3 No-Brainer Dividend Stocks to Buy in March

Some decisions are painstakingly difficult. Others are downright easy. Choosing from the thousands of dividend stocks on the market can fall into the former category. But it doesn't have to.

Three Fool.com contributors selected dividend stocks they believe are no-brainer picks to buy in March. Here's why they chose AbbVie (ABBV -1.03%), Johnson & Johnson (JNJ -0.69%), and Pfizer (PFE -0.19%).

A better picture than meets the eye

Keith Speights (AbbVie): I don't think anyone would seriously challenge AbbVie's credentials as a solid dividend stock. After all, the company is a Dividend King with 51 consecutive years of dividend increases. Its dividend has grown by a whopping 270% since the spinoff from Abbott Labs in 2013. AbbVie's dividend yield stands at nearly 4%.

However, some could challenge the idea that AbbVie is a great pick right now. The company projects that its adjusted earnings could sink close to 20% this year as its top-selling drug Humira faces biosimilar competition in the U.S. 

I believe, though, that there's a better picture for AbbVie than meets the eye. Sure, 2023 will be a tough year for the company. But it should also be the trough year, with total sales beginning to climb again in 2024. The big drugmaker expects to return to robust growth in 2025. 

AbbVie already has two successors to Humira -- Rinvoq and Skyrizi. It projects that the two autoimmune-disease drugs will together eclipse Humira's peak sales within the next four years. The company's 2020 acquisition of Allergan gave it a strong lineup of products, including Botox and Vraylar. AbbVie also has a promising pipeline.

The big pharma stock beat the market last year. It's not out of the question that AbbVie could do it again, especially if Humira's sales hold up better than expected. More importantly, AbbVie's long-term prospects are solid, just as its dividend is.

J&J's dividend growth streak likely isn't ending anytime soon

David Jagielski (Johnson & Johnson): What's a good buy-and-forget dividend stock to buy this month? I recommend Johnson & Johnson. There are plenty of things to like about this stock as an income investment that make it a no-brainer buy for me.

First off, the company has increased its dividend payments for 60 consecutive years. If J&J follows its pattern of raising dividends, then April is when the company will announce its next rate hike; news of its 6.6% dividend increase last year came as the company reported its first-quarter earnings.

Secondly, the company's financials are ridiculously strong. Johnson & Johnson has reported at least $14 billion in profit in each of the past four years. Its free cash flow during that stretch didn't dip below $17 billion. The healthcare giant's modest 66% dividend payout ratio also suggests there's still room for the business to make more generous rate hikes in the future.

The third reason I like the stock as a dividend investment is that Johnson & Johnson is spinning off its consumer business this year. While that means less diversification for the company, it also means more of a focus on its key growth segments in medical devices and pharmaceuticals. Last year, J&J's pharmaceutical and medtech businesses each grew at rates of more than 6% (when factoring out foreign exchange), while the consumer health business rose by less than 4%.

All in all, with solid financials and potentially stronger growth opportunities ahead for the business, Johnson & Johnson makes for a strong dividend stock to buy and hold. At 3%, its yield is well above the S&P 500 average of 1.7%. And with another potential rate hike coming next month, now is as good a time as any to buy and hold the healthcare stock.

The market is underestimating this stock, but you shouldn't

Prosper Junior Bakiny (Pfizer): Corporations sometimes fail to get the respect they have earned. In my view, that's what's happening with Pfizer. Over the past three years, shares have lagged behind the broader market even as the company has registered record revenue and earnings thanks to its success in the COVID-19 vaccine market. That's what seems to be the problem, though. Pfizer's coronavirus-related sales will drop substantially starting this year.

For many investors, that's a good reason to stay away. But the downward pressure on Pfizer's stock creates a great opportunity for value and dividend investors willing to be patient. The drugmaker is rejuvenating its lineup, with an expected 19 brand-new products or major label expansions expected in the next 18 months. That will allow Pfizer to replace its coronavirus lineup, which, by the way, won't stop contributing to its results entirely. 

Pfizer projects between $70 billion and $84 billion in non-COVID revenue by 2030. How does that compare to last year? In 2023, Pfizer's revenue came in at $100.3 billion, representing an increase of 30% year over year. Excluding contributions from its coronavirus products, the company's top line came in at about $43.6 billion. Pfizer's top line should return to growth (after dropping this year) once its coronavirus sales stabilize. 

And in the meantime, the pharma giant will continue rewarding shareholders with dividends. Pfizer offers a yield of over 4% and a modest payout ratio of 34.5%. The drugmaker has raised its dividends by a respectable 20.6% in the past five years. Finally, with a forward price-to-earnings ratio of 11.5, compared to the pharma industry's 14.2, Pfizer looks like a great deal at current levels. I think all of this is enough to make Pfizer a no-brainer dividend stock to buy in March.