7 Best Dividend Paying Stocks to Buy Now
By: Ned Piplovic,
While some equities might appear as good long-term investment opportunities, most income investors are looking for the best dividend paying stocks to buy now for immediate access to dividend income distributions.
Even without complex analytical systems, most investors can easily identify multiple equities that have the capacity to generate solid total returns with potential. Simple web-based tools –such as the Dividend Screener tool available at DividendInvestor.com — and just a few constraints will generally deliver a list of a dozen potential equities.
The viable equities for investment consideration should have a record of consecutive annual dividend hikes, above average yield and a relatively steady long-term asset appreciation, even if the share price exhibited recent price fluctuations. Below are the seven best dividend paying stocks to buy now, sorted by dividend yield in ascending order. All seven stocks are going ex-dividend next week.
7 Best Dividend Paying Stocks to Buy Now: #7
Allete, Inc. (NYSE:ALE)
Allete, Inc. — a diversified utility — has been paying dividends since 1945 and failed to hike its annual payout only once in the past two decades. The current $0.5875 quarterly payout is nearly 5% higher than the $0.56 amount from the same period last year. This current distribution corresponds to a $2.35 annualized dividend and a 2.9% yield. Allete’s current yield is nearly 40% above the 2.1% simple average yield of the entire Utilities sector and in line with the 2.9% average yield of the Diversified Utilities subsegment.
The company increased its annual payout one third over the past nine years of consecutive annual boosts. This advancement corresponds to an average annual growth rate of 3.3%. The dividend growth and 60% capital gains over the past five years combined for a total return of 81%. Over the past 12 months, the total return was 9% and 56% over the past three years.
7 Best Dividend Paying Stocks to Buy Now: #6
Paychex, Inc. (NASDAQ:PAYX)
Paychex, Inc. hiked its quarterly dividend 10.7% from $0.56 in the previous period to the current $0.62 quarterly payout amount. This new quarterly distribution is equivalent to a $2.48 annualized distribution and a 2.95% yield, which is just marginally lower than Paychex’s 3% five-year yield average.
However, Paychex has the second highest yield in the Staffing & Outsourcing Services market segment and is nearly twice the 1.49% segment average yield. The current yield also outperformed by 31% the 2.25% yield average of the segments only dividend-paying companies, as well as the 1.94% average yield of the entire Services sector by more than 50%.
Over the past two decades, Paychex missed only one annual dividend hike and has boosted its annual payout over the past eight consecutive years. Over that period, the company doubled its payout for an 8% average annual growth rate.
Paychex, Inc. complemented its rising dividends with asset appreciation that combined for a 37% total return over the past 12 months and 73% over the past three years. Shareholders more than doubled their investment over the last five years with total returns of 130%
7 Best Dividend Paying Stocks to Buy Now: #5
Emerson Electric Company (NYSE:EMR)
Emerson Electric Company’s dividend enhancement of $0.005 from a $0.485 payout one year ago to the current $0.49 distribution amount represents a hike of just 1%. While this hike is low by many standards, Emerson Electric has been increasing its annual dividend distribution for the past 62 consecutive years. Just over the past 20 years, the company tripled its annual distribution for an average growth rate of 5.5%.
The current quarterly payout is equivalent to a $1.96 annual distribution and a 3% forward yield, which is slightly below the company’s own 3.1% average yield over the past five years. However, as the highest current yield in the Industrial Equipment & Components industry segment, Emerson Electric’s current yield is nearly triple the 1.01% segment average, as well as 112% higher than the 1.39% yield average of only dividend-paying companies in the segment. Furthermore, Emerson Electric’s current yield is also nearly 160% higher than the 1.15% simple average yield of the entire Industrial Goods sector.
7 Best Dividend Paying Stocks to Buy Now: #4
Target Corporation (NYSE:TGT)
The Target Corporation advanced its quarterly dividend 3.2% from $0.62 in the same period last year to the current $0.64 distribution. The new quarterly payout amount is equivalent to a $2.56 annualized dividend distribution, which yields 3.4%. This yield level is 3.8% higher than Target’s 3.27% average yield over the past five years.
The company’s current yield outperformed the 1.94% average yield of the entire Services sector by 75%. Furthermore, as the equity with the highest yield in the Discount & Variety Stores industry segment, Target outperformed the segments overall 1.19% average yield by 185% and the 1.98% average of only dividend-paying companies by more than 71%.
Target has boosted its annual dividend for the past 47 consecutive years. Just over the past two decades, the annual payout amount advanced 17-fold, or at an average rate of 15.2% per year. A share price pullback in 2017, limited total returns to 5.5%. However, total returns over the past year were nearly 12% and more than 50% over the past five years.
7 Best Dividend Paying Stocks to Buy Now: #3
Consolidated Edison, Inc. (NYSE:ED)
Consolidated Edison’s (ConEd) current quarterly dividend amount of $0.74 represents a 3.5% hike above the $0.715 payout from same quarter 2018. The annualized dividend distribution of $2.96 is equivalent to a 3.53% forward dividend yield. Because ConEd’s share price grew faster than the company’s dividend distributions, the current yield is 2% lower than the company’s own 3.6% five-year average yield.
While slightly below its own five-year average, ConEd’s current yield is 68% higher than the 2.1% simple average yield of the overall Utilities sector. Additionally, ConEd’s current yield also outperformed the 2.9% yield average of the Diversified Utilities industry segment by more than 21%. The streak of more than four decades of annual dividend hikes combined with capital gains to deliver long-term total returns. Over the trailing year, the company delivered a 12.5% total return to shareholders. Three-year total returns exceeded 27% and total returns over the past five years were more than 71%.
7 Best Dividend Paying Stocks to Buy Now: #2
Duke Energy Corporation (NYSE:DUK)
The Duke Energy Corporation’s current $0.9275 quarterly dividend distribution is 4.2% higher than the company’s $0.89 payout from the same period last year. This new quarterly payout amount corresponds to a $3.71 annual distribution and yields 4.23%, which is 1.3% higher than the company’s own 4.17% average yield over the past five years.
The company has been paying dividends since 1926 and has rewarded its shareholders with an annual dividend boost every year over the past 14 years. Over that period, the Duke Energy corporation has nearly doubled its dividend distribution amount, which is equivalent to an average annual growth rate of nearly 5% per year.
Duke Energy complemented its steadily rising dividend income distributions with robust asset appreciation. Just over the past 12 months, the company delivered a total return of 18%. Over the last three and five years, total returns were 27% and 44%, respectively.
7 Best Dividend Paying Stocks to Buy Now: #1
Summit Hotel Properties, Inc. . (NYSE:INN)
Summit Hotel Properties, Inc started paying dividends in the second-quarter 2011 and has missed an annual dividend boost only once in 2013. Since resuming dividend hikes in 2014, the company has enhanced its total annual dividend payout 60%, which corresponds to an average annual growth rate of more than 8% per year.
The current $0.18 quarterly payout is equivalent to a $0.72 annualized distribution and a 5.86% dividend yield. This current yield is nearly 40% higher than the company’s own 4.24% average yield over the past five years. While a share price decline helped the dividend increase, Summit’s current yield outperformed the 3.09% average yield of the entire Financials sector by nearly 90%. Additionally, Summit’s 5.86% yield is also 74% higher than the 33.4% average yield of the company’s peers in the Real Estate Development industry segment. Furthermore, the current yield even outperformed the 4.6% average yield of the segment’s only dividend-paying companies by more than 26%.
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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.