Thousands of stocks pay dividends. Some of those dividends aren't all that attractive, though. And sometimes the dividend looks great, but the stock doesn't. It could be there's a fundamental weakness for the business or simply that the stock's valuation is too pricey.

But there are a select group of stocks with terrific dividends that are worthy of serious consideration by investors. I think AbbVie (NYSE:ABBV), Iron Mountain (NYSE:IRM), and Medical Properties Trust (NYSE:MPW) definitely qualify. Here's why these are three dividend stocks I'd buy right now. 

Man holding hand up behind the word dividends

Image source: Getty Images.


I've been bullish about AbbVie for quite a while. The biotech has a lot going for it, with its dividend, currently yielding north of 3%, being high on the list. The company has raised its dividend for 45 consecutive years, including the period when it was part of Abbott Labs. And since being spun off from Abbott in 2013, AbbVie's dividend has increased a whopping 77%.  

AbbVie's business has never been better. The company recently reported solid third-quarter results, with its top drugs Humira and Imbruvica posting impressive year-over-year sales growth. It just launched a new hepatitis C virus drug, Mavyret, that has significant potential. AbbVie also claims a deep pipeline and expects to have more than 20 new drug or indication approvals by 2020. 

Even with its attractive dividend, solid business fundamentals, and tremendous growth prospects, AbbVie stock is still relatively inexpensive. Shares currently trade at less than 15 times expected earnings. With earnings projected to grow by 14% annually over the next few years, the stock should have plenty of room to run.

Iron Mountain

My colleague Matthew Frankel wrote in August that Iron Mountain is a "dividend investor's dream." I think he's right. The records and data storage company's dividend yield currently stands at 5.8%. As a real estate investment trust (REIT), Iron Mountain must distribute at least 90% of its taxable income to shareholders in the form of dividends. That means the dividends will keep coming as long as Iron Mountain remains profitable -- which shouldn't be a problem.

Iron Mountain has over 230,000 customers, including 95% of the Fortune 1,000. These customers typically sign three-year leases, but the vast majority of them renew those leases and don't leave. It's a lot easier to keep doing business with Iron Mountain, a stable company that's been around almost 70 years, than to go through the hassle of moving items to another storage provider. 

At first glance, though, Iron Mountain stock might appear to be pricey. Its shares trade at 29 times expected earnings. But the company should be on track to grow earnings by more than 30% per year, thanks in part to rising demand for data storage. These growth prospects makes Iron Mountain's valuation look much more reasonable.

Medical Properties Trust

Another REIT that I really like is Medical Properties Trust. The company's name pretty much gives away what it does -- owning medical properties, primarily hospitals. Medical Properties Trust's dividend yields a little over 7%.

The company focuses on long-term leases to healthcare providers, usually for terms of 15 years or more. This gives Medical Properties Trust a reliable stream of revenue coming in the door. Thanks to acquisitions in recent years, it's now the second-largest owner of hospital beds in the U.S. but also owns properties in Europe. Aging demographic trends should drive demand for healthcare services, which should in turn give Medical Properties Trust long-term stability.

Medical Properties Trust stock trades at less than 13 times expected earnings, a valuation that's more attractive than several of its peers. Wall Street analysts think the company can grow earnings by close to 8% annually over the next few years. That's not a growth rate that would cause anyone to do cartwheels, but this respectable growth combined with a really high yield could at least make me do a few somersaults.

Top pick?

Selecting the best of these three dividend stocks is tough. I already own AbbVie and plan to hold on to it for a long time to come. But Iron Mountain deserves the nod as the top pick.

It's hard to argue against Iron Mountain's business model. The company has low maintenance and operating costs. It has a moat. And with increasingly more data and records being generated, Iron Mountain has great growth prospects.

Those growth prospects give it an advantage over Medical Properties Trust, in my view. Iron Mountain's exceptional yield gives it an edge over AbbVie. I'd buy all three of these dividend stocks right now, but if I could only choose one, it would be Iron Mountain.