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For decades, income-minded investors have searched for the best dividend stocks out there. In my experience, the main criteria to look for when betting on great dividend stocks are a history of strong fundamentals, increasing dividend distributions over time, great entry points (technicals), and a history of bullish trading activity in the shares.
The hallmark way I go about finding the best dividend stocks – the outliers – is by looking for quiet unusual trading activity. Oftentimes, that can be institutional activity … i.e., big money. I’ll go over what that unusual trading activity looks like in a bit. But the five stocks I see as long-term dividend growth candidates are Garmin Ltd. (GRMN), Starbucks Corporation (SBUX), Target Corporation (TGT), AbbVie Inc. (ABBV), and BlackRock, Inc. (BLK).
Over decades, I’ve learned that the true tell on great stocks is that big money consistently finds its way into the best companies out there – especially dividend-paying stocks. Some of the biggest returns ever have come from holding stocks for many years and reinvesting dividends. I am a very long-term minded person and see dividend investing as a pillar in personal finance and financial independence.
I take a well-rounded approach and rank each stock by technicals (long-term), fundamentals (long-term), and if there is big money supporting the stock. I want the odds on my side when looking for the highest-quality dividend stocks … and I own many of them. Many times, when a stock is under pressure, it is worthy of inspection. As stock prices head lower, the dividend yield increases. That is important for dividend seekers.
Up first is Garmin Ltd. (GRMN), which is a leading GPS company. Garmin has recently been growing and raising its dividend. When deciding on a strong candidate for long-term dividend growth, I like to look for stocks showing near-term positive performance:
- One-month performance: +18.01%
- Historical big money buy signals
Just to show you graphically how I like to look at stocks, below are the big money signals Garmin has made over the past year. Green bars are showing that Garmin stock was likely being bought by an institution, according to MAPsignals, while red bars indicate selling. Recently, there has been a lot of green.
On top of technicals, when deciding on the best dividend stock, you should look under the hood to see if the fundamental picture supports a long-term investment. As you can see, Garmin has a strong dividend history:
- Three-year dividend growth rate: +3.2%
- Current dividend per share: $0.61
- Forward yield: 2.1%
- Three-year earnings growth rate: +24.08%
Next up is Starbucks Corporation (SBUX), which is a leading coffee chain. The company has a long dividend history, and Starbucks shares have been in an uptrend recently. When deciding on a strong candidate for long-term dividend growth, it’s a good idea to look for many years of dividend increases. Now let’s look at recent performance:
- One-month performance: +9.57%
- Recent big money signals
Below are the big money signals that Starbucks stock has made over the past year. It is clear that the stock has seen green recently.
On top of technicals, when deciding on the best dividend stock, you should look under the hood to see if the fundamental picture supports a long-term investment. As you can see, Starbucks has a nice dividend history. However, the coffee giant’s earnings growth has been affected due to the COVID-19 pandemic:
- Three-year dividend growth rate: +17.9%
- Current dividend per share: $0.45
- Forward yield: 1.83%
- Three-year earnings growth rate: -6.23%
Next, I’m looking at Target Corporation (TGT), which is a leading department store chain. Target has a solid dividend history. When deciding on a strong candidate for long-term dividend growth, recent performance in the shares is important:
- One-month performance: +14.99%
- Recent big money signals
Below are the big money signals that Target stock has made over the past year. It is clear that the stock has been in a nice uptrend.
On top of technicals, when deciding on the best dividend stock, you should look under the hood to see if the fundamental picture supports a long-term investment. As you can see, Target has a strong dividend history:
- Three-year dividend growth rate: +3.9%
- Current dividend per share: $0.68
- Forward yield: 1.51%
- Three-year earnings growth rate: +10.77%
Next, I’m looking at AbbVie Inc. (ABBV), which is a leading healthcare company. The shares have been on a tear recently. When deciding on a strong candidate for long-term dividend growth, big performance is not a bad thing:
- One-month performance: +25.98%
- Recent big money signals
Below are the big money signals that AbbVie has made over the past year.
On top of technicals, when deciding on the best dividend stock, you should look under the hood to see if the fundamental picture supports a long-term investment. As you can see, AbbVie has a strong dividend history:
- Three-year dividend growth rate: +23.4%
- Current dividend per share: $1.30
- Forward yield: 4.99%
- Three-year earnings growth rate: +15.28%
Lastly, I’m looking at BlackRock, Inc. (BLK), which is a leading asset management company. When deciding on a strong candidate for long-term dividend growth, I like to look for recent leaders:
- One-month performance: +14.5%
- Historical big money signals
Below are the big money signals that BlackRock has made over the past year.
On top of technicals, when deciding on the best dividend stock, you should look under the hood to see if the fundamental picture supports a long-term investment. As you can see, BlackRock has been a steady grower:
- Three-year dividend growth rate: +13%
- Current dividend per share: $3.63
- Forward yield: 2.06%
- Three-year earnings growth rate: +17.78%
The Bottom Line
Shares of Garmin, Starbucks, Target, AbbVie, and BlackRock represent a potential buying opportunity for the long-term dividend investor. Given the strong historical dividend growth and big money signals in the shares, these stocks could be worth a spot in a yield-oriented portfolio.
Disclosure: At the time of publication, the author holds long positions in Garmin, Starbucks, and AbbVie but no positions in Target and BlackRock.
