Five High-Quality Dividend Stocks to Buy Now
Andrés is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Dividend stocks have been one of the best performing asset classes over the last few years, and for that reason there is an ongoing discussion of the possibility of a dividend bubble, meaning a lack of opportunities in dividend stocks at current levels. These five high-quality stocks show there are still some convenient possibilities for investors focusing on the strongest business with rock solid dividend policies.
The companies have been selected on several aspects:
- A solid business with international diversification and a strong competitive position to guarantee future profitability and dividend payments
- At least 25 years of consecutive dividend increases, as a measure of long-term resiliency and management commitment to dividend policy
- Dividend yields above 3%, more than double the yield of a 10-Year US Treasury bond
- Operating margins above 10% as a measure of business profitability
The five companies that passed the screen are Chevron (NYSE: CVX), Johnson & Johnson (NYSE: JNJ), Procter & Gamble (NYSE: PG), PepsiCo (NYSE: PEP) and McDonald’s (NYSE: MCD).
Although they come from different industries and there are considerable differences among them, these companies share some important qualifications. They are among the best known and most respected businesses in the world, with rock solid brand power and a high degree of international exposure. After all, the financial numbers are only a reflection of a company's fundamental quality.
They have also demonstrated their ability to increase dividends under varying economic conditions, which is an important attribute of the best dividend stocks. Investors can take comfort in the fact that these businesses have built their reputation over many years, and they will not depart from that road just like that.
Besides, when looking at the historical evolution of dividend yields, these companies don't look expensive at all; in fact they look quite cheap from that perspective. Current dividend yields for these five stocks are not only attractive in comparison to other possibilities, but also in relationship to their historical valuation.
Dividend investing is one of the most proven and respected investment strategies of all times, and these five companies have what it takes to be considered strong candidates for a long-term dividend stocks portfolio.
acardenal has no positions in the stocks mentioned above. The Motley Fool owns shares of Johnson & Johnson, McDonald's, and PepsiCo. Motley Fool newsletter services recommend Chevron, Johnson & Johnson, McDonald's, PepsiCo, and The Procter & Gamble Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. If you have questions about this post or the Fool’s blog network, click here for information.
