High-yield stocks receive all the attention, but the best dividend portfolios strike a balance between current income and long-term compounding. These eight stocks span multiple sectors and investment styles, from low-yield growth machines to high-yield income generators.
Each stock offers a different reason to own it -- and together, they form the foundation of a diversified dividend strategy. Read on to find out more about these eight incredible dividend stocks.
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1. The premium payments network
American Express (AXP +0.37%) operates a closed-loop payments network, connecting cardholders directly to merchants without the involvement of third-party processors. The stock yields just 0.87% with a 16% payout ratio, leaving enormous room for dividend growth. The company's affluent customer base and premium brand create pricing power that few financial services companies can match.
NYSE: AXP
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2. America's largest bank
JPMorgan Chase (JPM +1.67%) is the largest U.S. bank by assets, offering a range of services that include investment banking, commercial banking, asset management, and consumer financial services. With a 2% yield and 28% payout ratio, JPMorgan balances current income with capital appreciation. The bank's scale and diversification make it a cornerstone holding for dividend investors seeking exposure to the financial sector.
3. The membership moat
Costco (COST +1.58%) operates warehouse clubs that generate most of their profit from membership fees rather than product markups. The 0.5% yield may seem tiny, but the 27% payout ratio and history of massive special dividends -- $15 per share in 2023 and $10 in 2020 -- make this low-yield stock a major shareholder return play. Costco's fanatically loyal membership base has funded 20-plus consecutive years of regular dividend increases.
NASDAQ: COST
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4. The data monopoly
S&P Global (SPGI +0.29%) provides credit ratings, benchmarks, and analytics that financial markets can't function without. The stock yields 0.8% with a 28% payout ratio -- and has raised its dividend for 52 consecutive years. That track record reflects a business model built on recurring revenue and near-monopolistic market share alongside Moody's.
5. The biotech income machine
AbbVie (ABBV 1.79%) develops and markets biopharmaceuticals, including immunology blockbusters Humira, Skyrizi, and Rinvoq. The 3% yield and 53 consecutive years of dividend increases -- a streak inherited from parent company Abbott Laboratories -- make it a rare half-century streak in the healthcare sector. AbbVie's pipeline depth and Botox acquisition provide multiple growth drivers beyond its legacy immunology franchise.
6. The high-yield pharma giant
Pfizer (PFE 0.04%) is one of the world's largest pharmaceutical companies, selling vaccines, oncology treatments, and cardiovascular drugs globally. The 6.7% yield is among the highest of any blue chip stock, though the payout ratio is currently near 98% -- meaning the dividend is fully exposed to earnings volatility. For income-focused investors willing to accept that risk in exchange for substantial current yield at a depressed valuation, Pfizer fits the bill.
7. The smoke-free pivot
Philip Morris International (PM 0.58%) sells cigarettes and smoke-free products like IQOS heated tobacco and ZYN nicotine pouches outside the United States. The 3.8% yield comes with a payout ratio of nearly 78%, which is typical for tobacco companies that usually return most of their earnings to shareholders. Philip Morris's aggressive push into smoke-free products differentiates it from domestic peers and provides a growth angle that pure tobacco lacks.
NYSE: PM
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5. The dividend growth machine
Nvidia (NVDA +1.37%) designs GPUs and artificial intelligence (AI) accelerators that power data centers, gaming, and autonomous vehicles worldwide. The 0.02% yield may seem laughable, but the 1% payout ratio and substantial free cash flow -- with quarterly revenue now exceeding $35 billion -- suggest the dividend can grow substantially for decades. This makes Nvidia a stealth dividend compounder, hidden within a growth stock, with essentially unlimited capacity for future hikes.
