environment has been a testament to that. This can be attributed to the high quality of its lending standards and its emphasis on higher-income consumers, who are less likely not to default on their debts in times of economic stress. American Express is attractive for investors who love the idea of owning a top financial company, but are also concerned about economic circumstances. This great stocks to invest in during large market downturns or to hold until the bull markets recover.
Clearway Energy. While renewable energy is often considered a growth investment, it also presents a fantastic opportunity to earn dividends. Clearway Energy is a utility-scale, solar and wind asset owner and operator. The company acquires, invests and then operates renewables facilities. They sell the power to utilities on long-term deals — not years but decades — that are based on long term contracts. The dividend yield is above 4.5% over the past few years and has increased by an astonishing 84% since 2018. Clearway Energy can be a good choice for anyone looking to profit more from renewables.
Highest dividend stocks
You could be looking to make a large payout or generate income that you will use today. Here are some tips for maximising the dividends that you earn.
First, you should not be focusing on dividend . But instead, consider dividend . The dividend yield or the proportion of the share price for which dividends are paid annually is much more important than dollar amounts of dividends.
Next, don’t make owning high-dividend-yielding stocks your No. 1 priority. It is important to first focus on business quality. Only then, can you tell if a high payout yield is sustainable.
What are the key features to look for when investing in dividend stocks?
If you’re just beginning to invest in dividends, it’s worth learning about dividend stocks. After you have an understanding of the mechanics of dividends, you will be able to find outstanding dividend stocks for your portfolio.
Stock payout ratio: This is the ratio of the stock’s dividends per share to its earnings. In other words: This shows you how much earnings a stock pays to shareholders. A sustainable dividend means a relatively low payout ratio (say 70%).
History of dividend raises:Â It can be a sign that a company keeps increasing its dividends, even if it has to do so during times of economic hardships such as those caused by the COVID-19 pandemic.
Strong earnings growth and steady revenue. If you’re looking for the best dividend stocks, look for companies that are stable. Low revenue growth (up or down) and fluctuations in earnings can indicate trouble.
The most significant feature. This can include a proprietary tech, high switching costs and a strong brand.
High Yield: This listing is last because of a reason. It is obvious that a higher yield will be preferred over a lower one. However, this must be done only after the other four criteria have been met. A high dividend is only worth as much as the business which supports it. This is why you should compare dividend yields and to confirm that both the business and the payout are healthy.
Dividend stock are long -term investing options
Even the most solid dividend stocks are susceptible to volatility, even for very short periods. There are too many market factors that can affect them over days and weeks. Many have nothing to with the underlying company.
Although the companies listed above make great long term dividend investments, it’s important to not worry about fluctuations in prices every day. Instead, concentrate on companies with great businesses, stable income streams and (preferably), strong dividend track record. The long-term will take care.
