You really only have to look for two things when considering dividend stocks. First, the stock has to pay a dividend. Second, the business behind the stock should be strong enough to keep the dividends coming.
Sure, there are other characteristics of dividend stocks that are nice to have. A relatively high yield would be great. A track record of dividend increases is another big plus. You'd love for the stock to offer solid growth prospects as well.
Not every stock checks off all of the must-have and nice-to-have boxes. But here are three great dividend stocks to buy right now that do.
AbbVie (ABBV 2.81%) has paid a dividend since 1924, including the time when the company was still part of Abbott Labs. The drugmaker has increased its dividend for 49 consecutive years, qualifying AbbVie as a Dividend Aristocrat that's knocking on the door of becoming a Dividend King. The company's dividend yield currently stands at a mouthwatering 4.9%.
There's one glaring issue with AbbVie, though. The company's top-selling drug Humira loses U.S. exclusivity in 2023. That's going to make a serious dent in AbbVie's revenue, considering that Humira generated 43% of the company's total sales last year.
Could AbbVie's dividend be in jeopardy? Not at all. Actually, the company's long-term growth prospects shouldn't be impacted much either.
AbbVie does expect total sales to slip in 2023 with Humira losing market share to biosimilar rivals in the U.S. However, the pharma company thinks that it will return to growth in the following year with strong revenue growth for the rest of the decade.
Brookfield Renewable Partners
Brookfield Renewable Partners (BEP -0.04%) has paid a distribution (equivalent to a dividend) going back to 2000, before the company existed in its current structure. During that period, the renewable energy company's distributions grew by a compound annual growth rate of 6%. Today, its distribution yield is nearly 2.9%.
The company recently boosted its distribution by 5%. More hikes should be on the way. Brookfield Renewable expects to increase its cash flow by close to 15% annually on average over the next few years.
Achieving that goal shouldn't be too difficult. Inflation pricing adjustments and improving margins should contribute up to 6% of Brookfield Renewable's target growth. The company's 23,000-megawatt development pipeline could easily add another 5% in annual growth. Brookfield Renewable anticipates that future acquisitions will generate another 4% to 5% of growth.
There's no question that the demand for renewable energy will rise over the next decade and beyond. Major countries and large corporations have established ambitious carbon-reduction targets. Wind and solar have become the cheapest source of bulk power generation. As a leader in the renewable energy sector, Brookfield Renewable should be poised to deliver solid distributions and strong total returns for years to come.
Pfizer (PFE 1.30%) has consistently paid a dividend every quarter for decades. Although the company cut its dividend in 2009 due to its acquisition of Wyeth, it has steadily increased its dividend payout every year since then.
Look for Pfizer to reduce its dividend again this quarter. There's nothing to worry about, though. This dividend cut will be made in conjunction with Viatris initiating its dividend program. When Pfizer first announced the merger of its Upjohn unit with Mylan, it promised that the combined dividend for Pfizer and the new entity created by the merger would be roughly the same as Pfizer's previous dividend.
One positive consequence of the Viatris transaction is that it positioned Pfizer to deliver stronger revenue and earnings growth than it has in recent years. This growth, combined with the company's attractive dividend and low valuation, makes Pfizer the best big pharma stock to buy right now in my view.
The biggest growth driver for Pfizer this year will be COVID-19 vaccine BNT162b2. It remains to be seen how much recurring revenue the company will be able to count on from the vaccine. However, with the emergence of new coronavirus variants, I think that Pfizer will have a long-term multibillion-dollar franchise on its hands.