Dividend stocks can help income investors sleep at night as the companies often have durable competitive advantages that enable them to increase their dividends often, buy back shares, or both. Two stocks that definitely have competitive advantages and offer a stable dividend are Walmart (WMT 0.46%) and Polaris Industries (PII 0.99%). Sadly, many investors overlook these stocks simply because they screen for dividend yields exceeding 3% -- but these two companies are too good to pass up.

E-commerce or bust

Walmart grew its brick-and-mortar business over decades into the juggernaut retailer it is now, but its recent moves have made one thing very clear: It's e-commerce or bust. Walmart announced on May 9, 2018, that it would acquire a 77% stake in Flipkart, an Indian e-commerce company, for a staggering $16 billion.

It was an expensive move, especially considering Walmart reduced its earnings-per-share guidance for 2018 by $0.25 to $0.30, and it could reduce the retailer's 2019 earnings by roughly $0.60 per share. While it's a short-term speed bump for Walmart's earnings, Morgan Stanley notes that as recently as 2016, only 14% of India's internet users purchased products online, and that's expected to jump to 50% as soon as 2026. In addition, India is an attractive geographic region that boasts a rising middle class of consumers.

Man taking two Walmart boxes into a house.

Image source: Walmart.

This move will position Walmart to leverage Flipkart's regional insights and consumer preferences, while also using the Indian company's talent and technology to further the development of its Jet.com platform. This massive announcement comes at the same time Walmart announced it would undergo a major restructuring in its U.K. market. Sainsbury, the U.K.'s second-largest supermarket chain, will gobble up Walmart's Asda chain, which will create a new industry leader in terms of market share. Sainsbury will pay Walmart $10 billion for the chain in a cash and stock deal, with Walmart owning a remaining 42% in the company -- lessening its focus on the U.K. in favor of global e-commerce.

Walmart built its current retail dynasty through its web of brick-and-mortar stores, but it's attempting a major pivot and wants to build the next part of its dynasty through e-commerce. India looks to play a major part in that strategy. Investors willing to hold over the long term will also benefit from the retailer's impressive dividend history. While its 2.4% dividend yield falls short of many investors' lists, it recently announced a dividend increase for a staggering 45th consecutive year.

Riding innovation

Polaris Industries is one of the longest operating companies and most well-known brands in powersports. It's that brand power that's helped the company maintain its business despite roughly two years filled with recalls. Driving the company's powerful brand image is its track record of innovative products -- and there's good news for investors on that front. Management expects research and development spending to rise 10% during 2018, while it also cuts another $200 million out of expenses to help protect margins. It's that type of investment in R&D that will help the company innovate and differentiate its products in an attempt to take more market share.

Another great development for investors has been the recent success of its Indian Motorcycle brand, which has been stealing market share from Harley Davidson. Management projects revenues to jump into the high single-digit percentages during 2018. Look for more success as Indian products are attracting a younger demographic that has no loyalty or brand recognition with Harley Davidson -- and the latter has struggled to find a strategy to win over younger consumers.

PII Chart

PII data by YCharts.

Despite the speed bumps over the past couple of years, Polaris' dividend has been consistently returning value to shareholders. Currently, its dividend yield is 2%, which leads many investors to skip over the powersports manufacturer, but this is a company with an incredible brand and a proven track record for innovative products -- and it's on the mend after expensive recalls. If it can avoid future recall issues, continue to take market share, and increase its dividend, this is a dividend stock you should stop overlooking.

It's easy for investors to skip over dividends with yields lower than 3%, but these two companies have competitive advantages and have consistently returned value to shareholders through increasing dividends -- stop overlooking them!