The Best Dividend Stocks for Long-Term Investors

By Dan Caplinger Markets Fool.com

Dividend stocks pay out cash to shareholders each year.The best dividend stocks for investors feature two traits: healthy income and future payout growth.Let's look at five of the best dividend stocks for long-term investors:AT&T(NYSE: T),ExxonMobil(NYSE: XOM),Johnson & Johnson(NYSE: JNJ),3M(NYSE: MMM), andProcter & Gamble(NYSE: PG).

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Image source: Getty Images.

Reach out and touch someone

AT&T has been a key player in the telecommunications industry for more than 130 years. With a history that dates back to the invention of the telephone, AT&T was a pioneer in local and long-distance landline communication, and it has taken full advantage of the move to wireless telecom networks to offer a wide range of services to millions of customers across the nation.

Image source: AT&T.

For dividend investors, AT&T's 4.8% dividend yield is among the best in the stock market. Yet along with that rich payout, shareholders have also gotten a streak of 33 straight years of dividend increases, with the most recent having come just earlier this month. As long as people still want to talk to each other, AT&T will have a role to play in connecting them.

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Drilling for dividends

ExxonMobil has also been a great source of dividend income for investors. Its 3.5% dividend yield doesn't quite match up to AT&T's, but its 34-year streak of consecutive annual payout boosts holds its own among top dividend stocks. ExxonMobil's dividend has doubled in less than a decade, and investors see a lot more room for growth in the future.


Image source: ExxonMobil.

What's particularly impressive about ExxonMobil's track record is that the company has had to overcome huge cyclical swings to maintain a stable dividend history. With oil prices having fallen from well above $100 per barrel to less than $30 in the span of just a few years, the energy giant has nevertheless succeeded in tapping new sources of revenue and becoming more efficient to maximize profits. That's a long-term recipe for outperformance that should result in further dividend growth in the future.

Your source of healthy income

Johnson & Johnson is a household name best known among most people for its Band-Aid and Tylenol consumer products. But J&J has also become a pharmaceutical powerhouse, and that part of the healthcare giant's business has produced the most growth lately. Add to that the innovative medical devices that the company produces, and it's easy to see why Johnson & Johnson is a popular choice among stock investors.

Image source: J&J.

J&J's dividends are also superior. A 2.8% yield might not seem to stand out in this rarefied crowd, but a 54-year track record of rising payouts puts it among the top ranks of the dividend elite. With an attractive 7% dividend increase just last year, Johnson & Johnson has worked hard to give income investors what they want to see, and all signs point to sufficient business growth to support ongoing dividend increases in the future.

Put this stock's name on a yellow sticky

Conglomerate 3M has an impressive track record on the dividend front as well. A 2.5% yield gives investors above-average income, and 3M has raised its payout every year for 58 straight years, putting it among the top-10 stocks in the entire market. The company gave investors an 8% boost to the quarterly dividend last year, and most expect another increase in the immediate future.

Image source: 3M.

3M also has a track record for innovation that has put it at the top of its industry, with diversified exposure to a number of different business segments including consumer products, healthcare, and technology. From orthodontic products and Post-It Notes to car-care items and passive fire protection, 3M has made its mark across the U.S. corporate spectrum and stands ready to keep delivering both growth and income to its shareholders.

The stock behind the products you know and love

Finally, Procter & Gamble has an impressive stable of nearly two dozen consumer brands that bring in at least $1 billion in revenue each and every year. From Pampers diapers and Crest toothpaste to Tide laundry detergent and Gillette razors, the consumer products giant serves not only the U.S. but more than 180 countries across the globe. Brand loyalty allows P&G to charge premium prices above much of its competition, yet consumers willingly pay for the perception of higher quality.


Image source: Procter & Gamble.

Procter & Gamble has a dividend streak that goes back 60 years, which is the longest of any stock in the Dow Jones Industrials, and it pays a dividend yield of about 3.2%. With the company paying out just two-thirds of its earnings in dividends, P&G has the capacity to reward shareholders even more richly in the years ahead. With a rising middle class of consumers around the world, Procter & Gamble has the products people will want for decades to come.

If you want both income and future growth potential, only the best dividend stocks will do. These five dividend stocks give you a diversified portfolio of solid picks that should meet your dividend needs.

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Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of ExxonMobil. The Motley Fool recommends Johnson and Johnson. The Motley Fool has a disclosure policy.