Are you ready to take a break from searching for the market's next great growth stories? You wouldn't be wrong to do so, and you certainly wouldn't be alone. Everyone needs to take a step back sometimes and just collect some passive income. It's been a tiring 12 months, after all.
With that idea in mind, here's a rundown of three of the market's top dividend stocks to buy right now. They all offer a commonsense balance of reliability and growth.
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T. Rowe Price Group
Dividend yield: 2.45%
You may be familiar with -- or even own -- mutual funds managed by T. Rowe Price Group (TROW -3.80%) -- but those aren't the only way it can make you money. You can also own an actual piece of the company, collecting steady dividends while the organization continues to build its revenue-bearing asset base. And it's good at doing just that. As of the most recent tally, it was managing $1.47 trillion worth of investors' money, up from $763 billion just five years earlier.
Asset management is an ideal business model for producing steady dividends for shareholders. While a fund must generate good returns over the long term in order to attract and retain customers, fund managers collect quarterly fees for their efforts regardless of how well or poorly their funds perform. These fees are generally small as a portion of the assets being managed -- often less than 1% of every dollar under management. It's a business that scales very cost-effectively, however -- and those fees add up.
T. Rowe Price Group has proven itself in this regard too. While the current yield of 2.45% isn't particularly impressive, bear in mind that the current quarterly payout of $1.08 per share is twice what it was just five years back.
The Southern Company
Dividend yield: 4.06%
As well-suited as the mutual fund management business may be for supporting reliable dividend payments, the utility business is even better-suited to do so. Consumers may postpone the purchase of a new car or skip a trip to the mall. But barring fairly serious financial difficulties, they'll pay the bill to keep the lights turned on.
Among the most reliable names in the power-providing business is The Southern Company (SO -2.05%). The Georgia-based utility serves 9 million customers, mostly in the South, though it's got a strong presence in California as well. This base of business has facilitated 19 consecutive years of increased payouts, which puts the company well on its way to Dividend Aristocrat status. To become a Dividend Aristocrat, a company must boost its dividend annually for at least 25 consecutive years. It's unlikely that Southern is going to break its streak this close to the proverbial finish line.
And lest you think this decades-old company is too stuck in its polluting ways to survive the clean-energy revolution that's underway, think again. The Southern Company has been phasing out its most highly-polluting fossil-fuel operations for years, replacing them with cleaner and renewable sources. More than half of the electricity it now produces is generated by natural gas, and only 17% still comes from coal. The company is more than halfway to its 2050 goal of operating with net-zero greenhouse gas emissions.
In short, this utility is ready for whatever new environmental protection mandates might lie ahead.
Texas Instruments
Dividend yield: 2.1%
Finally, add Texas Instruments (TXN -0.79%) to your list of dividend stocks to consider buying now.
It's not a company that income-minded investors would typically consider. Technology companies tend to be growth businesses that lack the consistency needed to fund reliable dividends, and TI's current yield of 2.1% is less than thrilling.
Not everything is as it may seem on the surface with this particular organization, however.
For starters, it may be a technology outfit, but it's not of the same cyclical and competitive ilk as NVIDIA (NVDA -3.00%) or HP (HPQ -0.75%) are. Texas Instruments makes components for lighting, networking, and the aerospace industry, just to name a few. It even makes branded calculators. These provide markets for its embedded processors that don't waver much regardless of the economic environment.
Perhaps even more overlooked than the relatively consistent demand for Texas Instruments' technological components is how often and how much this company boosts its dividend. The current annualized payout of $4.08 per share is more than eight times the payout from 10 years ago, translating into an annualized growth rate of nearly 24%. Moreover, the company has increased its payout every year for the past 17. It, too, is well on the way to becoming a Dividend Aristocrat.
Best of all, the company can comfortably afford its dividend. Payouts have only accounted for between 50% and 60% of income for the past several years, leaving behind plenty of profits to reinvest in growth.
