3 Top Dividend Stocks to Buy Now

By Markets Fool.com

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As the British saying goes, mighty oaks from little acorns grow, a maxim that also perfectly applies to dividend investing.

Though not flashy, buying and consistently reinvesting the proceeds from the world's best dividend companies has been a proven way for investors to generate market-beating returns. Here's a quick chart demonstrating why T. Rowe Price Group (NASDAQ: TROW), Qualcomm (NASDAQ: QCOM), and Abbott Labs (NYSE: ABT) are three of the best dividend stocks to buy right now:

Company Name

Dividend Yield

Consecutive Annual Dividend Increases

T. Rowe Price


29 years



13 years

Abbott Labs


43 years

Data source: Dividend.com.

Though similar in many regards, these dividend companies' investment theses differ in several respects. Let's delve deeper into why these are some of the best dividend stocks you can buy today.

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T. Rowe Price: One of the best dividend-paying asset managers

Though asset managers tend to be stigmatized as high-risk companies, mutual fund giant T. Rowe Price is the embodiment of prudence. Its staid management of its own finances has allowed the company to increase its dividends each year for nearly three decades, through multiple boom and bust cycles. In a testament to its risk aversion, T. Rowe Price actually carries zero debt on its balance sheet,giving the company unparalleled financial flexibility to continue growing its dividend payments well into the foreseeable future. Making T. Rowe Price all the more alluring, the company's 3.2% dividend yield standswell above the S&P 500's paltry 2.1% yield.

T. Rowe's suite of mutual funds seems poised to continue to attract assets, even as investors increasingly favor more passive investing solutions like exchange-traded funds (ETFs). The company succeeds by helping its clients succeed, a business proposition that seems fair and likely to endure. As just one example of its ability to do so, more than 85% of T. Rowe Price's mutual funds beat their 10-year Lipper Average, a common mutual-fund performance benchmark. What's more, the company's strong culture and commitment to its clients' success means T. Rowe Price should continue to thrive as a company and a dividend stock for years to come.

Qualcomm: A Dividend Aristocrat in the making

Whereas T. Rowe Price has already established itself as a Dividend Aristocrat, Qualcomm seems like a Dividend Aristocrat in the making. The semiconductor stalwart's winning two-pronged business model has allowed the company to double its quarterly dividends per share from $0.25 in 2013 to $0.50 today.

Interestingly, the majority of Qualcomm's revenues come from its mobile chips segment, Qualcomm CDMA Technologies;the division produced roughly 70% of the company's sales in each of the last three fiscal years. However, Qualcomm's intellectual licensing division, Qualcomm Technology Licensing (QTL), produced 74% of the San Diego-based chipmaker's operating profits last year. The company has stated a target goal for QTL revenue: to grow from $7.9 billion in 2015 to over $10 billion in 2020. Assuming QTL's EBIT margin (earnings before interest and taxes, divided by net revenue) stays in the ballpark of 70%, this alone implies 4% annual earnings before taxes (EBT) growth simply through passive licensing deals alone. As our world becomes increasingly connected, it's hard not to remain bullish on Qualcomm's ability to generate returns for its investors, especially via dividend growth.

Abbott Labs: One of healthcare's best dividend stocks

Perhaps more so than T. Rowe Price or Qualcomm, Abbott Labs marries historic dividend prowess with exposure to a long-term secular growth market. According to the World Health Organization, the number of people aged 65 or older will increase from 524 million in 2010 to almost 1.5 billion by 2050, a trend expected to trigger a rapid increase in global healthcare spending. Abbott Labs operates four different reporting segments -- nutrition, diagnostics, established pharmaceuticals, and medical devices -- that give the company diversified exposure to this long-term trend.

Of equal note, Abbott Labs' massive international presence positions the healthcare giant to capitalize on this opportunity at a truly global scale. In the first half of the year, 69% of Abbott Labs' sales came from international markets.

However, the global presence that represents a long-term benefit has actually proven something of a detriment in recent quarters. The resounding strength of the U.S. dollar these days has, on paper, eroded much of the impressive growth taking place at Abbott Labs. The first half of 2016 saw Abbott Labs' total GAAP (generally accepted accounting principles) sales increase just 1.5% over the year prior. Backing out the negative effects of the strong dollar, actual organic sales increased at a far more compelling 6.8% clip, a number that seems far more indicative of Abbott's true long-term growth potential. Case in point, the analyst community estimates Abbott Labs will grow its earnings per share at an annual average rate of 9.6% over the next five years.

With 43 years of consecutive dividend paymentsalready under its belt, Abbott Labs' commitment to growing its payouts is beyond dispute. Thankfully, its exposure to one of this generation's most obvious growth markets positions the healthcare conglomerate to continue to thrive as well. Like Qualcomm and T. Rowe Price, Abbott Labs certainly looks like one of the best dividend stocks you can buy right now.

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Andrew Tonner has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Qualcomm. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.