Dividend Stocks

Payout Powerhouses: 7 Dividend Stocks to Buy Now

Just like in arguably most sports, balance is everything. The same applies to dividend stocks to buy. Yes, the high-flying growth names tend to attract the most attention. Frankly, there’s nothing wrong with pursuing select names in the space. However, you also want to lean into enterprises that provide passive income.

Let’s take a look at the sport of baseball since we’re in the season for it. A good team that makes it consistently to the playoffs and go far – and not just teams that occasionally show flashes of brilliance – have balanced lineups. Yes, all teams put their best players at the top of their lineup. But if the bottom of the lineup is pure garbage, that would become a liability.

Unlike other professional sports leagues, baseball seasons almost seem eternal. Of course, that’s just hyperbole but the point is, averages come to bite you if you have an unbalanced team of a few superstars and the rest being rank amateurs.

It’s the same thing with finance. Stick with your growth winners. But also show some love to dividend stocks to buy.

Target (TGT)

Source: Sundry Photography / Shutterstock.com

Big-box retailer Target (NYSE:TGT) presents a solid case for dividend stocks to buy because of everyday needs. In a retail ecosystem increasingly shifting toward e-commerce, companies in the space must fight for relevance. Target offers a huge advantage because of its one-stop-shop business model. No, it’s not a unique concept. However, TGT tends to be a step above in terms of ambiance (you know what I’m talking about).

You also can’t argue with the financials. Between the quarter ended July 31, 2023 and Q1 of fiscal 2025, the retailer posted an average earnings per share of roughly $2.23. This tally included a small miss in Q1. Nevertheless, the average earnings surprise clocked in at 23.6%, demonstrating consistent relevance to the customer (guest).

In terms of passive income, Target offers a forward dividend yield of 3%. That’s above the consumer staple sector’s average yield of 1.89%. Even better, the company has been raising its payout for the past 53 years. That makes it one of the strongest ideas for dividend stocks to buy.

Johnson & Johnson (JNJ)

A red Johnson & Johnson (JNJ) sign hangs inside in Moscow, Russia.

Source: Alexander Tolstykh / Shutterstock.com

A pharmaceutical giant that also features specialties in medical technology, Johnson & Johnson (NYSE:JNJ) represents a powerhouse in healthcare. JNJ ranks among the best dividend stocks to buy thanks to its alignment with a permanently relevant narrative. It’s just the reality that humans get sick. And people tend to put their resources into health because wealth doesn’t mean much without the former.

That’s just a blunt way of stressing the viability of J&J – it is what it is. You can’t argue with the results. While the healthcare space is competitive and the company doesn’t have a perfect record, it managed to post an average EPS of roughly $2.56 in the past four quarters. This tally translated to an average earnings surprise of 1.6%.

It’s not exactly exciting but it gets the job done. For passive income, J&J offers a forward yield of 3.41%. In contrast, the healthcare sector’s average yield comes in at 1.58%. Further, the sector juggernaut enjoys 63 years of rising payouts. That makes it a reliable idea for dividend stocks to buy.

Shell (SHEL)

Shell logo on a gas station in Iceland. SHEL stock

Source: JuliusKielaitis / Shutterstock.com

The hydrocarbon sector might not necessarily be everyone’s first choice for finding viable dividend stocks to buy. While the ecosystem is undoubtedly vital to the functioning of the global economy, social and political forces are pushing renewables. That leaves Shell (NYSE:SHEL) in a bit of a quandary, even though the company is investing in clean energy tech such as hydrogen.

Still, the cynical reality is that the world continues to run on oil. Further, geopolitical flashpoints – whether that be an unexpected dynamic in Europe or the escalation of tensions in the Middle East – may threaten global supply chains. That could really ramp up the demand and profitability of the entire hydrocarbon value chain.

It’s interesting that even with a conspicuous miss in Q2 2023, Shell’s average EPS hit $1.98 in the past four quarters. The average earnings surprise reached 11.08%.

In terms of passive income, Shell shells out a forward yield of 3.91%. Also, the payout ratio sits at 32.22%, providing confidence regarding yield sustainability.


Photo of IBM (IBM) building as seen through the canopy of a tree. IBM logo is in large letters on side of building.

Source: shutterstock.com/LCV

When it comes to technology plays, IBM (NYSE:IBM) isn’t the most exciting due to the lack of robust capital gains. In many cases, the legacy giant has been left behind by other enterprises, which seems odd. Yeah, the company incurred some missteps. At the same time, it commands excellent acumen, especially in relevant fields such as artificial intelligence.

Over time, Big Blue will have its time. For now, IBM intrigues because it’s one of the top dividend stocks to buy. While it’s not exciting in the capital gains sense, the company consistently hits its bottom-line targets. In the past four quarters, IBM’s average EPS reached around $2.44. This translate to an earnings surprise of almost 5%.

What that looks like over the trailing 12 months (TTM) is a net income of $8.15 billion. True to form, IBM consistently decides to reward its shareholders, providing a forward yield of 3.95%. Further, the company enjoys a 29-year track record of annual payout increases.

Duke Energy (DUK)

The logo for Duke Energy (DUK) is seen on a sign at one of the company's offices.

Source: Jonathan Weiss / Shutterstock.com

Fundamentally, Duke Energy (NYSE:DUK) makes a powerful case for top dividend stocks to buy because of its natural monopoly. First, utility giants benefit from the entrenchment of their businesses. Trying to compete in the field is almost impossible for many entities due to steep barriers of entry. Second, Duke specifically benefits from covering certain southern states and the Midwest.

People – particularly young people – are moving to regions that feature lower costs of living than major metropolitan areas. In that sense, Duke is positioned where the money will be. That’s significant because young people will generally see their income rise. In turn, that promotes more spending and thus economic activity – elements that indirectly favor Duke.

During the TTM period, Duke posted net income of $4.31 billion, translating to earnings of $5.59 per share. A lot of that is going to shareholders. Right now, the company offers a forward yield of 4.05%. That’s above the utility sector’s average yield of 3.75%, which is already high.

Philip Morris (PM)

Philip Morris factory offices in Lithuania. PM stock.

Source: Vytautas Kielaitis / Shutterstock

Let’s just get it out of the way – Philip Morris (NYSE:PM) is controversial. As a tobacco giant, it’s difficult to frame the company in holistically positive terms. Further, the company seemingly suffers from a relevancy problem. Over the past several years, anti-tobacco organizations have successfully brought the message home regarding the dangers of cigarettes. Thus, smoking prevalence globally has declined.

Still, that doesn’t mean the tobacco industry is fading into irrelevance. Many analysts cover PM stock and they rate shares a moderate buy. It’s not a ringing endorsement, per se. However, it’s not a sell recommendation either. Also, these market experts project in fiscal 2024 EPS expansion of 5% to hit $6.31. Further, revenue may rise 4.8% to reach $36.95 billion.

What gives? Essentially, Philip Morris has been investing in its cigarette alternatives like heat-not-burn devices and vaporizers. Further, the company is popular with investors because of its commitment to rewarding stakeholders. Right now, the tobacco specialist offers a forward yield of 5.07%. That’s well above the consumer staple sector’s average of 1.89%.

B2Gold (BTG)

b2gold (BTG) logo on a web browser enlarged by a magnifying glass

Source: Pavel Kapysh / Shutterstock.com

Admittedly, B2Gold (NYSEAMERICAN:BTG) might not be the best idea for dividend stocks to buy. As a precious metals miner, it doesn’t really have the pricing predictability of a metals streaming or royalty firm. Instead, it’s the equivalent of an upstream energy specialist. A lot of things can go wrong in the exploration and extraction business.

Further, BTG is also volatile, having lost more than 31% since the start of the year. Obviously, that’s not encouraging to risk-averse investors. However, I keep going back to the fundamental catalyst of the sector: inflation. As the latest May jobs report indicates, U.S. employers basically went on a hiring spree. That means more dollars chasing after fewer goods, which translates to higher inflation.

Financially, there are concerns obviously. Analysts project fiscal 2024 EPS to slip almost 11% to 25 cents. The top line may also fade by nearly 2%. However, they also anticipate a recovery effort in fiscal 2025, with EPS potentially rising to 42 cents on sales of $2.42 billion.

For now, B2Gold offers a forward yield of 6.13%. That might tempt some investors due to the underlying inflationary narrative.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.

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