Dividend stocks are making a comeback in portfolios after a period where higher interest rates made fixed-income options more attractive to income investors. As these investors return to dividend stocks, the criteria for selecting the best options have evolved — a trend that applies to most stock segments today.
For instance, today’s growth-oriented investors now demand stronger financial and fundamental credentials than in the zero interest rate policy (ZIRP) era, when any company forecasting significant future profits could easily attract investor funds, regardless of its underlying financial management. Now, investors are more cautious, avoiding speculative stocks with a more critical eye.
This shift also affects dividend stocks, albeit in a somewhat different way. While seeking greater stability in growth stocks, investors now expect long-term growth potential from their value investments. Although short-term Treasuries still offer yields over 5%, income-producing stocks must either provide a higher yield or the prospect of long-term capital gains — or both! — to stand out from the competition.
Medtronic (MDT)
Healthy, sustained dividends alongside long-term price appreciation potential are the best hallmarks of dividend stocks to buy. Few dividend stocks meet this high bar better than Medtronic (NYSE:MDT), which offers a perfect mix of stability and growth potential. As a top pick for long-term investing, Medtronic’s sector dominance and dividend status distinguish it from the competition.
Medtronic’s collaboration with Nvidia (NASDAQ:NVDA) to develop an artificial intelligence (AI)-driven diagnostic tool highlights its unique position at the intersection of growth and stability. Additionally, Medtronic’s CEO Geoff Martha recently emphasized the strategic use of AI to enhance clinical decisions, innovate new treatment indicators and personalize patient care. He seeks to position the company at the forefront of AI integration in medical technology.
Medtronic’s most recent filing points to the firm’s strength moving forward, including 5% sales growth and improved profitability. Better yet, for those looking for dividend stocks to buy, Medtronic also boosted its dividend to 70 cents per share quarterly — its 47th consecutive year of increases.
H&R Block (HRB)
Though we’ve moved beyond tax season (unless you’re a late filer), H&R Block (NYSE:HRB) remains one of the best dividend stocks to buy year-round. Moving beyond the inherently cyclical nature of tax software, H&R Block is diversifying its revenue streams to ensure steady cash flow throughout the year.
To mitigate the seasonal nature of the tax sector, H&R Block launched a mobile banking service that has seen quick success and continued growth. The company snagged $456 million in net customer deposits and a total of 316,000 customer signups in less than two years, pointing to a gap in a market primed for H&R Block to fill. Additionally, H&R Block is leveraging new technologies for more efficient tax filing moving forward, collaborating with industry-heavyweight Microsoft (NASDAQ:MSFT) on an AI-powered tax assistance product.
H&R Block’s status as a must-buy dividend stock is further solidified by its impressive 10% total yield, or a respectable 2.5% dividend yield. The rest comprises stock buybacks. This substantial yield, supported by a modest 33% payout ratio, indicates that H&R Block retains a considerable portion of its earnings for growth initiatives while still providing significant rewards to its shareholders.
VICI Properties (VICI)
Ready for a Las Vegas vacation? Dividend stock to buy VICI Properties (NYSE:VICI) owns and occasionally operates multiple famous Vegas properties, including Caesar’s Palace, the Venetian, and MGM Grand. This impressive portfolio alone makes VICI a compelling investment, as Vegas will unlikely lose its global appeal anytime soon.
The REIT went public in 2017, following Caesars Entertainment’s (NASDAQ:CZR) bankruptcy proceedings. While Caesars Entertainment still operates Caesars Palace, VICI owns the land and property itself. It collects cash on gambler and tourist trades with much less operational risk than the underlying business model its tenants rely upon.
Since its IPO, the dividend stock returned 60%, with gross returns exceeding 120% when including distributions. Over the past seven years, VICI has maintained a solid dividend yield of around 5%, with the current 12-month trailing yield at 5.8%. This competitive yield and growth potential make VICI a top pick among dividend stocks to buy.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
