5 Top Dividend Stocks to Buy Now
By: Ned Piplovic,
In addition to sporting high dividend yields, equities that qualify as top dividend stocks to buy now must also offer extended records of rising dividend distributions as well as asset appreciation that complements the dividend income in order to produce long-term total returns.
As the ratio of total annual dividend distributions per share and the equity’s current share price, the dividend yield is the simplest and most common metric that investors use to identify the top dividend stocks for their specific investment portfolio strategy.
Not only is the dividend yield readily available, it is also easy to calculate in the extremely rare instance that the metric is not offered. However, the dividend yield’s simplicity is also its biggest drawback. While a rising distribution amount drives the yield higher, a falling share price has the same effect. Therefore, a rising yield on its own could be either a positive indication or a negative one when a share price drop causes the increase.
Without resorting to complex and multi-variable analysis models, evaluating the equity’s total return over the trailing year is the simplest method for identifying the equities with rising yields that are worthy of consideration. As long as the one-year total return exceeds the dividend yield, investors should include that equity in the detailed analysis that they use to identify the best dividend stocks for their investment consideration.
Using a 4% dividend yield minimum as a criterion to find the best dividend stocks, the Dividend Screener available at DividendInvestor.com identified nearly 1,500 individual securities that met that eligibility requirement. Additional constraints reduced the list of potential investment options for the best dividend stocks to just the five entries below.
In addition to having a 4%-plus dividend yield, all five of the best dividend stocks to buy now have boosted their annual dividend distribution for at least five consecutive years and have both a minimum market capitalization of $3 billion.
Based on the above criteria, the five top dividend stocks to buy now are:
5 Top Dividend Stocks to Buy Now: #5
Principal Financial Group, Inc. (NASDAQ:PFG)
Market Capitalization: $14.1 billion
Dividend Yield: 4.4%
Dividend Payout Ratio: 50.2%
First Dividend: 2002
Consecutive Annual Hikes: 12 years
Based in Des Moines, Iowa, and founded in 1879, Principal Financial Group, Inc. provides retirement, asset management and insurance products and services to businesses, individuals and institutional clients worldwide.
The company has boosted its dividend distribution amount almost five-fold over the last 11 consecutive years. This level of advancement is equivalent to an average annual dividend growth rate of 15.5%. For its 12th consecutive annual dividend, PFG enhanced its quarterly payout by 2.8% to $0.56. This corresponds to a $2.24 annualized dividend distribution and yields 4.4%.
Total returns in the trailing 12 months were limited to 3.7%, but in the last five years the stock has performed much better, growing 64.1% to reward long-term investors.
5 Top Dividend Stocks to Buy Now: #4
Huntington Bancshares, Inc. (NASDAQ:HBAN)
Market Capitalization: $13.6 billion
Dividend Yield: 4.5%
Dividend Payout Ratio: 83.3%
First Dividend: 1912
Consecutive Annual Hikes: 10 years
Founded in 1866 and headquartered in Columbus, Ohio, Huntington Bancshares Incorporated operates as a holding company for the Huntington National Bank in eight Midwestern states. The current $0.15 quarterly dividend has stayed level since the third quarter of 2019, meaning the company is due for a dividend increase in the next few months if it would like to keep up its streak. The payout corresponds to a $0.60 annualized distribution and a yield of 4.5%.
Since nearly eliminating dividend distributions in the aftermath of the 2008 crisis, the bank hiked its dividend payout amount 15-fold, which is equivalent to a 35% average annual growth rate. Even over the last five years, the average annual growth rate has still been nearly 17%.
Combined with capital appreciation, Huntington Bancshares returned a total of 8.5% to investors in the last year. In the trailing five-year period, however, the share price has more than doubled, touting returns of 101.5%.
5 Top Dividend Stocks to Buy Now: #3
Franklin Resources (NYSE:BEN)
Market Capitalization: $14.2 billion
Dividend Yield: 4.0%
Dividend Payout Ratio: 67.9%
First Dividend: 1983
Consecutive Annual Hikes: 40 years
Franklin Resources, or Franklin Templeton Investments, is an investment service catering to both institutional and individual investors. At the end of 2020, the company was managing $1.42 trillion in assets, distributed largely between fixed-income (46%), equity (31%), multi-asset funds (10%) and alternatives (9%). More than 40% of its assets are invested in international operations, and approximately 30% of assets are sourced from investors living in other countries than the United States.
Since its purchase of Legg Mason in July 2020, the company has been doing remarkably well. Its one-year total returns came to 21.3%, the majority of which is from capital appreciation and share price growth. Its most recent dividend hike in the fourth quarter of 2020 brought the quarterly amount to $0.28, meaning the company pays an annual total of $1.12.
5 Top Dividend Stocks to Buy Now: #2
LyondellBasell Industries NV (NYSE:LYB)
Market Capitalization: $29.2 billion
Dividend Yield: 4.8%
Dividend Payout Ratio: 118.0%
First Dividend: 2011
Consecutive Annual Hikes: 7 years
Incorporated in the Netherlands, and with operational headquarters based in London and Houston, Texas, LyondellBasell Industries N.V. is one of the largest plastics, chemical and refining companies in the world.
The current $1.05 quarterly payout is 5% higher than the company’s $1.00 distribution from the beginning of 2019. This quarterly payout corresponds to a $4.20 annual payout and a 4.8% forward dividend yield. Since beginning its current streak of consecutive annual dividend hikes in 2013, the company has more than doubled its total annual payout amount, averaging 22.5% dividend growth per year in the last 10 years.
The stock grew 8.6% in the last year, meaning its total returns were nearly 14%. In the trailing five-year period, the company has grown its share price 40.7%.
5 Top Dividend Stocks to Buy Now: #1
Brookfield Property Partners LP (NASDAQ:BPY)
Market Capitalization: $20 billion
Dividend Yield: 7.9%
Dividend Payout Ratio: –
First Dividend: 2013
Consecutive Annual Hikes: 7 years
Based in Hamilton, Bermuda, and formed as a spinoff from Brookfield Asset Management in 2013, Brookfield Property Partners is a $70 billion real estate investment trust (REIT) that owns and manages a diversified portfolio of multifamily and commercial real estate properties. With an annual distribution hike every year, the trust has increased its annual payout by one-third since its formation six years ago. The level of growth corresponds to a 4.6% growth rate when averaged over the last five years.
The company has had a strong start to 2021 with YTD returns of 17%. Its one-year returns were a total of 5.2%, where its five-year returns were a stable 12.5%.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.