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3 Top Dividend Stocks to Buy Now

By Dan Caplinger - Dec 2, 2018 at 11:35AM

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These companies offer the income you need at the price you want.

Dividend stocks are a great way for investors to meet two key objectives in their portfolios. Not only do they pay income you can use right now to cover living expenses, but they also have the potential to deliver share-price appreciation over time. Getting growth and income in a single investment is attractive -- and can be quite lucrative as well.

With recent stock market volatility, many dividend stocks have gotten bid up to expensive levels. But value-conscious investors can still find promising dividend-paying companies whose shares are reasonably priced. With this in mind, let's take a closer look at JPMorgan Chase (JPM 1.66%), Altria Group (MO 0.04%), and ExxonMobil (XOM 0.87%) and find out why many dividend investors are interested in their shares right now.

Bank on solid payouts

JPMorgan Chase is the biggest bank in the country, with more than $2.5 trillion in assets and a wide-ranging banking operation that spans retail checking and savings accounts, personal and commercial loans, credit cards, and business banking services. Despite being among the banking institutions to receive government funding during the financial crisis, JPMorgan emerged from the market meltdown as one of the strongest financial institutions in the U.S., and its quick return to health led to dramatic gains for shareholders.

Three people talking around a table in the lobby of a building with the Chase logo in it.

Image source: JPMorgan Chase.

One clear sign of JPMorgan's strength is the pace at which it's raised its dividend over the past decade. After having to cut its payout to $0.05 per share during the financial crisis, nine subsequent dividend increases have brought JPMorgan's quarterly dividend all the way to $0.80, including a hike of more than 40% earlier this year. A 3% yield is right in the sweet spot for JPMorgan, giving investors enough income to satisfy them while leaving it with enough capital reserves to keep regulators happy. With a strong economy, favorable conditions in the financial industry, and a vote of confidence from one of the most successful investors of all time, JPMorgan is primed to sustain its leadership position well into the future.

This dividend stock won't go up in smoke

Altria is one of the most successful stocks of all time, and dividends have always played a key role in its overall returns. The tobacco giant has often sported dividend yields of 5% to 10% in its history, especially during periods when its business model was under fundamental attack from litigation, regulation, consumer advocates, and other naysayers. Through it all, Altria has managed to overcome falling demand for cigarettes to keep revenue and earnings consistently moving higher. Along the way, Altria's dividend has gone up 52 times in the past 49 years, and its current yield of 6% puts it near the top 10 dividend stocks in the S&P 500.

Altria has a couple of interesting opportunities for growth, and both are tied to alternatives to its traditional cigarette business. On one hand, its long collaboration with Philip Morris International (PM -0.23%) offers a chance for Altria to sell the IQOS heated-tobacco system in the U.S. if it can get approval from the U.S. Food and Drug Administration. More recently, speculation has arisen that Altria might take a minority stake in privately held e-cigarette and vapor specialist Juul Labs, thereby making a bigger push into that increasingly popular segment. Despite ongoing regulatory threats, Altria has good opportunities to keep growing in the years to come.

Make your dividend portfolio more energetic

Finally, ExxonMobil is a household name every investor knows. The giant integrated oil company has operations across the globe, and the earnings it's consistently brought in support a dividend yield that's currently more than 4%. The company has also been good to shareholders over the years, delivering dividend increases for 36 consecutive years.

Volatility in the crude oil market has made some investors question whether ExxonMobil's dividend is truly safe. Yet even with prices having fallen recently, the oil giant's overall strategic plan shows its dedication to making sure that its shareholders are in a position to keep getting their quarterly income far into the future. The stock price might well continue to rise and fall along with the price of crude, but ExxonMobil's history of making the best of the industry's cycles speaks for itself.

Be smart about dividend stocks

In addition to having lucrative payouts and good future prospects, these three dividend stocks all trade at valuations that are quite a bit less expensive than that of the overall market. But that's not likely to last long -- making now a good time to look closely at whether these stocks deserve a place in your dividend stock portfolio.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

JPMorgan Chase & Co. Stock Quote
JPMorgan Chase & Co.
JPM
$122.13 (1.66%) $1.99
Exxon Mobil Corporation Stock Quote
Exxon Mobil Corporation
XOM
$94.00 (0.87%) $0.81
Altria Group, Inc. Stock Quote
Altria Group, Inc.
MO
$45.15 (0.04%) $0.02
Philip Morris International Inc. Stock Quote
Philip Morris International Inc.
PM
$99.24 (-0.23%) $0.23

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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