Best dividend stocks

If you’re an investor looking to build wealth through a regular income stream, dividends can be your best friend. But with so many options available, how do you find the best dividend stocks and what should be wary of?

There’s no definitive way to display the “best” dividend stocks, so we’re going to cover all the top dividend-paying stocks across a few different metrics and categories to help you find the right company.

Best dividend stocks for 2023

• A2A SpA (A2A)
• Adecco (ADEN)
• Lenovo (00992)
• New World Development (00017)
• Janus Henderson (JHG)
• Great-West Lifeco (GWO)
• Sumitomo Forestry (1911)
• Legal & General (LGEN)
• Bouygues (EN)
• Toyo Seikan Group Holdings (5901)

• Best dividend stocks current share price

How we found the best dividend stocks

In order to build our list of the top 10 dividend stocks for 2023, we’re exploring stocks from all over the globe. To create our list, we’ve used the top 10 constituents (by yield-driven weight) in the S&P Global Dividend Aristocrats index.

Top 10 stocks by dividend yield

To make it onto the S&P Global Dividend Aristocrats index, each stock must have followed a policy of increasing (or stable) dividends for at least 10 consecutive years and be a high-yielding company within the S&P Global Broad Market Index (BMI). You can find more details about each stock below.

Best dividend-paying stocks by category

Because searching for the top dividend stocks is such a broad question, we’ve helped you narrow down your research by breaking down the best dividend-paying shares by category.

• Best FTSE 100 dividend stocks

  Taken from the top constituents in the S&P UK Dividend Aristocrats Index.
  

  Dividend stock	Sector	Current dividend yield	5-year performance
  British American Tobacco (BATS)	Consumer defensive	8.8%	-29.49%
  IG Group Holdings (IGG)	Financials	6.73%	-25.66%
  Legal & General (LGEN)	Financials	9.03%	-14.39
  Intermediate Capital Group (ICP)	Financials	5.91%	25.02%
  Primary Health Properties (PHP)	Real estate	7.21%	-18.51
  National Grid (NG)	Utilities	5.64%	21.41%
  Schroders (SDR)	Financials	5.27%	-22.01%
  Drax Group (DRX)	Utilities	3.9%	46.4%
  Unilever (ULVR)	Consumer defensive	3.7%	-7.53%

• Best S&P 500 dividend stocks

  Taken from the top constituents in the S&P Dividend Aristocrats index.
  

  Dividend stock	Sector	Years of dividend growth	Current dividend yield	5-year performance
  Procter & Gamble (PG)	Consumer staples	66	2.45%	85.39%
  Genuine Parts (GPC)	Consumer discretionary	66	2.48%	53%
  Dover (DOV)	Industrials	66	1.08%	67.07
  3M (MMM)	Industrials	64	5.76%	-50.64%
  Cincinnati Financial	Financials	62	2.88&	34.9%
  Coca-Cola (KO)	Consumer staples	60	3.04%	35.88%
  Colgate-Palmolive (CL)	Consumer staples	60	2.6%	10.83%
  Emerson Electric (EMR)	Industrials	60	2.17%	28.85%
  Johnson & Johnson (JNJ)	Healthcare	60	2.86%	21.09%
  Hormel Foods	Consumer staples	56	2.86%	2.27%

• Best growth dividend stocks

  These dividend growth stocks are taken from the top 10 large-cap US equities in the Russell 1000 Dividend Growth Index.
  
  To make it onto this index, the companies must have successfully increased their dividend payments over a 10-year period. The stocks are also screened for liquidity and dividend status.
  

  Dividend stock	Sector	Years of dividend growth	Dividend yield	5-year performance
  Dominos Pizza (DPZ)	Consumer discretionary	10	2.61%	0.32%
  RPM (RPM)	Industrials	49	1.68%	47.72%
  Thor Industries (THO)	Consumer discretionary	14	1.78%	6.02%
  Westlake (WLK)	Basic Materials	18	8.32%	41.9%
  Intuit (INTU)	Technology	11	0.6%	137.35%
  Lennox International (LII)	Industrials	13	1.21%	63.01%
  US Bancorp (USB)	Financials	12	5.33%	-33.43%
  Lithia Motors (LAD)	Consumer discretionary	11	0.66%	251.49%
  Lincoln National (LNC)	Financials	12	7.08%	-61.25%
  Digital Realty Trust (DLR)	Real Estate	18	3.84%	2.31%

Platforms where you can invest in the best dividend stocks

These trading apps allow you to invest in companies within teach index directly or to invest in funds/ETFs (exchange-traded funds).

Best for

ETFs

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0% commission

Best for

Beginners

Best for

Index funds

Best investment trust dividend stocks

Often overlooked, investment trusts can be a reliable way to earn dividend income. This is because their structure means up to 15% of profits can be withheld and then paid out another time for smoother dividends (something individual dividend stocks don’t do).

With an investment trust, you also get a diversified portfolio of holdings with a single investment and expert management. Below are the top dividend investment trusts from the AIC “dividend heroes” list, increasing dividends for over 20 years in a row.

Bottom Line

Finding the best dividend stocks for your portfolio isn’t an easy task. When you start researching dividend-paying stocks that suit your style of investing, you’ll notice it’s pretty hard to narrow down your options.

Ideally, look for a strong past track record but also check the current financial health of a company or investment to ensure it can keep paying dividends. Regular income through dividend stocks is an excellent way to provide your portfolio with a level of stability, and help with compound growth. Keep in mind that dividends aren’t guaranteed and be wary of becoming greedy and chasing high dividend yields.

Frequently asked questions

• Which is the highest dividend paying stock?

  This can change on a frequent basis, but as of August 2023, British American Tobacco (BATS) paid the highest UK dividend in the FTSE 100 of 240p in 2023.

• Are dividend stocks worth it?

  They can be, but they won’t suit every type of investor. In theory, dividends can provide a portfolio with more stability, but investors are less likely to see as much growth. Keep in mind there are always exceptions and there’s no hard and fast rule with dividend stocks, it comes down to the individual investment.

• What is a good dividend yield?

  There’s no strict answer but very high dividend yields can be a warning sign of trouble. Typically, the sweet spot for dividend yields can be in the region of 2% – 5%, but this is just a rule of thumb and depends on the rest of the business.

• When are dividends paid?

  This depends on the company in question. Some dividend stocks pay out income once every quarter (so 4 times a year). However, some may only pay out once or twice a year.