![]() The position did not affect the stocks included on the list. Whether this stems from technology, barriers to entry, high customer switching costs, or a powerful brand, the best dividend stocks have it.Īt the time of this writing, the author held a long-term position in Automatic Data Processing, Inc. There’s no question that companies that have maintained the best dividends for the longest periods have also secured durable competitive advantages. Look for dividend stocks that have delivered stable and growing earnings and revenue. Dividends are only as healthy as a company’s underlying business. While the dividend payout ratio and dividend yield can inform your understanding of a stock’s current dividend, it’s also key to find stocks that have regularly increased their dividends over time. Dividend yield gives investors an idea of how much a stock pays in annual dividends relative to its price. This is another percentage figure representing a stock’s annual dividend amount divided by its current price per share. A reasonably low payout ratio of 60% or less indicates that a company’s dividend is sustainable. The payout ratio rises and falls as a company’s earnings and dividend rates change. This is a percentage figure which represents a stock’s annual dividend amount divided by its annual EPS. Here are the key concepts you need to understand when evaluating the best dividend stocks: Income investors who want cash flow buy dividend stocks, although the best dividend stocks deliver good long-term appreciation in addition to income. Before you purchase any of these stocks, do plenty of research to ensure they align with your financial goals and risk tolerance.ĭividend stocks make regular distributions of cash and stock to their shareholders. Ideally, a dividend stock is financially strong and growing-continued stability and growth signals that the company’s dividend is sustainable over the long term and likely to be increased regularly.Īn experienced financial analyst selected the stocks above, but they may not be right for your portfolio. The top 10 in terms of dividend yield were selected for this listing.ĭividends are nice, but they aren’t the only factor to consider when buying a stock. exchanges, have a price of at least $5 and average over half a million shares per day.Īs of this writing, only 15 U.S. stocks have had at least one 50% drop or greater over that time period. The maximum decline a stock price could have seen over the last 10 years is 50%. The stocks must have outperformed the S&P 500 by at least one percentage point per year, on average, over the last 10 years. Expected to grow. Analysts expect EPS to grow by at least 8% per year over the next five years.Shareholder yield includes dividends and share buybacks or issuances. The current dividend yield must be at least 1%. Earnings must have remained positive for at least the last six years. EPS has increased more than 8% per year, on average, over the last five years. ![]() The annual dividend amount has increased by at least 7% on average over the last five years. The company must have increased its dividend for at least 10 years in a row. ![]() To be included in the list, each stock must have demonstrated: Our curated list of best dividend stocks is based on nine key measures. These companies have boosted annual dividend payouts for at least 10 years with attractive yields, have delivered long-term price stability and have grown their earnings year after year. To help you find reliable dividend investments, Forbes Advisor has identified 10 of the best dividend stocks available in the U.S. Similarly, a high dividend yield could be a trap that covers up erratic payouts, poor performance or minimal growth prospects. ![]() From 1973 to 2022, S&P 500 dividend stocks delivered twice the return of stocks that paid no dividends.īut here’s the trouble: A good dividend cannot make up for an underperforming stock. The best dividend stocks give you a great hedge against inflation, as they provide both appreciation and capital gains to offset rising costs. Over the last century, dividend payments accounted for about 40% of the total return of the S&P 500. When you reinvest dividend income, the magic of compounding can turbocharge your returns. Dividend investing provides investors with steady cash flow over the long term.
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