3 Dividend Stocks That I Love

By Todd CampbellFool.com

Source: Flickr userSimon & His Camera

A long-term commitment to investing has been proven to be a great way to grow wealth, and dividend-paying stocks have been shown to be a better long-term bet than their nondividend-paying peers, but it gets a bit more complicated when it comes down to picking the right stock to cozy up to for the long haul. Don't worry. Read on to learn which three big-cap, dividend-paying stocks I love and why.

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No. 1: CVS Health Few trends are likely to have as big an impact on our economy as aging baby boomers. 10,000 baby boomers are turning 65 daily, and as they enter their golden years, they're increasingly going to demand healthcare services -- and that's likely to mean bigger revenue and profit for CVS Health.

CVS Health is tapping into the aging-America trend via 7,800 neighborhood pharmacies, a $76 billion per year pharmacy benefit management business that manages prescription programs for health insurers and corporations, and through the opening of hundreds of Minute Clinic healthcare clinics in its stores that offer just-in-time healthcare services and that support growth in prescription and over-the-counter medicine sales.

Since CVS Health has an enviable national footprint that it can leverage to target seniors, it's hard for me to imagine that it won't be a solid bet for investors over the coming decade. If I'm right, then that could mean dividend payments grow beyond their current quarterly rate of $0.35 per share.

No. 2: Blackrock Fewer employers are offering pensions that can provide for a financially secure retirement, and that makes wealth management services incredibly important.

The combination of working Americans investing more to help shore up their retirement and retirees embracing wealth protection products means that more money is likely to flow into mutual funds, ETFs, and bond solutions such as those offered by Blackrock, an industry giant that manages more than $4.77 trillion (yes, trillion not billion) in equities and bonds, including over $1 trillion that is managed within their iShares ETF business.

Because Blackrock takes a small management fee on all of those assets, it's racking up sales and generating plenty of dividend-friendly profit, too. In the first quarter, Blackrock's revenue and earnings per share totaled $2.7 billion and $4.89, respectively.

With market-leading products and the potential for future growth, I wouldn't be surprised if years from now it's profitable enough to have significantly boosted its dividend payout from its current $2.18 per share level.

No. 3: UnitedHealth GroupAlthough many investors worried that insurers like UnitedHealth Group would struggle in the wake of health reform, the industry has instead thrived.

Millions of Americans have become newly insured through the Affordable Care Act's exchanges or thanks to Medicaid expansion, and that's led to surging premium revenue at UnitedHealth Group, the nation's biggest health insurer.

Thanks in part to its decision to increase its exposure to the healthcare insurance exchanges from four states in the first year of Obamacare to 23 states this time around, UnitedHealth Group reported revenue of $36 billion in the first quarter, up 13% from the previous year. UnitedHealth Group also reported that despite rising medical costs, its earnings per share were $1.46 in Q1, up 33% year over year.

Health reform should remain a major catalyst for revenue growth, but another equally important reason to like UnitedHealth Group for long-term portfolios is its exposure to Medicare.

UnitedHealth Group is one of the biggest insurers of Medicare part C plans, such as Medicare Advantage, and is a big player in Medicare prescription drug plans, too. That means that as more seniors turn 65, lose their insurance coverage through work, and embrace products like those offered by UnitedHealth Group, sales and earnings could climb. This would clearly be good news for UnitedHealth Group's dividend-hungry investors because the company continues to increase its dividend payout. Last quarter, the company returned $357 million to shareholders in the form of dividends, up 29% versus a year ago.

Tying it togetherWhen investors consider which dividend-paying companies they want to embrace for the long term, they should focus more on a company's long-term growth potential than on their current dividend yield. Sustainability is key here. All three of these companies have catalysts that are likely to support future dividend increases and management teams committed to capitalizing on long-term trends. For those reasons, CVS Health, Blackrock, and UnitedHealth Group are among my favorite dividend stocks to own.

The article 3 Dividend Stocks That I Love originally appeared on Fool.com.

Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may or may not have positions in the companies mentioned. The Motley Fool recommends CVS Health and UnitedHealth Group. 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.

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