If you've read my work, you 'll know that I love how dividend stocks offer some of the safest income sources. Sure, they’re not as exciting as tech stocks that go to the moon and back faster than a shuttle launch, but there’s something to be said for steady, reliable income over long periods. It’s essentially the dream—letting your money work for you.
And I’m not alone in thinking this. Cem Inal, CIO of US Large Cap Value Equities for Alliance Bernstein, said, “Dividend-paying stocks are a critical part of long-term investment success.”
“Over the last decade, investors have enjoyed the high returns generated by a small set of mega-cap growth companies during times of very low interest rates and times of multiple expansion. Dividend-paying stocks, however, maintained their historical earnings growth and dividend growth”, Inal added.
And with the market holding its breath under the current Trump administration, now might be the best time to invest in dividend stocks. Inal agrees, stating, “We believe that investors will be better served in increasing their allocation to dividend-paying stocks which will increase the durability of their investment returns as we enter into a period of higher inflation, economic uncertainty, and significant changes in the world order.”
So, today, let’s look at dividend powerhouses that can provide reliable income and see you through the uncertainty ahead.
How I Came Up With The Following Stocks
To get my list, I used Barchart’s Stock Screener tool with the following filters:
- Market Cap: 10 billion and above. While not an exact science, bigger companies tend to be more stable, especially over the long term. That’s why I’m filtering for large and mega-cap stocks.
- 5-year Percentage Change: 50% and above. I used this filter to recognize dividend stocks that have so far emulated the roughly 10% annual returns of the S&P 500.
- Number of Analysts: 12 and above. This filter allows me to get companies that are well-covered on Wall Street. Having more data points to pull from makes me more confident of the overall sentiment around the stock. Speaking of which—
- Current Analyst Rating: 4.5 to 5 (Strong Buy). I’m filtering for only top-rated stocks with this criterion.
- Annual Dividend Yield: 2.5% or more. The commonly accepted “good” dividend yield starts at 2.5%, so let’s start there, too.
- Dividend Payout Ratio: 35% to 50%. And finally, the dividend payout ratio indicates how much the company spends out of its after-tax earnings to pay dividends. A healthy range of this criterion falls between 35% and 50%. This means the company can comfortably pay dividends without having to fund it using cash reserves or credit lines.
With those filters set, I ran the screen and got five good results.
I arranged the results from highest to lowest yields and highlighted the top three above. Now, let’s discuss each company, starting with the top one:
Permian Resources Corp (PR)
Permian Resources Corporation is an oil and natural gas company focused on exploration, development, and production in the Permian Basin in western Texas and southeastern New Mexico. It was formed in 2022 through the merger of Centennial Resource Development and Colgate Energy Partners, making it a major operator in the Delaware Basin.
Since its formation, Permian Resources has made an impression among dividend investors. The company pays 15 cents per share quarterly, translating to a 60-cent annually and a 3.85% yield. Meanwhile, it maintains a relatively low dividend payout ratio of 49.45%.
PR’s stock price has grown significantly over the past five years, returning 377.91% to shareholders. And if you’re afraid you’ve missed the ride up, don’t worry; analysts still rate it as a strong buy with a high target price of $23.
Royal Bank of Canada (RY)
As a native Canadian, I’ve long been acquainted with the Royal Bank of Canada, one of the country's largest and most reliable banks. The company offers banking, wealth management, insurance, and investment services through its international branch networks and online platforms in Canada, the US, and other countries.
RY’s stock price has grown 54.61% over the past 5 years, which is not bad considering it’s a mature company in a largely cyclical sector. Another thing to be excited about with the Royal Bank of Canada is its commitment to shareholder value. Not only has the company consecutively increased annual dividends since 2019, but it has also increased them quarterly.
Currently, the company pays CA$1.48 per share quarterly, or roughly US$1.03. This reflects an approximate US$4.12 annual dividend and a 3.37% yield while maintaining a 46.07% payout ratio. No wonder analysts rate it a strong buy.
Cenovus Energy Inc (CVE)
Cenovus Energy is another Canadian giant. They are an integrated oil and natural gas company headquartered in Calgary, Alberta. The company specializes in developing oil sands, conventional oil and gas, and refining operations in Canada and the United States.
CVE has a 72.33% 5-year return against the S&P 500’s 89.7% over the same period. However, the gap closes once we factor in the company’s dividend payments. Currently, Cenovus pays 18 cents per quarter or 72 cents CAD annually, or roughly 50 cents USD. Based on current prices, this translates to a decent 3.33% yield, while its dividend payout ratio sits at a safe 38.38%.
Meanwhile, analyst recommendations are all solid buys (11 strong buys and three moderate buys), with an average 4.79 score or a strong buy recommendation overall.
Final Thoughts
Investing in high-quality dividend stocks should be a part of everyone’s portfolio. These companies’ moderate returns and relatively high yields over long periods can lead to significant gains, especially over decade-long investment horizons. Of course, not everything is set in stone, so keep your eyes on the news and do your due diligence before jumping in.
