If you're looking for attractive dividend-paying stocks, that's a smart move. If you're not, perhaps reconsider -- because:
- Healthy and growing dividend-paying stocks tend to send you cash regularly, whether the market or economy is doing well or not.
- They tend to increase their payouts over time, too -- often annually and often by enough to beat inflation.
- Dividend-paying stocks have greatly outperformed non-payers over the past 50 years or so.
Here are three dividend stocks to consider for your long-term portfolio.
Image source: Getty Images.
1. AT&T
If you're about to yawn at the thought of a huge telecommunications company, stop -- and check out AT&T's (T -0.44%) recent dividend yield: 4.9%. That's pretty good, and the picture gets better. AT&T has recently sold off its 70% stake in DirecTV, generating a lot of cash that can be used to pay down debt and to reward shareholders. That dividend is one solid reward for shareholders, but the company is also planning to buy back around $20 billion worth of its shares, which also rewards shareholders. (Imagine a pizza. If it's divided into seven equal slices instead of eight, each piece will be bigger. It's the same with companies that reduce their number of shares.) AT&T is also raising prices, which should boost revenue.
2. AbbVie
AbbVie (ABBV -0.66%) is a drug company with a recent dividend yield of 3.75%. That's quite respectable, and the stock also offers a history of impressive price gains. Over the past five years, for example, it grew at an average annual clip of 17.9%, and 12.4% over the past decade.
As a drug company, AbbVie faces the loss of patent protection for various drugs over time, and the loss for its big seller Humira is tough. But major pharmaceutical companies tend to have a lot of drugs in development, some or many of which might end up as blockbuster sellers. AbbVie recently had more than 90 drugs in its pipeline, 50 of which were in mid- or late-stage development. The company plowed nearly $8 billion into research and development in 2023.
Shares don't seem bargain-priced at recent levels, so consider building a position in it incrementally. Shares also don't seem wildly overvalued, so anyone buying now can enjoy dividend income while waiting for AbbVie's revenue, earnings, and valuation to grow over time.
3. Johnson & Johnson
Johnson & Johnson (JNJ -0.36%) is a super familiar name for most people, and it's a compelling stock as well. Its dividend recently yielded 3.4%, and that payout has been increased by about 5%, on average, annually over the past five years. Johnson & Johnson has been increasing its payout for 62 consecutive years!
The company was long known for being in three big businesses: pharmaceuticals, medical devices (think catheters, artificial joints, and more), and consumer products such as Band-Aid and Tylenol. It spun off that slower-growing consumer product business in 2023, though, creating a new company, called KenVue (KVUE -0.88%). That leaves two faster-growing divisions, and a lot of potential.
In its facts for investors, the company points out that about 25% of its revenue comes from products launched within the past five years and more than 65% of revenue comes from items that have a global market share of No. 1 or No. 2. Johnson & Johnson's impressive third quarter featured revenue up 5% year over year. With its recent forward-looking price-to-earnings (P/E) ratio of 13.6 well below its five-year average of 16.0, the stock seems appealingly valued.
These are just a few of many appealing dividend-paying stocks. Whether you invest in these, some others, or a powerful dividend-focused ETF, you can be positioning your portfolio for long-term growth.
