3 Dividend Stock Winners

By Steve Symington, Dan Caplinger, and Brian Stoffel Markets Fool.com

Buying and holding solid dividend stocks is one of the most effective ways for investors to predictably generate wealth and beat the market over the long term. But it's not always easy to separate the best dividend stocks from the those that are destined to underperform the rest.

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To help you get started, we asked three top Motley Fool contributors to pick one dividend stock winner they believe investors would be wise to purchase. Read on to learn why they chose Nike (NYSE: NKE),Enviva Partners LP(NYSE: EVA), and Altria Group (NYSE: MO).

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A perfect pause for long-term investors

Steve Symington (Nike): Nike stock may have plunged 7% after its latest quarterly report a few weeks ago, but I still think the athletic apparel and footwear giant is a compelling portfolio candidate for patient, long-term investors.

For perspective, Nike's revenue last quarter climbed a modest 5% year over year, to $8.432 billion, while net income per share climbed nearly 24%, to $0.68. Those results were mixed relative to Wall Street's expectations, which called for earnings of just $0.53 per share on higher revenue of $8.47 billion. Nike's shortfall on the top line was primarily driven by a well-documented slowdown and highly promotional environment in North America.

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But Nike also delivered double-digit growth in Western Europe, Greater China, and its emerging markets segment. And Nike CEO Mark Parker views the slowdown as a chance to solidify his company's industry leadership.

"While we are mindful of these near-term dynamics, we remain focused on the long term," Parker explained. "The current backdrop represents a tremendous opportunity for Nike, because the brands that win are going to be the ones that have been out front with digital and leading with service."

In the meantime, investors willing to buy and hold can benefit from Nike's ambitious capital-returns initiatives. The company not only pays a healthy dividend that yields 1.3% annually, but also has around $8.4 billion remaining under its four-year, $12 billion repurchase program that was initially approved in late 2015.

An uber-high dividend yield that doesn't seem too good to be true

Brian Stoffel(Enviva Partners LP): One of the most intriguing dividend stocks that I'm currently following is Enviva Partners LP. The company processes wood pellets -- which seems like a pretty innocuous business -- until you realize that they have become one of the leading inputs for energy companies in Northern European countries that are trying to wean themselves off of coal.

Enviva -- with operations primarily in the American Southeast -- was a first mover in the industry. This helped it to acquire production plants and buy deep-water docks on the East Coast that have continually helped cut costs and move the profit-margin needle in shareholders' favor.

Management believes that it can pay out $2.35 in dividends in 2017, giving it a current yield of 8.3%. That dividend is protected on a number of fronts: The company has long-term offtake contracts with power companies that help guarantee revenue. The average weighted length of those contracts is just under a decade.

While management hopes to have a coverage ratio of 1.15 on its dividend -- equivalent to a free-cash-flow payout ratio of 87% -- last year's dividend featured a coverage ratio of 1.28. In other words, only 78% of the company's distributable cash flow was used to pay its outsized dividend.

That type of operating leverage and safety via long-term contracts helps explain why the stock has been a real winner since October 2015, returning over 160% to shareholders.

This stock is lighting up

Dan Caplinger (Altria Group): It's hard to find a dividend stock that has outperformed Altria Group over the long run. For more than a half-century, the tobacco giant has found ways to deliver above-average dividends, while also giving investors impressive total-return performance. The stock remains one of the best in terms of share-price appreciation over the decades, and recently, Altria has continued to post new highs.

Much of Altria's success has come from defying investor skepticism about its sustainability. For years, many believed that Altria would fall prey to destructive litigation that would make the entire cigarette business a thing of the past. Yet time and time again, Altria fought back plaintiffs and avoided the crushing blow that many had expected. Meanwhile, depressed share prices led to outsized dividend yields that rewarded those who stayed the course.

Now, many of Altria's legal threats are behind it, yet the company still faces opposition from high taxes, adverse consumer groups, and restrictive regulation. Yet with strong pricing power from its Marlboro brand, Altria has been able to keep revenue and profits growing despite falling volume. With a yield that still puts the overall market to shame, Altria remains a valuable dividend stock that also has the potential to see further growth in the future.

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Brian Stoffel has no position in any stocks mentioned. Dan Caplinger has no position in any stocks mentioned. Steve Symington has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Nike. The Motley Fool has a disclosure policy.