How does getting paid to own a stock sound to you? That's exactly what dividends do. Even if you don't need extra income, reinvesting dividends can significantly increase the total returns you achieve over the long run.
Three Motley Fool contributors think they've found unstoppable dividend stocks to buy right now. Here's why they picked Abbott Laboratories (ABT 0.30%), AbbVie (ABBV 0.38%), and Pfizer (PFE 0.54%).
Image source: Getty Images.
A steady, reliable dividend payer
Prosper Junior Bakiny (Abbott Laboratories): Despite the threat from tariffs that could affect its financial results, Abbott Laboratories, a medical device specialist, has performed well this year. While we can't guarantee it will maintain that momentum through the end of 2025, the healthcare giant has plenty of qualities that make it a top stock to own, particularly for income-seeking investors.
Abbott Laboratories has a diversified business across four main therapeutic segments: medical devices, established pharmaceuticals, diagnostics, and nutrition. The company also has a significant presence across much of the world. The company's diversified business allows it to weather the storm when one of its segments isn't performing well.
And it has several important long-term opportunities. The most lucrative might be its FreeStyle Libre, a series of continuous glucose monitoring systems that enable people with diabetes to track their blood glucose levels. It has been Abbott's key growth driver for some time, but there is still significant white space in this market. Beyond that, the company routinely innovates and earns clearances for newer devices.
Some of the other units within the medical devices sector, including structural heart and heart failure, have also performed well.
Lastly, Abbott Laboratories has a remarkable streak of 53 consecutive years of dividend increases, earning it the title of Dividend King. No company can achieve a feat of this caliber without having a rock-solid underlying business -- and that's exactly what dividend investors should focus on, rather than passing on the stock because of its unimpressive 1.8% forward dividend yield (the S&P 500's average is 1.3%).
Investors shouldn't buy Abbott Laboratories' shares because of its strong performance this year. The company's excellent prospects and impressive dividend program are much better reasons.
A fantastic business with a fast-growing dividend
David Jagielski (AbbVie): Drugmaker AbbVie is a terrific blue chip dividend stock that looks poised not only for higher future payouts, but also for tremendous growth. The company has a robust portfolio of assets that can help grow its business in the long run and pave the way for significant dividend increases along the way.
AbbVie, which is already a Dividend King when you count the time that it was part of Abbott Laboratories, has been raising its payouts at generous rates in the past few years. Since 2020, when its quarterly dividend was $1.18 per share, the healthcare company has boosted its payout by 39%, to $1.64 today. That averages to a compound annual growth rate of 6.8% -- well above the usual rate of inflation.
Its payout ratio is over 100%, and that could make its dividend look risky. But in reality, there's plenty of room for AbbVie to still boost its dividend even higher. Its free cash flow over the trailing 12 months has totaled $18.2 billion, which is far higher than how much it has paid in dividends over that stretch ($11.3 billion).
Through the first six months of the year, the company's net revenue has risen organically by 8%, to $28.8 billion. And what's impressive is that it's doing that even as it isn't firing on all cylinders. While its immunology and neuroscience segments grew by double digits over the past two quarters, oncology revenue has grown organically by only 5%. And aesthetics, which includes its Botox cosmetic business, has declined by 9%.
There are still many opportunities for AbbVie to increase its top and bottom lines in the future, which is why this is an exciting stock to own. It already offers a great above-average yield of 3.2%, which is more than double the S&P 500 average. For income investors, this is an unstoppable-looking stock to hang on to for the long haul.
An ultra-high yield you shouldn't have to worry about
Keith Speights (Pfizer): When investors see an ultra-high dividend yield of over 5%, they might be tempted to worry about its sustainability. However, Pfizer's forward dividend yield of roughly 6.7% should be quite safe.
The big drugmaker isn't a member of dividend royalty like Abbott and AbbVie. But Pfizer has increased its dividend for 16 consecutive years and has paid a dividend for an impressive 347 quarters in a row.
Could those streaks be in jeopardy because of Pfizer's looming patent cliff? I don't think so. Sure, the company faces losses of exclusivity (LOEs) over the next three years for several top drugs, including blood thinner Eliquis, breast cancer drug Ibrance, and autoimmune disease drug Xeljanz. But these LOEs are only one side of the story.
Pfizer also has multiple products in its lineup that should be key growth drivers for years to come. Eczema drug Cibinqo, multiple myeloma drug Elrexfio, and bladder cancer drug Padcev especially stand out.
The company's pipeline is also promising, with 108 programs in clinical development. Experimental lung cancer drug sigvotatug vedotin and breast cancer candidate atirmociclib could especially be big winners in the future.
In addition to a juicy dividend, Pfizer offers investors an attractive valuation. The stock's forward price-to-earnings ratio is a super-low 8.3.
