Last Updated on January 11, 2023 by pf team
Best dividend stocks offer steady growth of capital as well as dependable dividends. During early years of investing, dividends can help you grow your position.
In later years, your dividends can help you transform your lifestyle with a steady income — while also growing your core investment over time. Here, we choose 20 of the best dividend stocks that have a proven track record decades long.
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How we created this list of best dividend stocks?
To make this list, we looked for some key characteristics. A group of stocks with high dividends might also include stocks with a spotty history or even stocks with troubled fundamentals. We wanted a rock-solid base.
Consecutive years of dividend increases (40 to 63 years)
First, we looked at stocks with annual dividend increases. A stock that only pays a dividend occasionally, or that frequently suspends its dividend can make long-term earnings unpredictable.
However, a stock that continually raises its dividend is an attractive find. We set 40 years as a minimum. This ensures that the stocks are healthy companies with a solid history of profitability throughout many types of economic conditions.
40 years is a stunning track record of dividend increases, but our list spans as long as 63 years. In the past 40 years, these stocks have weathered 5 recessions and come through with a dividend increase each year — even as competitors took a tumble.
Payout-ratio (26% to 65%)
A stock’s dividend payout ratio tells an interesting tale and can help predict future payouts. Here we can use a tailored version of the Goldilocks principle.
Rather than considering stocks with a payout ratio that’s too high (or too low), we want a range that’s just right. Low payouts don’t meet our long-term earnings goals, so we ignored stocks with a payout ratio below 26%.
At the other end of the range, a high payout ratio can signal a warning. If the payout ratio is too high, there may not be enough money to grow to company and continue growing the dividend as profits grow.
You might even come across dividend stocks with a payout ratio of over 100%. Obviously, a dividend that’s higher than net earnings isn’t sustainable. There’s a risk of increased debt. The future dividend itself may also be at risk.
We set a cap of 65% to be certain the companies found the “just right” balance between rewarding investors and funding future growth.
All stocks are members of Dividend Aristocrats list
Dividend Aristocrats are stocks that have increased their dividends for at least 25 years. We set the bar higher in choosing our picks, focusing on 40-years or longer for dividend growth, but Dividend Aristocrats typically make good choices for recession-proof investing with a focus on dividend income.
Best dividend stocks list
| Stock ticker | Payout ratio | Dividend yield | Years of dividend increases |
|---|---|---|---|
| DOV | 42.51% | 1.89% | 63 |
| EMR | 55.54% | 2.76% | 62 |
| GPC | 55.18% | 2.96% | 62 |
| CNIF | 39.75% | 1.99% | 58 |
| LOW | 61.61% | 1.98% | 56 |
| CL | 64.26% | 2.51% | 55 |
| HRL | 45.17% | 2.05% | 53 |
| SWK | 61.52% | 1.80% | 51 |
| SYY | 47.81% | 1.96% | 49 |
| TGT | 42.45% | 2.45% | 47 |
| PPG | 38.54% | 1.62% | 47 |
| GWW | 32.77% | 1.86% | 47 |
| NUE | 27.35% | 2.94% | 46 |
| PEP | 43.03% | 2.79 | 46 |
| SPGI | 26.22% | 0.90% | 45 |
| WMT | 47.51% | 1.80% | 45 |
| ITW | 53.62% | 2.51% | 44 |
| WBA | 41.24% | 3.28% | 43 |
| PNR | 34.88% | 1.72% | 42 |
| SHW | 28.52% | 0.77% | 40 |
Source: Yahoo Finance.
1. NYSE: DOV — Dover Corp
You’ll probably recognize most of the companies on our list but Dover Corp often works behind the scenes. In the company’s more than 60-year history, they’ve brought improvements to many aspects of our lives, ranging from supermarkets to healthcare to energy delivery.
Dover designs the systems and technology that make modern life what is. You may not always know when Dover’s innovations are at work, but life would look much different without the company’s contributions.
Solid earnings of over $4.00 per share allow Dover to pay a dividend of nearly $2.00 per share while also keeping capital free for future growth.
2. NYSE: EMR — Emerson Electric Co.
With a history dating back to 1890, Emerson began as a builder of electric motors and fans. What a difference a 100+ years can make. Emerson evolved over the decades, becoming an engineering leader for new types of technology.
The company now services industrial, commercial, and consumer markets throughout the world and posted over $17 billion in revenue in 2018 with earnings of $2.2 billion.
Emerson has rewarded recent investors with growth as the stock price rose from $47 in 2015 to its current value of over $70 per share. Throughout its continued success, Emerson also paid a growing dividend, now at nearly $2 per share.
3. NYSE: GPC — Genuine Parts Company
If you aren’t familiar with GPC, you might know one of the company’s top brands: NAPA Auto Parts. But Genuine Parts Company isn’t just auto parts.
Motion Industries provides OEM and repair parts for a wide range of industries and services over 200,000 customers throughout North America.
A third business under GPC’s umbrella, S.P. Richards, supplies offices and businesses with a wide range of products including safety items, office goods, and furniture.
Strong earnings driven primarily by the auto parts group provide investors with a dependable dividend with a forward yield of nearly 3%. GPC’s history goes back nearly 100 years, but its best years may still be ahead.
4. NASDAQ: CINF — Cincinnati Financial Corporation
If you’re looking for long-term performance, few businesses can top a well-run insurer. Cincinnati Financial is best known for its insurance business, Cincinnati Insurance Company, which services a broad market in over 40 states.
They also specialize in high-net-worth clients. Three other business units compliment Cincinnati Financials insurance group and bring other services, such as leasing, financing, and brokerage.
Strong earnings stem from careful underwriting and a level of customer loyalty that’s difficult to find in the insurance business. A solid dividend of over 2% rewards investors but shares in CINF have also quadrupled in value since 2006.
5. NYSE: LOW — Lowe’s Companies, Inc.
It’s sometimes hard to imagine the mega-stores when they were small. Lowe’s history began as a single location hardware store in downtown North Wilkesboro, NC. That was in 1921.
Fast forward 100 years and Lowe’s is now the second largest retailer in the space, both in revenue and number of stores. Lowe’s recently beat 2nd quarter earnings expectations, sending the stock soaring over 10% in a single day.
Gains are always welcome but dividend investing puts the focus on shared earnings. While stock prices change day to day, Lowe’s rewards investors with a reliable dividend.
6. NYSE: CL — Colgate Palmolive Company
With a history dating back to 1806, when Colgate began as a soap and candle business in New York City, Colgate Palmolive defines staying power. The company’s business looks a bit different these days, however.
Now, the company sells a wide range of products in over 200 markets throughout the world. Colgate Palmolive’s focus on everyday goods makes the company a safer bet when looking at long-term prospects.
You might have trouble finding a home or business that didn’t use products made by the giant. Everyday goods make the business recession-resistant.
A healthy yield of over $1.70 per share rewards investors for supporting brands they probably have in their own cabinets.
7. NYSE: HRL — Hormel Foods Corporation
Home to nearly 50 brands and 10 companies, Hormel Foods stocks the cabinets of many US households. The company reports that 81% of US homes have Hormel products on hand.
Impressively, Hormel products hold the #1 or #2 position in more than 40 different product categories. International sales also fuel growth for the company with products sold in over 80 countries.
During its nearly 130-year success story, Hormel continued to grow its sales and profits, increasing its dividend for the 53rd consecutive year following 2018 year-end results.
8. NYSE: SWK — Stanley Black & Decker, Inc.
Stanley Black & Decker brings together 2 iconic brands that have graced nearly every toolbox in America. Stanley’s history begins in 1843. Black and Decker dates back to 1910.
But the company’s reach includes several other trusted brands, such as Craftsman and MAC TOOLS. Stanley Black & Decker makes more than great tools, though.
The company also provides pipeline services, engineered fasteners, and more. Another branch of the company is the 2nd largest provider of commercial electronic security in the world.
Earnings of over $4 per share fuel a dependable and growing dividend that will make you smile the next time you pick up one of their tools to fix something around the house.
9. NYSE: SYY — Sysco Corporation
There are companies we all know because we see their brands every day — and there are others that exist quietly behind the scenes, making things work smoothly.
In this case, that thing is food, and the company is Sysco. Sysco markets and distributes food products to restaurants and other places where food is served away from home.
Through its family of broad market and specialty businesses, Sysco services a wide global market of loyal buyers. The company also supplies related products, like packaging solutions or even the napkins you use at the restaurants you visit.
A healthy dividend of about 2% gives investors another reason to get to know Sysco.
10. NYSE: TGT — Target Corporation
Many of the department stores that seemed to define America are now gone or are a mere shadow of what they once were. However, a few remain standing and some are even still thriving.
Include Target among the big-box retailers with a promising future. Many people may not realize that Target has been with us since 1962.
The modern and well-maintained stores tell the story of a seasoned retailer that positions itself as an affordable but upmarket option.
You’ll find both standalone stores and stores in malls or anchoring successful shopping plazas. With earnings per share of over $6 and a sturdy dividend, Target is worth a closer look.
11. NYSE: PPG — PPG Industries, Inc.
While not as well-known as some brands in our roundup, PPG’s brands and innovations can be found nearly everywhere you look. PPG’s 135-year history is a tale of evolution and of specializations.
The company makes paint, coatings, adhesives, and more. They make our cars last longer. They make hockey pucks glide faster. You name it, PPG probably coats it, strengthens it, or makes it look better.
Investors who bought PPG in 2015 enjoyed growth from $80 per share to the stock’s current value of $126 per share. A growing dividend adds even more value with a forward dividend of over $2 per share.
12. NYSE: GWW — W.W. Grainger, Inc.
With a 90-year history of serving businesses of all sizes, Grainger has become the go-to source for industrial supplies and safety products. The company built its reputation by keeping inventory in stock and ready for same-day shipment.
When your product catalog has over 1.5 million products, that’s no easy feat. Still, it’s the reason many businesses won’t even think of calling anyone else.
250 retail locations throughout the US add another convenient way to restock whatever your business might need, including tools, shelving, electrical items, and more.
Share prices in Grainger have nearly doubled since August 2017 and the company pays a forward dividend of nearly $6 per share.
13. NYSE: NUE — Nucor Corporation
Agriculture, automotive, and construction are just a few industries served by Nucor, one of the largest steel and steel products companies in North America.
The company find its roots in Ransom E. Olds, the creator of the iconic Oldsmobile. Over the years, Nucor underwent several name changes and even industry changes, but one thing remained the same: steel.
Nucor is now the largest steelmaker and recycler in the US. There’s value in being among the best at what you do and Nucor’s stock growth drives that point home.
The company’s market cap has increased more than 5-fold since December 02. Short-term stock moves in tandem with other steelmakers are offset by a dividend that has been growing for decades.
14. NASDAQ: PEP — PepsiCo, Inc.
We all know PepsiCo makes Pepsi, but did you know they also bring us many of the world’s favorite food and snack brands? PepsiCo’s 6 divisions include Frito-Lay and Quaker Foods.
Business divisions in Latin America, Europe, Asia, and the Middle East also partner with local markets to distribute core brands and local brands specific to each market.
The marriage of Frito-Lay and Pepsi dates back to 1965 when the 2 companies brought their products under one corporate roof. PepsiCo’s brands generate a combined revenue of over $1 billion annually.
The company pays a strong dividend and boasts decades of dividend increases.
15. NYSE: SPGI — S&P Global Inc.
S&P, short for Standard and Poor’s, dates back to 1860 when Henry Poor first published a guide to help railroad investors.
Many years later, Standard Statistics Co. entered the mortgage bond rating business. In 1941, the two businesses merged.
Most famous for its S&P 500 stock index, the company now operates as a rating agency as well as a data and research provider.
McGraw Hill acquired S&P in 1966. They renamed the combined company to S&P Global in 2016 and continue to offer industry-leading research and company data.
S&P Global investors have enjoyed a 173% increase in stock value over the past 5 years while a forward dividend of over $2 per share creates additional value.
16. NYSE: WMT — Walmart Inc.
Amazon may have surpassed Walmart as the world’s largest retailer, but Walmart is still a staple for shoppers worldwide.
With over 11,000 stores in 27 countries, it’s unlikely that any competitors will dethrone the discount store giant soon. Walmart stores come in 3 types, with supercenters being the most common.
Often heralded as a recession-proof stock, the company focuses on bringing value-priced goods and sees little change in same-store sales when the economy takes a downward turn.
Since 1970, when Walmart stock went public, the company has had a history of increased profits and increased dividends.
17. NYSE: ITW — Illinois Tool Works Inc.
Don’t let the name fool you. Illinois Tool Works isn’t just a quaint tool company. ITW is everywhere, but not always obvious.
From healthcare to deep-sea oil rigs to automotive components, ITW’s engineering prowess is at work. The company’s automotive OEM business leads revenue with $3.3 billion in revenue for 2018.
Food equipment contributed another $2.2 billion while the company’s other divisions brought total revenue to nearly $15 billion. 2018 operating margins topped 24%. Impressive.
With solid earnings of over $7.50 per share and a long-standing habit of increasing dividends, ITW makes a compelling investment choice.
18. NASDAQ: WBA — Walgreens Boots Alliance, Inc.
We often think of Walgreens as the neighborhood pharmacy but Walgreens has nearly 19,000 stores in 11 different countries.
Through its 400 distribution centers, the drug store giant services nearly a quarter million pharmacies and healthcare providers in more than 20 countries. Boots is a UK-based pharmacy chain also owned by the Walgreens Boots Alliance.
WBA has given investors a rough ride over the past 5 years, but with a low PE ratio and a stronger-than-average dividend, the stock merits a closer look.
19. NYSE: PNR — Pentair plc
Contrary to what its name might suggest, Pentair’s business focuses mostly on water. A diverse line of products address markets ranging from fire protection to filtration to pumps and nozzles.
Other divisions build dust collectors or membrane products. For consumers, the company offers premium pool and water filtration systems. However, most of Pentair’s products target commercial buyers.
The stock price is mostly flat over the past 5 years but a recent beat on earnings expectations bodes well for the stock’s dividend.
20. NYSE: SHW — The Sherwin-Williams Company
Sherwin Williams started business in 1866 but the company’s growth took off when it offered ready-mix paint, a huge step forward for the paint business.
The company operates 4 divisions, including its US-based namesake, Sherwin Williams Stores. In addition to paint, SHW also offers specialized coatings.
In 2017, SHW acquired its well-known competitor Valspar, making the company comparable to fellow paint and coating company PPG in total revenues.
A stock price increase of 139% for SHW over the past 5 years gives investors a reason to celebrate the merger. SHW’s dividend of nearly $5 per share rewards investors going forward.
How to get the highest return on your investment with best dividend stocks
Dividend stocks are a great way to build wealth or passive income. However, if you don’t need the income right away, there are some ways to structure your investment to get the highest return.
- Hold dividend stocks in taxed-deferred accounts. A tax-deferred account like an IRA lets you postpone taxes on dividends. Without paying taxes along the way, you’ll have more to reinvest and your investment can grow faster.
- Enroll in DRIP programs to reinvest the dividends. A DRIP is a dividend reinvestment program. Most brokers offer a way to reinvest dividends automatically. The shares purchased with your dividends increase your dividend payouts in later years. Some companies also offer their own DRIP plan. For example, GPC from our list offers a direct plan.
- Use the buy and hold strategy. Attempts to time market moves are often disastrous for investors. Instead of trading in and out of stocks, consider holding your investment, letting compound interest work its magic. This strategy can be super-effective with dividend stocks.
Alternatives for investing in best dividend stocks
For every dividend stock that looks good on paper, you can probably find 10 more that didn’t perform well. Stock picking can be risky business for beginners or even experienced investors.
If you’re not comfortable choosing your own stocks, consider some ready-made alternatives.
Another option is to invest part of your money in mutual funds or ETFs while using some of your money to experiment with individual dividend stocks.
- Consider mutual funds with a healthy dividend. Shop carefully before choosing a fund, though. Many funds with high yields may invest in corporate bonds or other types of investments that may not fit your goals. Fees are another concern. Mutual fund fees can take a big bite out of your returns.
- Exchange-traded funds are another option. ETFs also bring some tax advantages if you’re investing in a taxable account. Look for ETFs with a solid yield and then investigate to see what the ETF holds. Similar to mutual funds, some dividend ETFs may invest in bonds or other assets. You’ll often find the best returns from investments that offer both capital growth and dividends.
- Index funds or themed funds are also options but are available as an ETF or a mutual fund. For example, SDOG is an ETF that follows the Sector Dividend Dogs Index, better known as Dogs of the Dow. This group of DOW stocks are famous for strong dividends. SPY is another index ETF. However, SPY has lower yields than a more focused fund.
Best dividend stocks have a long history of dividend increases
If you study famous investors like Warren Buffett, you’ll find many are value investors. That means dividends aren’t always their primary focus but a lot of their investments do pay a healthy dividend.
For example, Buffett’s Berkshire Hathaway owns stock in PNC, PSX, & GM, all of which pay a strong dividend. Consider the long view on your investments.
Yields can often mislead and may even signal trouble that’s causing investors to sell. By choosing a mix of stocks with long histories of dividend increases, it’s hard to go wrong.