Dividend investing is a top strategy among some of the world’s best investors. Legendary investors like Warren Buffett hunt down high-yield stocks that stand the test of time. Then when great deals come along, they add the best dividend stocks to their portfolios.
In the guide below, you’ll see a time-tested system that uncovers the top dividend stocks. And as the market moves, the best investing opportunities come and go. That’s why I regularly update the top dividend achievers list.
But before jumping to the best dividend stocks, I urge you to check out our unique research process. It’s crucial for tracking down safe and high-yield dividend stocks. Let’s dive in…
How to Find the Best Dividend Stocks
Starting Point to Find Top Dividend Stocks
There are hundreds of dividend-paying stocks available… so narrowing down the list is key. One starting point that I often use is the list of dividend achievers. Dividend achievers are companies that have paid 10 or more consecutive years of dividend increases. And there are roughly 250 in the market.
One approach is to invest in most of the dividend achievers at once. You can accomplish this through funds such as Invesco Dividend Achievers (PFM), although this isn’t a preferred method. There are constant fees that eat away at returns, and the market cap weighting isn’t optimal. More money flows into the overvalued companies and less into the undervalued dividend stocks. There is some momentum benefit, but it’s not contrarian. Smart contrarian investing can outperform in the long term.
Buying a basket of dividend-paying stocks might work for some folks, but I’m more hands-on. The dividend achievers list is useful for cherry-picking the best dividend stocks. Owning just a handful of them can vastly outperform the general market while producing high-yield dividends.
Dividend Yield History Uncovers Hidden Value
Most investors follow the herd. In doing so, they’re often late to the game and show below-average returns. Instead, one of the best times to buy dividend stocks is when others are fearful. Going against the herd is contrarian, and it’s a powerful investing strategy.
Be fearful when others are greedy and greedy when others are fearful. – Warren Buffett
As investors bid up a company’s share price, the yield drops. This makes dividend yield a great value indicator for steady dividend-paying stocks. The charts below also back up the strategy.
The yield and price move in opposite directions. This is a common theme among the world’s top dividend stocks. Here’s another example that shows Walmart’s dividend yield history.
Once again, the price and yield move inversely. This makes the dividend yield a great value indicator for companies with a long dividend history and a sustainable future.
Dividend yield history is a key component of finding the best dividend stocks. With that in mind, let’s jump to the best dividend deals in the market.
Three Best Dividend Stocks
The companies below have paid solid dividends. They also look like great value stocks relative to their peers.
- General Mills (NYSE: GIS) has paid a dividend every year since 1928. The company produces many household name brands such as Cheerios, Chex and Betty Crocker. These staple goods help produce solid cash flow through both up and down markets. Investors have beaten down General Mills shares. This has pushed the dividend yield up, and it’s a much better time to invest. The company has overcome many hard times over the last century and will continue to adapt. To learn why General Mills is one of the best dividend stocks, check out more on General Mills’ dividend history.
- Cummins (NYSE: CMI) builds, sells and services power solutions such as engines. Cummins’ product line is diverse, and it serves customers in about 190 countries. The product diversification provides steady cash flows. Investors have sold off shares, but the dividend yield is now higher. Cummins has a long history of staying relevant. As technology trends change, Cummins will adapt. To learn why Cummins is one of the best dividend stocks, check out more on Cummins’ dividend.
- Texas Instruments (Nasdaq: TXN) is another top dividend achiever. It’s consistently paid and raised its dividend to shareholders. The business employs roughly 30,000 employees and brings in about a half a million in sales per employee. Texas Instruments has also gone through a tough time, but it’s now trading at a lower value. The dividend payout ratio is up, but the higher-yield dividend is safe. You can learn more by clicking here: Texas Instruments’ dividend history.
The market is still near its all-time highs. This makes it tough to find buying opportunities among the best dividend stocks. The three dividend stocks above have an initial green light, but investment research should go further…
Analysts should review the companies’ future prospects in great detail. That’s why our Chief Income Strategist Marc Lichtenfeld researches thousands of stocks. And the best part, he gives away some of his dividend research for free. You can sign up for his Wealthy Retirement e-letter by Clicking Here!