3 No-Brainer Dividend Stocks to Buy in September

When's a good time to invest in dividend stocks? Any month that has a vowel in its name. 

We asked three Motley Fool contributors to identify no-brainer dividend stocks to buy in September. Here's why they picked AbbVie (ABBV -4.58%), Bristol Myers Squibb (BMY 0.34%), and Gilead Sciences (GILD 0.23%). 

Dividend royalty with better days ahead

Keith Speights (AbbVie): It's never easy for a drugmaker to lose patent exclusivity for its top-selling product. AbbVie is certainly feeling the pain now that Humira faces biosimilar competition in the U.S. The company's revenue, profits, and share price have fallen.

However, income investors continue to fare well owning AbbVie stock. The pharma giant's dividend yield stands at 4%. AbbVie also belongs to the exclusive group known as the Dividend Kings thanks to its remarkable 51 consecutive years of dividend increases.

The stock is attractively valued, with shares trading below 13.5 times expected earnings. Better days should lie ahead for AbbVie as well. The company expects to return to solid growth in 2025. 

AbbVie already has two successors to Humira on the market. It looks for Rinvoq and Skyrizi to together generate greater annual peak sales than Humira did in its prime. 

The company also has several other key growth drivers, notably including antipsychotic Vraylar and migraine drugs Ubrelvy and Qulipta. In addition, AbbVie's pipeline features over 90 programs in development. 

AbbVie offers investors an attractive and growing dividend, a bargain valuation, and the promise of strong growth throughout the second half of the decade. That makes it an ideal stock to buy in September.

This high-yielding dividend stock trades at steep a discount

David Jagielski (Bristol Myers Squibb): Pharmaceutical giant Bristol Myers Squibb is an investment that can be an ideal option for all types of investors. With a yield of 3.7%, the stock provides an above-average payout that is more than double the S&P 500 average of 1.6%. 

The dividend is sustainable, too; Bristol Myers' payout ratio is just 60%, which leaves plenty of room for the company to boost its dividend payments in the future. Bristol Myers has been increasing its dividend since 2010. Last year, it lifted its payouts by 6%. Over the last five years, the drugmaker's dividend has risen by 43%.

Despite the relative stability that Bristol Myers' stock offers (its beta value is just over 0.4, indicating low volatility), investors haven't been eager to buy shares of the healthcare specialist lately. Its stock has declined by 14% year to date, and trades at just 8 times its estimated future profits. That's well below the healthcare sector average of 19.

The reason the stock trades at such a discount is that investors are worried about losses of exclusivity for Bristol Myers Squibb's top-selling drugs and a potential big drop in revenue in the future. Eliquis and Opdivo are set to lose patent protection this decade and were the company's top products last quarter, bringing in more than $5.3 billion in revenue. But Bristol Myers has been investing in growth. Its new product portfolio, although still small with revenue totaling just $862 million last quarter, grew at a rate of 79% year over year.

Bristol Myers generates ample free cash flow, which is important whether a business is looking to invest in its operations or acquire assets that can help with its long-term growth. In each of the past three years, its free cash flow has topped more than $10 billion. Given that its dividend costs around $4.6 billion annually, Bristol Myers still has plenty of cash to invest in its future growth.

Investors may be discounting the stock too much given Bristol Myers has a solid track record of uncovering new growth opportunities. While there is some risk and uncertainty surrounding the business, the discount looks excessive. Buying the stock now could lead to outsize returns in the future.

A high-yield, rock-solid dividend pick 

Prosper Junior Bakiny (Gilead Sciences): Biotech giant Gilead Sciences has much to offer dividend investors. First, its current business is solid and consistent. Like its peers in the industry, it provides medicines that are critical to patients' well-being. Gilead Sciences is a leader -- arguably the leader -- in the HIV drugs market, thanks to treatments such as Biktarvy (the top-prescribed HIV regimen in the U.S.), Descovy for PrEP, Sunlenca, and others.

True, the volume of HIV diagnoses and prescriptions declined during the earlier pandemic years in a once-in-a-lifetime event. These dynamics harmed Gilead Sciences' business, but it's not indicative of what will happen with the company moving forward. The biotech's second-most-exciting segment is arguably oncology. It accounts for a relatively small percentage of Gilead Sciences' top line, but sales of the company's oncology products have been growing much faster than the rest of its business.

Second, Gilead Sciences is a proven innovator and boasts more than 60 ongoing programs. Dividend investors want companies that can remain in business and deliver solid financial results for a long time. Gilead Sciences' deep pipeline is a good sign that it can do exactly that.

Third, Gilead Sciences has a solid dividend profile. Over the past five years, the biotech has boosted its payouts by a respectable 31.6%. The company's yield of 3.84% is highly competitive, while its payout ratio of 42% leaves plenty of room for dividend increases.

Gilead Sciences may not have the most exciting business, but when it comes to delivering consistent dividends, slow, steady, and "boring" works just fine. The biotech remains an excellent pick for income-seekers to buy in September and hold for a long time.