A dividend stock refers to a company that is known to regularly reward their shareholders with a fraction of their profits on a monthly, quarterly, semi-annually or sometimes even a yearly basis.
Dividend paying companies provide a steady stream of income to shareholders, and many still offer the potential for stock price appreciation. Stability and income generation has always remained a top priority for many investors.
Given ongoing economic uncertainty, investors hunt for dividend-paying stocks that are undervalued, as only companies that have quality fundamentals and a robust foundation have the financial stability to maintain their dividends during questionable economic periods.
Another great aspect of adding dividend stocks to one’s portfolio is the ability to reinvest any dividends paid out by a company, using them to buy more shares (sometimes called ‘DRIP’), and taking advantage of compounding returns.
The dividend stocks that have been screened and included in the list below show solid, consistent dividend prospects, strong fundamentals, long profit histories and strong credit ratings. We want to show investors that the best dividend stocks available for trading often still have room to run, while also hedging against too much volatility and generating additional compoundable (when reinvested) income.
The numbered list of such top dividend companies are displayed below:
- Market Cap: 36.932 billion
- Fair Value: $156.29
- Fair Value Upside: 31.8%
Marathon Petroleum Corporation, together with its subsidiaries, operates as an integrated downstream energy company in the United States. The company operates through three segments: Refining & Marketing; Midstream; and Renewable Diesel. It sells renewable diesel to wholesale marketing customers, buyers on the spot market, and through long-term supply contracts to direct dealers under the ARCO brand. Marathon Petroleum Corporation was founded in 1887 and is headquartered in Findlay, Ohio.
- Market Cap: 20.626 billion
- Fair Value: $32.05
- Fair Value Upside: 46.5%
HP Inc. provides personal computing, printing, 3D printing, hybrid work, gaming, and other related technologies in the United States and internationally. The company operates through three segments: Personal Systems, Printing, and Corporate Investments. The company was formerly known as Hewlett-Packard Company and changed its name to HP Inc. in October 2015. HP Inc. was founded in 1939 and is headquartered in Palo Alto, California.
- Market Cap: 9.851 billion
- Fair Value: $47.43
- Fair Value Upside: 25.3%
Best Buy Co., Inc. offers technology products and solutions in the United States, Canada, and internationally. It provides computing and mobile phone products, such as desktops, notebooks, and peripherals. The company was formerly known as Sound of Music, Inc, and was incorporated in 1966 and is headquartered in Richfield, Minnesota.
- Market Cap: 9.833 billion
- Fair Value: $73.98
- Fair Value Upside: 4.2%
East West Bancorp, Inc. operates as the bank holding company for East West Bank that provides a range of personal and commercial banking services to businesses and individuals in the United States. The company operates through three segments: Consumer and Business Banking, Commercial Banking, and Other. The company was founded in 1973 and is headquartered in Pasadena, California.
- Market Cap: 9.389 billion
- Fair Value: $35.62
- Fair Value Upside: 16.5%
Ally Financial Inc., a digital financial-services company, provides various digital financial products and services in the United States, Canada, and Bermuda. The company operates through Automotive Finance Operations, Insurance Operations, Corporate Finance Operations, and Corporate and Other segments. The company was formerly known as GMAC Inc. and changed its name to Ally Financial Inc. in May 2010. Ally Financial Inc. was founded in 1919 and is based in Detroit, Michigan.
- Market Cap: 8.117 billion
- Fair Value: $48.18
- Fair Value Upside: 54.5%
Ovintiv Inc., together with its subsidiaries, explores, develops, produces, and markets natural gas, oil, and natural gas liquids in North America. The company was formerly known as Encana Corporation and changed its name to Ovintiv Inc. in January 2020. Ovintiv Inc. was incorporated in 2020 and is based in Denver, Colorado.
- Market Cap: 4.509 billion
- Fair Value: $205.78
- Fair Value Upside: 32.9%
Nexstar Media Group, Inc. is a leading diversified media company which produces and distributes engaging local as well as national news, sports and entertainment content across its television and digital platforms. It includes over 310,000 hours of programming produced annually by its business units.
Headquartered in Irving, Texas, Midtown Manhattan, and Chicago, Nexstar owns America’s largest local broadcasting group of top network affiliates, with 200 owned or partner stations in 116 U.S. markets reaching 220 million people.
- Market Cap: 4.269 billion
- Fair Value: $42.56
- Fair Value Upside: 13.3%
Bank OZK (OZK) was established in 1903 as a small community bank in Jasper, Arkansas. Now, the bank has assets of $30 billion, more than 2,700 employees and over 240 offices in eight states. The company offers deposit services, including non-interest bearing checking, interest bearing transaction, business sweep, savings, money market, individual retirement, and other accounts, as well as time and reciprocal deposits.
It also provides trust and wealth services, such as personal trusts, custodial accounts, investment management accounts, and retirement accounts, as well as corporate trust services, including trustee, paying agent and registered transfer agent services, and other related services.
To start, we focused only on those U.S. stocks that have a market capitalization exceeding $1 billion as well as a significant market share, while presenting stable financial conditions for continuing the growth of their dividend payouts regardless of ongoing macro conditions.
In order to guarantee that we are not buying stocks that are already extremely expensive, a fair value assessment filter was added in the InvestingPro screener, which shows only those stocks that have growth potential going forward, thereby avoiding risks of a sudden, big drop in share price.
Further, a filter for dividend compound annual growth rate (CAGR) of 5 years has also been incorporated in our stock screening criteria, which curates a list of only those companies that are consistently growing their payout ratios at 10% or more.
Here are the steps to finding top U.S.-based dividend stocks easily using Investing Pro:
- Click on the Screener tool.
- Select ‘Dividend Yield’ as a filter parameter on the Screener page, and set the threshold value to greater than 3%.
- Add a P/E Ratio filter and set the range between 0 and 30x.
- Add a further four metrics: Market Cap, Shareholder Yield, Fair Value Upside and Dividend CAGR (5y), setting their range to desired values. You can also follow our stock selection metrics as shown in the screenshot below.
- For U.S.-centric stocks, select ‘United States’ under the ‘Trading Region’ tab drop-down, and make sure to check (select) the ‘Primary Trading Item’ option.
- You can then see the list of all the companies falling in the desired screener filters’ range arranged in a descending order.