Stocks That Pay Good Dividends

When you buy a stock, you become a partial owner in a company. As a partial company owner, you are entitled to a share of the company’s profits.

The payouts companies dispense to shareholders are called dividends. Dividend payments are your portion of company profits—think of it as a reward for sticking with a company rather than just buying and selling short term.

For many people, being able to retire and live off of passive income is the dream. In fact, that is one of the main reasons people invest in stock in the first place; to have a stream of passive income that they can tap into when necessary. 💵

Investing in high-dividend stocks is a great way to secure funds for retirements and ensure you always have some form of income. You can also reinvest your dividends to buy more shares and reap more dividends down the road.

Dividend stocks are valued based on their dividend yield, the quotient of the total amount of dividend paid per share and the price of an individual share. Dividend yields are usually calculated based on annual dividends.

For example, if a company pays out $0.50 in dividends annually per share and its shares are priced at $10, then the dividend yield is 5%. (0.50/10 = 0.05). Dividend payouts vary according to the company but they usually come out to less than 1$ per share.

All other things being equal, the higher the dividend yield, the more income from dividends you receive will be higher. So if you want to invest funds for long-term financial security, your best bet is to look at high dividend-yield stocks. Some investors also use valuation tools like the dividend discount model to estimate a stock’s fair price based on its expected future dividends.

The 4% Rule 📘

If you are investing money to secure dividends for retirement, we need to talk about the 4% rule. The 4% rule is a general rule of thumb that states you should withdraw no more than 4% from your retirement account for each year of retirement.

The idea behind the 4% rule is to have enough money to live off during retirement while keeping enough in your portfolio to consistently generate income. The 4% rule was devised by experts as the optimal percentage to withdraw without depleting your nest egg over 30 years.

Considering that the majority of your income during retirement will come from interest and dividends, financial experts recommend the ideal dividend yield should hover around 4%. That is, you should try to invest in companies that have a 4% dividend yield. Most companies pay out dividends quarterly so you want to make sure

One more important thing: when it comes to dividends, a higher dividend yield is not always better. Generally, stocks that have dividend yields over 10% are viewed with suspicion.

An extremely high dividend yield compared to competitor companies could signal that the growth is unsustainable or that stock price is being driven down to inflate dividend payouts. Either way, stocks with dividend yields of 10%+ need to be handled carefully.

Also, it is important to keep in mind that dividend yields can be affected by movements in the larger economy. For example, investors lost a ton in dividends during the 2009 recession when the housing market crashed. The possibility of falling dividend yields is another reason why it is important to diversify your portfolio to insulate yourself from risk.

How to Pick the Best Dividend Stock 🏗

Dividend investing is based around finding long-term sustainable growth. Several well-known investors such as Warren Buffett orient their entire investing strategy around top-notch dividend-paying companies. Many retail investors turn to trusted stock picking services to help them identify these kinds of companies early, especially when sorting through thousands of potential candidates.

The ideal is to find a stock with a high dividend yield and then reinvest a portion of those dividends to buy more stock. Over time this compounding process will raise your wealth exponentially.

It can be a bit tough to know what kinds of stocks to look for. Simply looking at the current dividend yield is not enough as that figure is not necessarily stable and could change.

You need to identify the fundamental factors of a company that show it will be able to keep making dividend payments into the near future. Here are a few key indicators to look for when hunting for dividend stocks.

Profits 💰

The first thing to look for is a company that has a solid profit margin. If companies you are looking at do not have good profit figures, cut them out of your list.

Don’t just look at profit amount either but profit growth. It is possible to get good dividend returns from high-profit companies with low profitable growth, but unless you’re specifically using a dividend capture strategy, there is no good reason to choose a company like that over one with profitable growth.

A far as earning expectations, the gold standard is between 5% and 15 projected earnings growth. You don’t want to invest in a company with a larger than 15% growth expectations as any rate that high is very difficult to maintain and is certainly expected to hit a backlash in the future.

At the same time, the company you invest in needs to have a large cash flow. The bigger the cash flow, the more liquid assets they can payout to investors.

This is one major reason why utility stocks have such strong dividend payouts; they have a sizable consumer base and extremely high revenue from providing basic services. Utility companies pull in a lot of cash income so they are great at paying out dividends.

Lastly, look for companies that have shown continual dividend growth for at least 5 years. Once dividend growth hits the magic 5-year mark, it is more likely they will continue to grow in the future.

To help identify these kinds of companies, many investors rely on curated investment newsletters that highlight dividend stocks with strong fundamentals and consistent growth histories.

Industry Health ⛑

One thing many investors neglect to look at is the state of the industry or sector as a whole. They get so caught up in the technical minutiae of dividend yields and quarterly revenue and miss the forest for the trees.

Case in point; many experts predict declining revenue in oil industries as renewable energy and non-oil sources of energy become more popular in the near future. Conversely, the aging boomer population is expected to cause the healthcare services industry to grow significantly over the next 20 years.

The key point here is that you cannot just go on history. Things change sometimes and a trend of increasing dividends may not continue in the future if it’s subsumed in a dying industry.

To be certain, even industries that are in good shape aren’t completely immune to market plunges. They do tend to be more resilient than other stocks though.

Avoid Very High Dividend Yields 📊

If you are investing for long-term financial security, then it’s recommended you stay averse to stocks with high dividend yields 10%-12%+. While many investors go into dividend investing looking exclusively at dividend yields, ultra-high dividend yields are mostly always unsuitable for long-term investing.

The reason why is that high dividend yields over 12% are usually unsustainable in the long run. When the dividend yield is that high, it’s a good chance it cannot be maintained and the dividend payouts will decrease.

A good example of this in practice is REITs. Many REITs have great dividend yield figures but when you look under the hood things aren’t as good as they seem, with things like unsustainable payouts, or dangerously high-interest rates (that being said, there are some solid REITs for dividend investing which we will cover later).

Hence why many dividend investors like to look at the fundamentals of a company to predict investing performance rather than purely technical figures and data. Fundamental analysis can do a good job of telling you if some current dividend production is sustainable or not.

That is why experts recommend dividend investors invest in stock with a yield between 4%-7%. These values tend to be stable enough for consistent growth and generate enough income so you can rely on dividend payouts for retirement.

Look for Dividend Reinvestment Programs 💱

Reinvesting dividends is one of the smartest strategies to build wealth and long-term financial security. The idea is simple; every quarter or month when you get a dividend payout, you take some portion of it and reinvest it back into the company.

You then get a larger payout next dividend payout which means you can reinvest a larger portion into the company, and so on. You can see how this can lead to incredible gains in the long term.

Try investing in company stocks that have a dividend reinvestment program. These programs automate the reinvestment process and you can specify whether you want to put back in some, none, or all of your dividends.

Qualified and Non-Qualified Dividends 👨‍🏫

Since dividends are considered a source of income, they are usually subject to federal and state taxation. There are two types of dividends that have different tax rules.

Qualified dividends are taxed at the same rates as capital gains taxes, which for most people comes out to about 15%. In general, only stocks that have been held onto for more than a year are eligible to produce qualified dividends.

In contrast, nonqualified (or unqualified) dividends are counted as regular income and are taxed based on income bracket. So if you are in the 22% tax bracket then you would pay 22% taxes on your dividend income.

Some high dividend-yielding stocks like  REITs are always taxed at regular income rates. If you have stocks that produce dividends your broker will likely provide you with the 1099-DIV form that outlines how much you earned and how much you owe.

If you are investing in some kind of tax-advantaged account like an IRA or work 401(k) then you can avoid paying direct taxes on dividends until you start withdrawing the money. Roth IRA are already taxed before the money is put in so you will never have to pay taxes to access a Roth IRA.

It often makes more sense to invest in a tax-deferred account rather than a tax-exempt account. For instance, if you are currently in the 24% tax bracket by expect to be in the 12% bracket when you retire, it might make more sense to invest that money into a tax-deferred account to avoid paying 24% on it now and instead pay 12% on it later.

Watch Out for Debt ⚠

Lastly, and this goes without saying, don’t invest in a company that has a large amount of debt. Specifically, you need to look at the company’s debt-to-equity ratio.

If the ratio is over 2.0 then look elsewhere, though the ideal D/E ratio is below 1.0. The higher the D/E ratio then that means the company will have to pay off that debt at some point. When that happens, dividend payouts are likely to decrease as that money goes towards paying the debt.

11 Stocks that Pay Dividends 🗃

Here are our picks of some of the best dividend stocks to invest in for long-term financial security and retirement. Dividend yield percentages have been calculated using annual dividend amounts.

1. International Business Machines (IBM)

Yield: 4.1%

IBM is one of the world’s largest computing technology companies and has a history of generating consistent dividends while maintaining high levels of growth. With a total market value of $120 billion, IBM is one of the most successful information technology companies in the world.

Although the price of IBM’s stock has been on a steady decline for the past 2 years, the company has recently expanded its cloud presence via the $34 billion acquisition of Red Hat so it can be more competitive with other cloud competitor mainstays such as Microsoft and Amazon.

In 2025, IBM rolled out new chips and servers designed to simplify AI integration across enterprise systems, signaling a continued pivot toward next-generation infrastructure and smarter computing. These innovations support its strategy of blending legacy enterprise trust with cutting-edge performance.

The company has also been exploring quantum computing, with early versions of its quantum cloud services already available to the public. While the applications are still limited, IBM’s long-term vision positions it at the frontier of both classical and quantum computing.

Despite the recent drop in share prices, IBM still have strong dividend yields. IBM has been paying dividends to investors since 1916 and is currently on a 24-year streak of increasing dividends. So even if IBM’s growth has slowed in recent years, it is still a solid choice of dividend stock.

2. Realty Income

Yield: 3.6%

Considering that Realty Income often calls itself “The Monthly Dividend Company,” it’s a no-brainer that it got a spot on our list.

Usually, real estate companies have high dividends but can be very susceptible to volatile changes in the market. Realty Income is one of those real estate investment trusts (REIT) that break this mold and give reliable dividends without much risk.

Since the company’s IPO in 1994, Realty Income has managed to show a 4.5% annual dividend increase for 88 consecutive quarters. Even better, the company pays out dividends per month rather than per quarter like most companies.

The amazing feat is that Realty Income has achieved such a stable dividend growth with a relatively bland real estate portfolio. The average Realty Income property is a Walgreens or a 7-Eleven; not exactly what you would call flashy investments.

Of course, this relative blandness is how Realty Income achieved such stable growth. The trick is that Realty Income invests in retail properties that are relatively immune from e-commerce. For example, most of their properties are drug stores and dollar stores; stores that can get people things they need much faster than e-commerce stores.

It might not be the highest dividend producing stock out there but Realty Income is probably the absolute best REIT dividend stock to invest in.

3. United Parcel Service (UPS)

Yield: 4.0%

United Parcel Service has been delivering more than just packages—it’s been delivering consistent dividends for over two decades. As one of the largest logistics and shipping companies in the world, UPS plays a critical role in global commerce, with a reach that spans more than 200 countries and territories.

UPS has steadily grown its dividend payouts thanks to a resilient business model, strong cash flows, and a reputation for operational efficiency. Even during challenging macroeconomic conditions, the company has remained committed to rewarding shareholders.

Its yield currently sits around 4%, and UPS has shown an ability to increase its dividend annually, making it a strong candidate for long-term income investors. With the ongoing growth of e-commerce and supply chain modernization, UPS stands to benefit from rising demand while continuing to provide dependable dividend returns.

4. Verizon Communications

Yield: 4.2%

Communications technology giant Verizon currently owns and operates the world’s largest 4G network and plans to make 5G standard in the States this year.

It is believed that this high-quality 5G network will stimulate revenue growth, something that Verizon has been falling behind in recently. Verizon only showed 0.6% revenue growth and 2.5% profit growth in 2019, and predictions for 2020 hover at about the same levels. Verizon itself says that the new 5G network is not expected to impact revenue growth until 2021.

Still, Verizon’s position remains strong. In mid-2025, the U.S. FAA confirmed it was not considering replacing its existing contracts with Verizon or L3Harris with SpaceX’s Starlink, reinforcing Verizon’s long-standing institutional reliability.

The upshot is that since cell service is practically a utility now, Verizon makes a lot of money that they can funnel into growing dividend payouts. Stable revenue equals stable dividends for shareholders. Over the past 5 years, Verizon has shown a consistent 2.70% dividend growth rate each year.

The one thing that could hurt Verizon’s dividend yield is if other competitors quickly ramp up their cellular service quality. However, several experts believe Verizon will still have the upper hand in the coming years due to its early start on 5G networks.

5. Pfizer (PFE)

Yield: 5.5%

Pharmaceutical companies, like utilities, tend to offer stable dividend opportunities—especially when backed by decades of innovation, government contracts, and essential healthcare products. Pfizer fits that mold, having paid dividends consistently for over 30 years.

Best known for its role in global vaccine development, Pfizer has maintained a strong financial position with a diverse portfolio of treatments and therapies across cardiovascular, oncology, and infectious diseases. In 2025, a former Pfizer doctor testified before Congress, affirming that the company did not delay the release of COVID-19 vaccine trial data—a move that reaffirmed public confidence in Pfizer’s scientific transparency and regulatory compliance.

Pfizer’s current yield sits around 5.5%, among the highest in its sector. While the company is not in a rapid growth phase, its post-COVID restructuring and streamlined pipeline have positioned it well for long-term income stability. For dividend-focused investors seeking exposure to healthcare, Pfizer remains a dependable, high-yield choice.

6. Target (TGT)

Yield: 3.4%

Retail may not be the first sector that comes to mind for dividend stability, but Target has proven to be one of the most reliable income-generating stocks in the space. As one of the largest big-box retailers in the United States, Target has been paying uninterrupted dividends since the 1960s and has increased its dividend annually for over 50 years—qualifying it as a Dividend King.

The company recently announced a major retail expansion, with new stores planned across six states—demonstrating confidence in its long-term growth outlook. Combined with disciplined inventory management, a loyal customer base, and a strong omnichannel strategy, this physical growth push reinforces Target’s ability to generate consistent revenue across diverse markets.

It has also shown resilience in navigating supply chain disruptions, inflationary pressures, and shifting consumer trends. Its ability to adapt while maintaining profitability helps support steady cash flow and shareholder returns.

Currently yielding around 3.4%, Target continues to deliver dividend growth while keeping its dividend payout ratio sustainable. For investors looking for consistent income from a consumer-driven company with room for long-term appreciation, Target offers a compelling mix of stability and value.

7. Ventas

Yield: 5.6%

The aging of the population means that in the near future there will be an explosion in demand for healthcare-related services such as doctors and specialized living facilities. Companies poised to take advantage of this specialized real estate boom will be well rewarded.

Ventas is a healthcare-focused real estate investment trust that boasts an impressive 5.6% dividend yield, fairly high compared to some other REITs. The company recently announced its second quarter 2025 earnings release date and upcoming conference call, a sign of its continued commitment to transparency and investor engagement.

Since construction in the senior living accommodation industry is still low and is expected to increase rapidly in the coming years, now is a good time to invest in Ventas stock. As the number of senior living spaces is expected to increase, that means healthcare-focused real estate investment companies will have a substantial cash flow to pay dividends from.

It also helps that Ventas is one of the most diversified healthcare REITs around and have properties in offices, research facilities, living spaces, and hospital/health care facilities. Some experts think that dividend growth might shrink by a bit as Ventas goes through a rough patch, but it is expected to make a recovery in the following year.

This current rough patch is caused by a glut of senior living properties which has driven prices on living spaces down. Most experts agree that this temporary mismatch between supply and demand will correct itself soon with the eventual aging of baby boomers.

8. Chevron (CVX)

Yield: 4.2%

As one of the world’s largest integrated oil and gas companies, Chevron offers both a strong dividend yield and long-term exposure to the energy sector. While renewable energy gets a lot of the spotlight, global demand for oil and gas remains robust—and Chevron is positioned to benefit.

Chevron has outperformed many of its peers in recent years, supported by disciplined capital management, solid cash flow, and share buybacks. The company has increased its dividend for over 35 consecutive years and currently offers a yield of about 4.2%, well above the average for S&P 500 companies.

Chevron continues to invest in traditional energy infrastructure while also allocating capital toward low-carbon ventures, such as hydrogen and carbon capture projects. The energy giant expects strong earnings performance through 2025, with analysts projecting healthy dividend coverage and steady growth.

Although its stock price may fluctuate with commodity cycles, Chevron’s reliable income and diversified strategy make it an attractive choice for dividend-focused investors seeking higher yields with long-term potential.

9. Prudential Financial

Yield: 4.3%

Prudential Financial is an insurance company specializing in life insurance, annuities, and retirement-related products. The company manages over $1 trillion in assets and operates across four continents.

In a major move in 2025, Prudential’s asset management arm, PGIM, announced plans to merge several units into a unified $1 trillion global credit platform, aiming to streamline operations and expand its footprint in the fixed-income market. This strategic consolidation is expected to enhance performance, improve efficiency, and attract large institutional clients—potentially reinforcing Prudential’s already solid dividend base.

Earlier growth initiatives include the acquisition of Assurance IQ, an insurance planning tech firm that allows individuals to customize life, health, and auto insurance plans. This move into direct-to-consumer channels signals continued expansion for the company.

Although Prudential’s share price may face short-term stagnation due to macroeconomic pressure and interest rate volatility, the company’s platform remains high quality and future-focused. In fact, despite these headwinds, Prudential increased customer account value by 11%, reaching a record $218 billion, and recorded its strongest-ever life insurance sales.

The company has also channeled over $1.2 billion annually into dividend payouts, with a 10-year streak of increases and an average 11.5% growth rate over the past five years. At $1 per quarter, the average annual dividend stands at $4 per share.

Between its forward-looking credit consolidation strategy and demographic tailwinds from an aging population, Prudential is well-positioned to remain a steady income generator in the financial sector.

10. AT&T

Yield: 6.2%

Given that cell phone communications are essentially a utility now, telecommunications companies have a large pool of cash revenue for paying out dividends. This makes telecommunications companies a great option for stable dividend stock.

AT&T has a total market value of $234.5 billion and a current dividend yield of 6.2%, one of the highest out of all communications companies. AT%T has also managed to continually increase its dividend payout for 34 consecutive years.

AT&T has also recently undergone some dramatic structural changes. The company merged with Time Warner and acquired DirecTV and now has more than 170 direct-to-consumer relationships across phone, TV, and internet.

The real benefit of AT&T is that due to its wide customer base, they have a massive cash flow so even if the share price drops in the coming years, it is unlikely that this would significantly affect dividend payouts. These features all make AT&T a particularly attractive dividend stock. AT&T fairs slightly better than Verizon, another on our list, in terms of dividend amounts and has a better one-year target estimate.

Some experts see the recent acquisition of Time Warner as negative in terms of dividends. AT&T’s recent acquisition shows the company is slowly moving away from being a utility provider, which is what generates the most consistent dividend payments. However, the presence of several marquee properties in the deal such as HBO and Tuner could give the company more direct-to-consumer relationships.

AT&T is also expected to drop a new streaming service soon following on the heels of Disney+. If the streaming service gets a sizable subscriber base that is another source of cash flow for the company that can be put into dividend payments.

11. Allstate Corporation (ALL)

Yield: 2%

Insurance companies like Allstate are often overlooked in dividend-focused portfolios, but they offer a unique kind of stability—especially when rate volatility, inflation risk, or trade tensions disrupt other sectors. Allstate has been paying dividends since 1939 and increasing them annually for over a decade.

In July 2025, Barron’s Roundtable named Allstate one of the top financial income stocks, highlighting its diversified revenue streams and consistent cash flow. Unlike companies that rely on borrowing or cyclical income, Allstate draws its earnings from a massive customer base and prudent underwriting, helping it maintain a healthy dividend even in challenging markets.

While its current yield of about 2% may appear modest, the company maintains a low payout ratio and has grown its dividend by an average of nearly 10% per year over the past five years. With a disciplined capital strategy and significant reserves, Allstate is well-positioned to weather economic cycles—and for investors seeking reliable income with lower volatility, it’s a strong long-term contender.

Conclusion 🏁

When it comes to long-financial security, dividends are the way to go. Investing in good dividend stocks can grant you a reliable source of passive income and give you a way to pursue other interests.

The key thing to remember is that dividends are a long term plan. You should not rely on dividend payments to get rich in the short term.

Reaping the maximum benefit from dividends takes a long time and you will inevitably have to ride out negative market conditions. That’s ok; it’s to be expected. Dividend stock rewards those who are patient and can wait out the bad times.

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