Best Dividend Stock to Buy and hold: It has been the dream of many investors looking for reliable income while still possible capital appreciation. Dividend-paying stocks are characteristically stable and solid companies with deep roots, and their regular dividend pay is something that will ensure a significant and stable cash flow in the hands of investors. However, not all dividend-paying stocks are created equal; better long-term prospects are seen in companies whose financial health and potential growth can be differentiated from other firms.
What Makes a Good Dividend Stock?
More than just mere dividend yield, a good dividend stock is more than just having an eye on its yield. Still, a good dividend stock also makes it important to consider some of these:
Dividend Yield
This is the percent of the stock price paid out in dividends each year. The higher the yield, the more appealing, but it’s not always a great sign of a strong company. The goal is to achieve sustainability yields that are between 2-5%.
Payout Ratio
The payout ratio would tell you what percentage of earnings is actually paid out as a dividend. Ideally, you would want a payout ratio under 60% to know they are retaining enough earnings for growth.
Earnings Growth
Ensures the company is going to be able to continue to pay, and hopefully increase its dividends over time.
Debt-to-Equity Ratio
As much as a company has an acceptable amount of debt, it is probable that it will continue its dividend payouts and its increase in the payment. Seek those whose debt-to-equity ratio is below 2.
Top 5 Best Dividend Stock to Buy and hold
Let’s consider a number of the best dividend stocks to buy and hold at the moment in the United States market. As much as these companies have possible and reliable dividend, they have the most attractive fundamentals to bring in the long-term investors.
1. Johnson & Johnson (JNJ)
Dividend payment for a hundred years, Johnson & Johnson is also in health care. A century’s long history of dividend payments also gives the company an impressive record for fifty consecutive years of annual dividend growth. Diversification in pharmaceuticals, medical devices, and consumer health promises the company a stable future.
- Dividend Yield: 2.8%
- Payout Ratio: 43%
- Dividend Growth: 58 consecutive years of dividend increases
2. Procter & Gamble (PG)
A household name in consumer goods, Procter & Gamble delivers a comprehensive portfolio of household products. Being a dividend aristocrat for 66 years running, P&G has ensured increasing its dividend every year and has been an income investor favorite.
- Dividend Yield: 2.5%
- Payout Ratio: 59%
- Dividend Growth: Consistent annual increases
3. Coca-Cola (KO)
The Coca-Cola Company is one of the most recognizable names on earth and also a regular dividend payer. Its large, global presence ensured the company had steady cash flow, which enabled it to improve its dividend payout consistently year-in-year-out.
- Dividend Yield: 3.1%
- Payout Ratio: 72%
- Dividend Growth: Over 60 years of consecutive increases
4. Apple (AAPL)
Though Apple is touted as a tech stock, it is also a great dividend payer. With massive cash reserves and a relatively predictable revenue stream from its products and services, Apple boasts a low yield but tremendous long-term potential.
- Dividend Yield: 0.6%
- Payout Ratio: 14%
- Dividend Growth: Steady increases since resuming dividends in 2012
5. Realty Income (O)
This is a diversified real estate investment trust in the commercial property arena. The dividend company was described as the “Monthly Dividend Company” because of its dependable monthly dividend payments, making it an income-focused favorite among investors.
- Dividend Yield: 5.4%
- Payout Ratio: 82%
- Dividend Growth: Consistent monthly payments for over 50 years
How to Analyze Dividend Stocks for Long-Term Investing
While reviewing the dividend stocks, people have to move beyond the yield. The safety of dividends for a company, by its ability to generate free cash, ensures that the dividend is maintainable or growth-progressive over time.
Why Focus on Dividend Growth Instead of Yield?
While high-yielding dividend stocks appear to be the sure thing, most of them have a higher risk to them. Dividend growth investments instead offer yields that are sustainable over time and continue going up year after year, giving investors a more excellent chance at seeing their returns compounded.
The Role of Dividend Reinvestment Plans (DRIPs)
A dividend reinvestment plan automatically helps investors reinvest dividends, and the portfolio’s dividends are invested in new shares, continuing to work compounding returns over time. It is a great strategy for long-term investors who wish to accumulate their holding without putting in more money.
Conclusion
Dividend stock investments offer income and growth, especially if you focus on companies with great fundamentals. Stocks like Johnson & Johnson, Procter & Gamble, Coca-Cola, Apple, or Realty Income represent a sure mix of dividend stability with the possibility of growth in capital. As always, study a company’s financials and growth prospects before making any investment.
NOTE:- We don’t provide any buy/ sell recommendation. We are not Goverment register. You should seek appropriate advice from your broker, or licensed investment advisor, before taking any action.
