Investing in dividend stocks can be a strategic way to generate consistent returns and build wealth over time. Companies that regularly pay dividends not only offer potential for capital appreciation but also provide a reliable income stream, which can help offset losses during market downturns. Moreover, dividends enhance the rate of compound gains when reinvested, helping a portfolio grow faster.
We’ve curated a list of US-based dividend stocks, sorted by highest yield, and each with a Buy or better analyst rating.
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*Source: TradingView. Return and dividend data accurate as of February 26, 2025.
How we picked these stocks
We considered the following factors when setting up our screener to find the best dividends stocks:
Dividend yield: 2%–6%, to include stocks with yields worth the effort and reduce the risk of companies struggling to maintain payouts.
Payout ratio: 30%–60%, a balance between reinvesting too heavily and unsustainable dividends.
Continuous dividend growth: 5 years, to include companies consistently raising dividends.
Market capitalization: $2 billion and above, to avoid unreliable small-caps and stick with established companies.
Price-to-earnings ratio (P/E ratio): Under 20, to avoid overvalued stocks.
Debt-to-equity ratio (D/E ratio): Below 1, to include companies not drowning in debt and without risk of slashing dividends during downturns.
Dividend history: At least 10 years of consecutive dividend payouts, to highlight reliability.
How to buy the best dividend stocks in 5 easy steps
Sign up with online stock trading platform. Choose from our Top Picks or jump straight to the best stock trading apps of 2025. Then, provide your personal information and sign up.
Set up a funding method to pay for the transaction. Deposit funds into your account by linking your banking information.
Choose the stocks you want to buy. Search for the stock by name or ticker symbol.
Place your order. Buy the stock. It’s that simple.
What to look for when choosing dividend stocks
It’s important to consider how each stock will fit into your portfolio and investment goals. Investors should select high-quality companies and weigh the following factors when choosing the best dividend stocks:
Dividend yield. Dividend yield is a financial ratio that measures a stock’s annual dividend payment expressed as a percentage of the stock’s current price. For example, a stock that trades at $75 and pays a dividend of $3 each year has a dividend yield of 4%. The dividend yield moves inversely to the stock price, so generally speaking, if the dividend rate doesn’t change, the yield rises when the stock price falls and falls when the stock price rises. A high yield typically means more income per dollar invested. But a rise in yield may not be a good thing if the stock price is plummeting.
Dividend payout ratio. This tells you how much of a company’s income it’s paying out in dividends. A low payout ratio could mean a company is reinvesting most of its earnings into expanding operations, while high dividend payout ratios could represent a steady income stream. Too high a payout ratio could be unsustainable, though.
Dividend growth rate. Investors should look at how quickly the company has raised its dividend in the past. While it’s no guarantee, a history of strong dividend growth could mean future dividend growth is likely.
Pros and cons of investing in dividend stocks
Pros
Dividend stocks can provide regular income.
Reinvesting dividends enhances the rate of compound gains, helping a portfolio grow faster.
Dividend-paying stocks tend to be less volatile than non-dividend-paying stocks.
Cons
Dividend stocks typically exhibit slower growth compared to high-growth stocks.
High dividend yields can be misleading and can signal financial trouble, especially if the yield is inflated because of a declining share price.
Dividend payments are never guaranteed.
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Yes, finding the best dividend stocks can provide regular income and some stocks have been paying dividends for decades. But remember that dividend payments are never guaranteed and some dividend stocks see little share price growth.
How are dividend stocks taxed?
Dividends from stocks are taxed as either qualified or ordinary. Ordinary dividends are taxed as regular income, while qualified dividends that meet certain requirements are taxed at lower capital gain rates.(1)
Matt Miczulski is an investments editor and market analyst at Finder. With over 450 bylines, Matt dissects and reviews brokers and investing platforms to expose perks and pain points, explores investment products and concepts and covers market news, making investing more accessible and helping readers to make informed financial decisions.
Before joining Finder in 2021, Matt covered everything from finance news and banking to debt and travel for FinanceBuzz. His expertise and analysis on investing and other financial topics has been featured on Yahoo Finance, CBS, MSN, Best Company and Consolidated Credit, among others. Matt holds a BA in history from William Paterson University.
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