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Cory MitchellContributor
Cory has been a professional trader for two decades. In addition to trading and investing he's widely published and coaches individual clients on the finer points of gaining an edge in the market.
Cory MitchellContributor
Cory has been a professional trader for two decades. In addition to trading and investing he's widely published and coaches individual clients on the finer points of gaining an edge in the market.
Contributor
Michael Adamseditor
Michael Adams is lead editor, investing at Forbes Advisor. He's researched, written about and practiced investing for nearly two decades. As a writer, Michael has covered everything from stocks to cryptocurrency and ETFs for many of the world's major financial publications, including Kiplinger, U.S. News and World Report, The Motley Fool and more. Michael holds a master’s degree in philosophy from The New School for Social Research and an additional master's degree in Asian classics from St. John’s College.
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Michael Adamseditor
Michael Adams is lead editor, investing at Forbes Advisor. He's researched, written about and practiced investing for nearly two decades. As a writer, Michael has covered everything from stocks to cryptocurrency and ETFs for many of the world's major financial publications, including Kiplinger, U.S. News and World Report, The Motley Fool and more. Michael holds a master’s degree in philosophy from The New School for Social Research and an additional master's degree in Asian classics from St. John’s College.
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Updated: Mar 7, 2024, 1:39pm
Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations.
Dividend investing provides investors with steady cash flow over the long term. When you reinvest dividend income, the magic of compounding can turbocharge your returns. Over the last century, dividend payments accounted for about 40% of the total return of the S&P 500.
The best dividend stocks give you a great hedge against inflation, as they provide both appreciation and capital gains to offset rising costs. From 1973 to 2022, S&P 500 dividend stocks delivered twice the return of stocks that paid no dividends.
But here’s the trouble: A good dividend cannot make up for an underperforming stock. Similarly, a high dividend yield could be a trap that covers up erratic payouts, poor performance or minimal growth prospects.
To help you find reliable dividend investments, Forbes Advisor has identified 10 of the best dividend stocks available in the U.S. stock market today. 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.
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Show Summary
- 10 Best Dividend Stocks To Buy Now
- Texas Instruments Inc. (TXN)
- Air Products and Chemicals, Inc. (APD)
- Lockheed Martin Corporation (LMT)
- McDonald’s Corporation (MCD)
- Automatic Data Processing, Inc. (ADP)
- Microchip Technology Incorporated (MCHP)
- UnitedHealth Group Incorporated (UNH)
- Hubbell Inc. (HUBB)
- Elevance Health, Inc. (ELV)
- Methodology
- What Are Dividend Stocks?
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10 Best Dividend Stocks To Buy Now
| Stock (ticker) | Dividend Yield |
|---|---|
| Texas Instruments Inc. (TXN) | 2.9% |
| Air Products and Chemicals, Inc. (APD) | 2.9% |
| Lockheed Martin Corporation (LMT) | 2.9% |
| McDonald’s Corporation (MCD) | 2.3% |
| Automatic Data Processing, Inc. (ADP) | 2.3% |
| Microchip Technology Incorporated (MCHP) | 1.8% |
| UnitedHealth Group Incorporated (UNH) | 1.6% |
| Marsh & McLennan Companies, Inc. (MMC) | 1.4% |
| Hubbell Inc. (HUBB) | 1.3% |
| Elevance Health, Inc. (ELV) | 1.3% |
Texas Instruments Inc. (TXN)
Dividend Yield
2.9%
5-Year Avg. Annualized Dividend Growth
11.0%
5-Year Avg. Annualized EPS Growth
4.8%
2.9%
11.0%
4.8%
Why We Picked It
Once famous for calculators, Texas Instruments now earns most of its revenue from manufacturing semiconductors. It’s the world’s largest maker of analog chips.
TXN has an “A” grade for financial health from Morningstar. It has seen strong earnings growth, and that is expected to continue with 10% yearly Earnings Per Share (EPS) growth over the next five years. The company has steadily raised its dividend amount, averaging 11.0% yearly increases over the last five years.
The stock has outpaced the S&P 500 by 5.1 percentage points per year over the last decade. For reference, the S&P 500 has averaged 11.5% yearly returns over the last decade while TXN has averaged 16.7%.
Air Products and Chemicals, Inc. (APD)
Dividend Yield
2.9%
5-Year Avg. Annualized Dividend Growth
9.7%
5-Year Avg. Annualized EPS Growth
7.0%
2.9%
9.7%
7.0%
Why We Picked It
Air Products and Chemicals is an industrial gas supplier. It’s one of the largest helium and hydrogen producers in the world and a leading materials stock.
APD is another stock with an “A” financial health rating. Analysts expect the company to grow EPS by 10.3% per year over the next half decade.
The stock is trading below its 52-week high and has beaten the S&P 500 by 2.5 percentage points per year over the decade.
Lockheed Martin Corporation (LMT)
Dividend Yield
2.9%
5-Year Avg. Annualized Dividend Growth
7.4%
5-Year Avg. Annualized EPS Growth
9.4%
2.9%
7.4%
9.4%
Why We Picked It
Lockheed Martin is the largest defense contractor in the world and a leading industrial stock. The company makes fighter planes, helicopters, missiles and missile defense systems, satellites and space vehicles.
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 at a respectable average of 10.7% per year for the next five years. More than enough growth for the company to keep paying and increasing the dividend.
The stock has outpaced the S&P 500 by 4.6 percentage points per year for the last decade.
McDonald’s Corporation (MCD)
Dividend Yield
2.3%
5-Year Avg. Annualized Dividend Growth
7.6%
5-Year Avg. Annualized EPS Growth
8.9%
2.3%
7.6%
8.9%
Why We Picked It
McDonald’s operates fast food restaurants around the world, including both company-owned and franchised stores.
MCD has an “A” financial health rating. Analysts expect the company to grow EPS by 9.0% per year over the next five years. That is the lowest expected growth rate on this list, but it is still above the median expected growth rate of 8.7% for S&P 500 stocks.
The stock has been a great long-term performer beating the S&P 500 by an average of 2.2 percentage points per year over the last 10 years.
Automatic Data Processing, Inc. (ADP)
Dividend Yield
2.3%
5-Year Avg. Annualized Dividend Growth
12.1%
5-Year Avg. Annualized EPS Growth
18.7%
2.3%
12.1%
18.7%
Why We Picked It
Automatic Data Processing provides human resources, payroll, insurance and retirement services to corporations.
ADP is an all-around solidly performing stock. It has a “B” financial rating from Morningstar, and it’s grown EPS at 16.2% per year over the last five years. Analysts expect 13.5% yearly EPS increases for the next five years. That’s the highest expected growth rate on this list.
The price is currently well below its 52-week high and these kinds of pullbacks have historically been good buying points in this long-term uptrending stock. It has beaten the S&P 500 by an average of 3.8 percentage points per year over the last 10 years.
Microchip Technology Incorporated (MCHP)
Dividend Yield
1.8%
5-Year Avg. Annualized Dividend Growth
19.8%
5-Year Avg. Annualized EPS Growth
45.3%
1.8%
19.8%
45.3%
Why We Picked It
Microchip Technology is a semiconductor company that makes microcontrollers and microprocessors, data converters, LED drivers, memory products, power management products and more.
MCHP has a “B” financial health rating and the highest EPS growth rate on this list. Analysts expect 12.1% yearly EPS growth over the next five years. That’s the second-highest expected growth on this list.
The stock is well below its 52-week high, but it has bettered the S&P 500’s returns by an average of 4.3 percentage points per year over the last decade.
UnitedHealth Group Incorporated (UNH)
Dividend Yield
1.6%
5-Year Avg. Annualized Dividend Growth
15.9%
5-Year Avg. Annualized EPS Growth
14.4%
1.6%
15.9%
14.4%
Why We Picked It
UnitedHealth Group provides health insurance primarily within the U.S. but also globally. Its plans care for 152 million people.
UNH is an all-around solid stock. It has an “A” financial rating from Morningstar, and analysts expect 11.9% yearly EPS increases for the next five years. That’s the third-highest expected growth rate on this list.
The price is currently near its 52-week high. It is the strongest performing stock on the list, outperforming the S&P 500 by an average of 13.1 percentage points per year over the last 10 years.
Marsh & McLennan Companies, Inc. (MMC)
Dividend Yield
1.4%
5-Year Avg. Annualized Dividend Growth
11.3%
5-Year Avg. Annualized EPS Growth
18.4%
1.4%
11.3%
18.4%
Why We Picked It
Marsh & McLennan provides insurance and risk consulting and services. It operates through four businesses: Marsh, Guy Carpenter, Mercer and Oliver Wyman.
MMC has an “A” rating for financial health and has been growing EPS at more than 18% per year. That growth is expected to slow, but it should remain a respectable 11.1% per year on average for the next five years. The company has a strong history of increasing dividends and that is likely to continue.
The stock has outpaced the S&P 500 by 6.1 percentage points per year for the last decade, making it the third strongest performing stock on the list.
Hubbell Inc. (HUBB)
Dividend Yield
1.3%
5-Year Avg. Annualized Dividend Growth
7.7%
5-Year Avg. Annualized EPS Growth
16.5%
1.3%
7.7%
16.5%
Why We Picked It
Hubbell is an industrial conglomerate selling everything from copper and fiber cable to audio and video cords, chargers, LED lights, fasteners and much more.
HUBB is another stock with an “A” financial health rating. Analysts expect the company to grow EPS by 10.0% over the next five years. The dividend has been growing every year for the last decade, and that isn’t currently in danger of changing.
The stock is trading below its 52-week high and has beaten the S&P 500 by 1.1 percentage points per year over the last decade.
Elevance Health, Inc. (ELV)
Dividend Yield
1.3%
5-Year Avg. Annualized Dividend Growth
15.3%
5-Year Avg. Annualized EPS Growth
12.2%
1.3%
15.3%
12.2%
Why We Picked It
Elevance Health is a health insurer providing individual plans as well as government- and employer-sponsored plans
ELV has a “B” grade for financial health from Morningstar. It has seen strong earnings growth of 9.3% per year over the last five years, and that is expected to continue with 11.8% yearly EPS growth over the next five years. The company has steadily raised its dividend amount, averaging 14.6% yearly increases over the last five years.
The stock is the second-best performing on the list over the last decade, outperforming the S&P 500 by 8.3 percentage points per year.
*All analysis and data are sourced from Trades That Swing, current as of March 7, 2024.
Methodology
Our curated list of best dividend stocks is based on nine key measures. To be included in the list, each stock must have demonstrated:
- Long-term dividend increases. The company must have increased its dividend for at least 10 years in a row.
- Decent annual dividend growth. The annual dividend amount has increased by at least 7% on average over the last five years.
- Sustained earnings growth. EPS has increased more than 8% per year, on average, over the last five years.
- No unprofitable years. Earnings must have remained positive for at least the last six years.
- Elevated current dividend yield. The current dividend yield must be at least 1%.
- Decent overall shareholder yield. Shareholder yield must be at least 1%. Shareholder yield includes dividends and share buybacks or issuances.
- Expected to grow.Analysts expect EPS to grow by at least 8% per year over the next five years.
- Outperforms the S&P 500. The stocks must have outperformed the S&P 500 by at least one percentage point per year, on average, over the last 10 years.
- Maximum drawdown. The maximum decline a stock price could have seen over the last 10 years is 50%. This helps exclude volatile stocks. More than 82% of U.S. stocks have had at least one 50% drop or greater over that time period.
- Minimum stock data requirements. The stocks are listed on U.S. exchanges, have a price of at least $5 and average over half a million shares per day.
As of this writing, only 15 U.S. stocks met all the criteria. The top 10 in terms of dividend yield were selected for this listing.
Dividends are nice, but they aren’t the only factor to consider when buying a stock. 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.
An experienced financial analyst selected the stocks above, but they may not be right for your portfolio. Before you purchase any of these stocks, do plenty of research to ensure they align with your financial goals and risk tolerance.
What Are Dividend Stocks?
Dividend stocks make regular distributions of cash and stock to their shareholders. Income investors who want cash flow buy dividend stocks, although the best dividend stocks deliver good long-term appreciation in addition to income.
Here are the key concepts you need to understand when evaluating the best dividend stocks:
- Dividend payout ratio. This is a percentage figure which represents a stock’s annual dividend amount divided by its annual EPS. The payout ratio rises and falls as a company’s earnings and dividend rates change. A reasonably low payout ratio of 60% or less indicates that a company’s dividend is sustainable.
- Dividend yield. This is another percentage figure representing a stock’s annual dividend amount divided by its current price per share. Dividend yield gives investors an idea of how much a stock pays in annual dividends relative to its price.
- Sustained dividend increases. 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.
- Steady growth in EPS and revenue. Dividends are only as healthy as a company’s underlying business. Look for dividend stocks that have delivered stable and growing earnings and revenue.
- Durable competitive advantages. There’s no question that companies that have maintained the best dividends for the longest periods have also secured durable competitive advantages. Whether this stems from technology, barriers to entry, high customer switching costs, or a powerful brand, the best dividend stocks have it.
At the time of this writing, the author held a long-term position in Automatic Data Processing, Inc. (ADP). The position did not affect the stocks included on the list.
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Contributor
Cory has been a professional trader for two decades. In addition to trading and investing he's widely published and coaches individual clients on the finer points of gaining an edge in the market.
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