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3 Top Dividend Stocks to Buy in November

By Keith Speights – Oct 31, 2021 at 5:52AM

Key Points

  • Devon Energy's fixed-plus-variable dividend gives it the highest yield in the S&P 500 by far.
  • Brookfield Infrastructure offers an attractive dividend plus great growth prospects.
  • Merck gives investors a solid dividend and growth likely on the way with the its COVID-19 pill.

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Income-seeking investors should especially like these stocks.

You won't get nearly as much yield from bonds now as you would've years ago. For anyone looking for steady investment income, stocks remain the most attractive alternative.

Some stocks are much better choices for income-seeking investors than others, though. Here are three top dividend stocks to buy in November.

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Image source: Getty Images.

1. Devon Energy

If you want an especially juicy dividend yield, look no further than Devon Energy (DVN -0.16%). The oil and gas producer offers the highest yield by far in the S&P 500

However, there is a little twist. Devon's dividend consists of two components. The fixed component gives you a yield of close to 1.1%, which isn't going to excite any investor. But the company also pays a variable dividend that's calculated quarterly based on excess free cash flow. Devon fully expects this variable component will boost its total dividend yield to more than 10%. 

Rest assured that Devon highly prioritizes its dividend program. The company has paid a dividend for 28 consecutive years. During that period, its payout increased by a compound annual growth rate of more than 10%. 

Devon's business also remains quite strong. Increased energy demand combined with lower global oil production has driven oil prices higher. Devon is cranking out more oil than expected, though, averaging 291,000 barrels per day in Q2. Look for the company's fixed-plus-variable dividend yield to continue topping the S&P 500 for a while to come.

2. Brookfield Infrastructure 

Forget what happens in Washington, D.C. with President Biden's infrastructure bill. Infrastructure will become increasingly important regardless of what the politicians do. And that's great news for Brookfield Infrastructure (BIP 0.49%) (BIPC -1.87%).

I can't think of a safer infrastructure stock to buy right now. Brookfield Infrastructure offers remarkable diversification. It owns infrastructure assets including data centers, electricity transmission, fiber networks, pipelines, ports, and telecom towers across North America, South America, Asia Pacific, and Europe. 

These assets provide a steady revenue stream and cash flow for the company. That's exactly what an income investor likes to see. And with an infrastructure super-cycle underway, Brookfield Infrastructure also provides significant growth opportunities.

You can invest in Brookfield Infrastructure in a couple of ways, but the underlying business is the same. The limited partnership (LP), Brookfield Infrastructure Partners, trades under ticker BIP and has a dividend yield of nearly 3.5%. Brookfield Infrastructure Corporation doesn't have the tax hassles of an LP. It trades under ticker BIPC with a dividend yield of nearly 3.4%. Either alternative gives investors a dependable source of income.

3. Merck

Merck (MRK -0.50%) has been a favorite for income investors for a long time. The big drugmaker's dividend currently yields nearly 3.2%. Merck has also rewarded shareholders with heftier dividend increases in recent years compared to its past.  

There's a lot going right for Merck these days. Sales of cancer immunotherapy Keytruda continue to soar. Its blockbuster Gardasil human papillomavirus vaccine is enjoying strong momentum. The company's animal health business is performing well.

I think Merck especially stands out as a good pick now, though, because of its COVID-19 pill molnupiravir. The company hopes to soon win U.S. Emergency Use Authorization (EUA) for the oral therapy. My prediction is that Merck will secure EUA. The drugmaker thinks the pill could generate sales of around $7 billion by the end of 2022. 

Look for Merck to also continue scooping up additional regulatory approvals for Keytruda, particularly in combination therapies. The company has other promising late-stage programs targeting cancer as well. With its strong product lineup and pipeline, investors should be able to count on Merck's dividends. 

Keith Speights owns shares of Brookfield Infrastructure Corporation, Brookfield Infrastructure Partners, and Devon Energy. The Motley Fool recommends Brookfield Infra Partners LP Units, Brookfield Infrastructure Corporation, and Brookfield Infrastructure Partners. The Motley Fool has a disclosure policy.

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