20 of the Best Dividend Stocks To Buy (Plus Advice From Advisors)

Investing in dividend stocks is a highly recommended way to build wealth in the long run. Not only can the price of the stock increase, but you also can receive small, regular payments, called dividends while owning these stocks.

While many stocks offer a dividend, only so many will become successful, and some might lose a majority of their value. This is why investing your money in only the best dividend stocks is essential.

What Are Dividend Stocks?

Before diving into some of the best dividend stocks to invest in, it’s crucial to understand what they are.

A dividend is payment companies make to their shareholders, who own stock in their corporation. The dividend stock label refers to those that historically have paid out reasonable dividends and maintained (or even increased) their payments yearly. The best dividend stocks are companies with an excellent track record with dividend payments, will likely not be changing course any time soon, and can serve as a source of passive income.

“However, dividends are not guaranteed,” points out Danielle Miura, CFP, founder and owner of Spark Financials, a fee-only firm in Ripon, CA. “The board of directors decides whether or not to lower the dividend amount or not have a dividend at all.”

What To Look For in Dividend Stocks

It’s not good enough to list the best dividend stocks and never revisit them because the markets constantly shift. So what works well one year may not work another. That’s why knowing what to look for in dividend stocks is important.

The first important thing to understand is that dividend stocks have a yield representing what percent of your investment you can receive as a regular payment. So, for example, if you buy a $100 dividend stock with a 5% yield and the stock price stays the same, you’ll receive $5 total in dividends for every year you own the stock. It may be an annual payment or split up into separate ones throughout the year.

The higher the dividend yield, the higher the percentage of the money you should theoretically earn back from dividends. However, it’s essential to watch out for company trends as a growing company with a 3% yield will often give you far more appreciation of the stock price and total return in the long run than a shrinking company with a 5% yield.

Therefore, the best dividend stocks aren’t necessarily the ones with the highest yield percentages but ones that will provide you with the most stability and total returns in the long run.

Danielle Miura suggests that “if you plan to invest in dividend stocks, look for a happy medium between growth in the value of the stock and growth in the income you receive. Look for dividend stock companies with low debt to equity ratios, strong cash flow, and consistent dividend growth.”

Dividend Stocks Are Long-term Investments

An important thing to remember about investing is that no matter what vehicle you choose, investing almost always works better with extended holding periods. Even the best dividend stocks can experience volatility when looking at 12 months.

Though dividends provide you with some extra safety in the form of cash distributions, it’s necessary to remember that there is a chance you could lose money; selling at a low will cost you in profit.

Miura emphasizes this point: “Even the most financially stable dividend stocks can have high fluctuations over short periods. Like any other individual stock investment, investors should be concerned about long-term growth, not short-term growth.”

Picking From the Best Dividend Stocks: Common Mistakes

Making mistakes is how people learn. However, when it comes to your finances, you’ll likely want to minimize the amount of “learning” you do with real stocks by educating yourself ahead of time. This will help prevent potential damage to your portfolio.

Tunnel Vision Regarding Yield

The first common mistake people make when investing in dividend stocks is tunnel vision regarding yield. Of course, a higher dividend yield means potentially higher dividends, but there are many other important factors to consider.

Certified financial planner Jonathan P. Bednar states, “Many people search for yield and buy the companies with the highest dividend yield. Sometimes the high dividend can be a red flag because they may use leverage or have a high debt to support the dividend. The long-term risk is that it may be cut to be sustainable.”

Failing To Consider Tax Implications of Dividends

Another common mistake investors make is not considering the tax implications of dividends. For example, Ayad Amary from Wealth Care says, “most dividend income is taxed as ordinary income. It will add to your annual revenue, and the dividends will also get taxed at your regular income tax rate.

If you are a high-income earner, you may want to consider buying dividend-paying stocks or funds in an IRA or similar retirement vehicle if possible.”

Letting Emotions Win

The final most prominent mistake investors make when purchasing even the best dividend stocks is letting their emotions get the best of them. Like investing in any other vehicle, it’s crucial to keep a level head and make decisions based on facts, not feelings.

20 of the Best Dividend Stocks To Consider Adding to Your Portfolio

While you may have heard that Johnson & Johnson is one of the best dividend stocks to own, what others exist? The list is constantly changing, but here are 20 standout candidates to consider adding to your portfolio.

1. Realty Income (O)

  • Date of creation: 1969
  • Dividend yield: 4.04%
  • Payout ratio: 307.8%
  • Market cap: $44.24B
  • 1-year total return: 8.16%
  • Price: $73.61

Realty Income Corporation is a real estate investment trust that acquires single-tenant commercial buildings. They specialize in triple net lease investments and consistently offer a solid dividend and high appreciation.

2. Mplx Lp (Mplx)

  • Date of creation: 2012
  • Dividend yield: 8.67%
  • Payout ratio: 66.71%
  • Market cap: $32.91B
  • 1-year total return: 15.90%
  • Price: $32.51

MPLX LP is a network of energy companies focusing on infrastructure and logistics assets. They own many oil and gas collection systems and offer an extremely high yield on their stock.

3. Magellan Midstream Partners Lp (Mmp)

  • Date of creation: 2000
  • Dividend yield: 8.06%
  • Payout ratio: 92.86%
  • Market cap: $10.90B
  • 1-year total return: 9.81%
  • Price: $51.50

Based in Tulsa, Oklahoma, Magellan Midstream Partners LP is a partnership that owns ammonia and petroleum pipelines. They primarily transport, distribute, and store petroleum products and have offered over 20 years of impressive returns.

4. Hanesbrands Inc. (Hbi)

  • Date of creation: 1901
  • Dividend yield: 5.37%
  • Payout ratio: 45.8%
  • Market cap: $3.90B
  • 1-year total return: -39.60%
  • Price: $11.18

Hanesbrands is a multinational clothing company based in North Carolina that employs over 60,000 people worldwide. They are known for their comfortable, high-quality, and affordable clothing.

5. Walmart

  • Date of creation: 1962
  • Dividend yield: 1.70%
  • Payout ratio: 47.84%
  • Market cap: $361.97B
  • 1-year total return: -7.15%
  • Price: $132.05

Walmart is an international company that operates thousands of retail stores across the globe. Though its dividend yield is lower than other dividend stocks, Walmart has offered consistent returns through capital gains throughout the year and has a solid payout ratio.

6. Federal Realty Investment Trust

  • Date of creation: 1962
  • Dividend yield: 4.05%
  • Payout ratio: 129.8%
  • Market cap: $8.39B
  • 1-year total return: -9.40%
  • Price: $105.61

Federal Realty Investment Trust is a real estate investment company that invests in shopping centers and mixed-use neighborhoods in the Northeastern US, the Mid-Atlantic states, California, and South Florida.

7. Church & Dwight

  • Date of creation: 1846
  • Dividend yield: 1.19%
  • Payout ratio: 30.7%
  • Market cap: $21.36B
  • 1-year total return: 2.77%
  • Price: $87.97

Church and Dwight is a large manufacturing and consumer product goods company headquartered in Ewing, New Jersey. Church and Dwight are best known for their Arm & Hammer products, including baking soda, laundry detergent, and toothpaste.

8. West Pharmaceutical Services

  • Date of creation: 1923
  • Dividend yield: 0.21%
  • Payout ratio: 7.7%
  • Market cap: $25.45B
  • 1-year total return: -17.26%
  • Price: $343.56

West Pharmaceutical Services is a leading manufacturer of pharmaceutical packaging services and delivery systems with over 10,000 employees worldwide. The company helps to ensure the safety of life-saving and life-enhancing medicines for patients.

9. Walker & Dunlop, Inc.

  • Date of creation: 1937
  • Dividend yield: 2.13%
  • Payout ratio: 25.6%
  • Market cap: $3.73B
  • 1-year total return: 10.39%
  • Price: $112.64

Walker and Dunlop provide financing services for individuals and corporations who invest in commercial real estate. They are based in Bethesda, Maryland, and provide loans out of 38 offices in the United States.

10. Brookfield Renewable Partners

  • Date of creation: 2011
  • Dividend yield: 3.37%
  • Payout ratio: -201.8%
  • Market cap: $13.31B
  • 1-year total return: -0.68%
  • Price: $48.34

Being majority owned by Brookfield Asset Management, Brookfield Renewable Partners owns and operates renewable power and energy assets. Their portfolio consists of hydroelectric, solar, wind, and storage facilities all over the world.

11. Enbridge Inc.

  • Date of creation: 1949
  • Dividend yield: 5.98%
  • Payout ratio: 121.66%
  • Market cap: $116.21B
  • 1-year total return: 16.30%
  • Price: $57.51

Enbridge is a major energy infrastructure company in Calgary, Alberta, Canada. They own pipelines across North America that transport crude oil, natural gas, and natural gas liquids. They have some of the most effective pipeline systems in North America.

12. Stag Industrial (Stag)

  • Date of creation: 2010
  • Dividend yield: 4.45%
  • Payout ratio: 88%
  • Market cap: $5.87B
  • 1-year total return: -19.89%
  • Price: $32.78

STAG Industrial is a real estate investment trust focusing on acquiring and operating industrial properties in the United States.

13. Agnc Investment (Agnc)

  • Date of creation: 2008
  • Dividend yield: 11.42%
  • Payout ratio: -77.4%
  • Market cap: $6.59B
  • 1-year total return:
  • Price: $12.61

Founded in the financial crisis, AGNC Investment Corp is a REIT that invests in agency residential mortgage-backed securities on a leveraged basis.

14. Altria Group (MO)

  • Date of creation: 1985
  • Dividend yield: 8.21%
  • Payout ratio: 80%
  • Market cap: 79.41B
  • 1-year total return: -8.11%
  • Price: $43.86

Altria Group is one of the largest tobacco companies in the world, producing and marketing cigarettes and related products.

15. Big Lots (Big)

  • Date of creation: 1967
  • Dividend yield: 5.94%
  • Payout ratio: 66%
  • Market cap: $583.84M
  • 1-year total return: -63.70%
  • Price: $20.19

Big Lots is a retail company offering consumers savings on household essentials, storage units, and snack items.

16. General Dynamics (GD)

  • Date of creation: 1952
  • Dividend yield: 2.22%
  • Payout ratio: 41.2%
  • Market cap: $62.95B
  • 1-year total return: 15.75%
  • Price: $226.67

General Dynamics is an American aerospace and defense company noted as the sixth-largest defense contractor in the world.

17. Franklin Resources

  • Date of creation: 1947
  • Dividend yield: 4.23%
  • Payout ratio: 66.01%
  • Market cap: $13.72B
  • 1-year total return: -7.79%
  • Price: $27.45

Better known as Franklin Templeton, Franklin Resources is one of the largest investment managers in the world.

18. Automatic Data Processing

  • Date of creation: 1949
  • Dividend yield: $1.73%
  • Payout ratio: 57.9%
  • Market cap: $100.73B
  • 1-year total return: 15.12%
  • Price: $241.12

Also known as ADP, Automatic Data Processing is a leading provider of online payroll and HR solutions, plus tax, compliance, and benefits administration.

19. Pepsico

  • Date of creation: 1965
  • Dividend yield: 2.63%
  • Payout ratio: 94.19%
  • Market cap: $241.46B
  • 1-year total return: 11.92%
  • Price: $174.96

PepsiCo is a multinational food, beverage, and snack corporation that oversees all its products’ manufacturing, distribution, and marketing.

20. Abbott Laboratories

  • Date of creation: 1888
  • Dividend yield: 1.73%
  • Payout ratio: 42.3%
  • Market cap: $190.57B
  • 1-year total return: -9.99%
  • Price: $108.84

Abbott Laboratories is one of the largest healthcare companies in the world. They specialize in creating technologies to extend lives and offer comprehensive information and medicines in the healthcare space.

The Best Dividend Stocks To Consider

Remember, it’s essential to do your research to find companies that consistently offer growing dividend payouts and have strong business fundamentals so that they will be a money-making vehicle year after year.

This post was produced by Savoteur.

 

20 of the best dividend stocks to buy (plus advice from advisors)

Jeff Fang

+ posts

Jeff is a Harvard 2025 student who is passionate about learning, living, and sharing all things personal finance-related. He has experience working in the financial industry and enjoys the pursuit of financial freedom. Outside of blogging, he loves to cook, read, and golf in his spare time.

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