Looking For The Best Dividend Stocks For Your Long-Term Portfolio?
Dividend stocks have been a great vehicle for investors who like predictable income along with good long-term growth potential. If you’re a long-term investor then finding the right dividend stocks to buy in the stock market in 2021 could make a significant difference in your portfolio returns. It’s important to note that not all dividend stocks are good investments. You might be reading this and saying to yourself, “How do I find the best dividend stocks to invest in right now?”. Sometimes it can be a challenge to find good dividend stocks. If you’re looking for the top dividend stocks to buy in the stock market today then keep reading.
What Is A Dividend?
A dividend is a distribution of a piece of the company’s net profits to its shareholders. Public companies are not required to pay dividends to their shareholders. But it is a decision made by the company’s board of directors. It’s basically a reward by publicly traded companies to their shareholders for investing money into their company. Dividend payouts can be paid in monthly, quarterly, or annual distributions.
How To Find Top Dividend Stocks To Buy In 2021
Next, I think it’s important to cover what makes up the characteristics of the “top dividend stocks in 2021”. If you’re thinking of ways to invest in dividend stocks there are a few things you should be aware of first.
Focus on companies with; a good track record, strong fundamentals, a solid balance sheet, increasing dividend distribution over a period of time, and consistent long-term growth. These tend to the bigger, more established publicly traded companies. The reason being is that these are companies that have shown more predictable profitability over a longer period of time compared to earlier stage growth stocks. For example, investors in top dividend stocks to watch like Walmart Inc. (NYSE: WMT) and Universal Corp (NYSE: UVV) have seen solid gains over the years. These items mentioned above when blended together will help you get on the right path of choosing the best dividend stocks, and potentially becoming a successful income investor in 2021. With all that being said, let’s take a look at 20 top dividend stocks to consider adding to your portfolio in 2021.
Top Dividend Stocks To Buy [Or Avoid] In 2021
- 3M Co. (NYSE: MMM)
- AbbVie Inc. (NYSE: ABBV)
- AGNC Investment Corp (NASDAQ: AGNC)
- AT&T Inc. (NYSE: T)
- International Business Machines Corp. (NYSE: IBM)
- Johnson & Johnson (NYSE: JNJ)
First on the list is industrial and chemical giant 3M. MMM is a well-diversified technology company that operates in 70 countries worldwide. The company was founded in 1902 and is currently headquartered in St. Paul, Minnesota. One impressive feature of MMM stock is that the company has leading positions in a variety of industries such as display & graphics, consumer, electronics and telecommunications, industrial safety, transportation, and others. 3M has a current valuation of $95.5B and sales greater than $32 billion.
The company’s impressive track record and growth story have led to 3M being known as what’s called a “Dividend King”. Because 3M has raised its dividends for a consecutive 62 years, it falls under the category of being a Dividend King. These are companies that have increased their dividends for at least 50 straight years. The company currently has an annualized dividend of $5.88 and a dividend yield of 3.6%. To put this into context, MMM stock has averaged a yield of 2.6% over the last decade. Making its most recent yield one percentage point under the current yield. Can the higher yield combined with MMM’s strong track record make it a top dividend stock to buy in the stock market today? You tell me.
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Next on the list of dividend stocks to watch is biotech company AbbVie. The company currently operates multiple research and development centers, and manufacturing facilities worldwide. ABBV stock has therapeutics in numerous areas including immunology, eye care, neuroscience, women’s health, and more. Some of the company’s products include Botox Cosmetics, implants, and fillers. Year-to-date ABBV stock is up over 23% and has a current dividend yield of 4.71%.
In the company’s most recent quarterly report, AbbVie displayed a 4.1% year-over-year increase in non-GAAP adjusted net revenues hitting $12.88 billion. AbbVie also reported net earnings of $2.31 billion. This reflects an increase of 22.50% year-over-year. Cash and equivalents were reported at $7.89 billion. The strong demand for the company’s products and therapies has been a key factor to revenue growth for the company. Do you have ABBV on your list for 2021?
AGNC Investment Corp
Third, we have real-estate investment trust (REIT) AGNC Investment Corp. AGNC is an internally managed REIT that’s primary investment focus is residential mortgage-backed securities. This could be a good option for investors looking for a low-risk income-producing investment. What makes AGNC low-risk is that the principle and interest payments are guaranteed by the U.S. government. This means the company takes on very little credit risk. If for whatever reason the borrower can’t come up with their monthly mortgage payment, AGNC Investment Corp still gets paid.
Just this month on January 12th, the company announced that they have declared a monthly common stock dividend of $0.12 per common share for January 2021, which equates to a dividend yield of 9.2%. AGNC stock has recovered from March lows of $9 a share and closed Friday’s January 22nd trading session at $16.14 per share. AGNC is set to report its fourth-quarter 2020 results on Monday, January 25th after the closing bell. With all that being said, can AGNC be one of the best value dividend stocks to buy in 2021 and hold long-term? The decision is yours.
Fourth on the list of top dividend stocks to watch in 2021 is telecom giant AT&T. The company currently has a solid dividend yield of 7.2%, and it looks to be sustainable for the foreseeable future. AT&T has definitely had its struggles in recent years, including a lackluster wireline business and its ongoing issues with its DirectTV segment. However, its biggest business, which is its wireless segment is responsible for 42% of the company’s total revenue, has continued to deliver handsomely for the company throughout the global pandemic.
T Stock’s most recent acquisition with WarnerMedia has amounted to 18% of the company’s top-line revenue and is a content juggernaut including brands such as HBO, CNN, and DC comics. The company has raised its dividend payouts for 34 straight years. With 3 more quarters left in the year, the question becomes with T Stock increasing the streak to 35 years of annual dividend raises. Only time will tell.
International Business Machines Corp.
At number 5 is technology and consulting company International Business Machines Corporation. Also known to most as simply IBM. The New-York based company has accumulated over 350,000 employees throughout 170 countries worldwide. Just last week the tech stock announced its 2020 fourth-quarter and full-year results. Before we get into these financials, it’s important to point out that the company has previously reported it has made significant investments in its blockchain and hybrid cloud platforms. Now let’s move into the numbers.
In the fourth quarter of 2020, IBM reported revenues of $20.4 billion, representing a 6% drop due to divested businesses and currency. On the flip side, total cloud revenue came in at $7.5 billion, up 10%. And debt declined by $3.9 billion since the end of the previous quarter. IBM stock currently has an annual dividend of $6.52, resulting in a dividend yield of 5.01%. Given the strong fundamentals of IBM stock, and long-term growth outlook should investors consider buying IBM for their long-term portfolio?
Johnson & Johnson
Next, we have big pharma company, Johnson & Johnson. The company has been one of the biotech stocks spearheading the efforts to produce a safe and effective COVID-19 vaccine. In the last year, JNJ stock price is up 14.80% closing Friday’s trading session at $163.55 a share. Some might just think of Johnson and Johnson as just a pharmaceutical company, but what’s a key differentiator for the company is its large, well-positioned presence in the health care centric consumer goods market with an extensive range of products. Its two most notable products are Tylenol and Band-Aid.
The big pharma company announced their next quarterly dividend payout will be $1.01 per share. At the current share price, that would result in an annualized dividend yield of 2.6%. Johnson & Johnson has been a long-time fan favorite for income investors and has raised their distributions at least once annually for 57 straight years. This makes JNJ stock one of the few S&P 500 companies to have been able to achieve such an impressive milestone. Also, the company recently announced its plan to have 100 million vaccines for Americans by Spring of 2021. J&J has been in its phase 3 trials for its COVID-19 vaccine since September. Though last week the New England Journal of Medicine reported early trial results that some think look favorable for the top biotech stock.
What separates J&J’s vaccine versus its industry peers like Pfizer (NYSE: PFE) and Moderna (NASDAQ: MRNA) is Johnson and Johson’s vaccine only requires a single dose, while the others currently require two doses. For these reasons, we’ve added JNJ stock to our list of the top dividend stocks to buy in 2021.