Looking for safe dividend income? These 3 stocks have solid payouts.

If you buy dividend stocks, you need to carefully consider not only the payout ratio, but also the company’s long-term prospects. Intel suspended its dividend recently, an example of a situation that shouldn’t have been all that surprising for a company struggling with profitability and growing its foundry business. In such a situation, it is hard to expect the company to invest in an expensive growth strategy and pay a dividend.

There are many other safe dividend stocks to buy that may be a much better fit for your portfolio and aren’t nearly as risky. There are three stocks you can count on for long-term dividend income Abbott Laboratories (NYSE: ABT), ExxonMobil (NYSE: XOM)and AT&T (NYSE: T).

Abbott Laboratories

One of the safest dividend stocks you can own is undoubtedly the healthcare company Abbott Laboratories. Last year, Dividend King announced that it would increase its dividend for the 52nd year in a row. And the company has now been paying dividends for 100 years.

There’s little reason to suggest Abbott can’t continue his streak either. The business, which generates revenue from multiple segments including nutrition, diagnostics, pharmaceuticals and medical devices, is well diversified and consistent. Abbott reported solid revenue growth of 4% in the most recent period (ended June 30), driven by an impressive 10% growth rate in its medical devices segment. The company has obtained clearance and approval for new products, including two new continuous glucose monitoring devices, suggesting there is still room for much greater growth in the future.

Abbott’s steadily growing business makes it an ideal option for income investors. Its payout ratio is modest at around 67%, and while its 2% dividend yield may seem low, it’s still above S&P 500 average of 1.4%. And with future rate hikes highly likely, there’s plenty of incentive for investors to buy health care stocks and hang onto them for years.

ExxonMobil

Investors can secure a higher return from oil and gas producer ExxonMobil. At 3.2%, its yield is more than double the S&P 500 average. While it doesn’t have as long a track record as Abbott when it comes to raising its dividend, it has raised its payout for 41 consecutive years. And with a payout ratio of just 45%, there’s still plenty of room for the company to extend its streak this year.

What’s remarkable is that even amid oil price volatility and the impact it can have on the business, Exxon has continued to raise its dividend. Its $60 billion purchase of Pioneer Natural Resources last year made Exxon bigger, also positioning it to achieve lower-cost production in the years ahead. Over the past three years, Exxon has accumulated $115 billion in profits.

The story continues

Even though there is a rise in electric vehicles, investors may not necessarily have much to worry about by investing in a top oil and gas stock soon. Analysts at Goldman Sachs expect oil demand to continue to rise and not peak until 2034. And while demand may decline after that, oil will likely remain a key source of energy for the foreseeable future.

AT&T

The highest yielding stock on this list is AT&T. At 5.7%, the telecom stock’s yield has fallen as investors have bought shares of the company this year, but it’s still a higher yield than AT&T’s typical yield. The company has slowly won over its naysayers with some strong quarterly results, and in the coming months I’d expect the stock to continue to rise and yield to fall as a result.

The company’s free cash flow in its most recent quarter, which ended in June, totaled $4.6 billion, which was better than the $4.2 billion it generated a year ago ago. Free cash flow is one of the most important metrics for the company in terms of its dividend, because it tells investors how healthy the telecom carrier’s cash flow is and how much room AT&T has to pay dividends and pay down debt. Given that the company pays out about $2.1 billion per quarter in dividends, I wouldn’t be surprised if AT&T announced a rate hike this year.

While AT&T hasn’t been a great buy in recent years and shares are down 34% since 2020, its financial position appears to be in much better shape today. The company is no longer chasing expensive growth opportunities in the streaming industry and is instead focusing on being a top-tier telecom provider, making it a more sustainable option for income investors who just want to own a solid dividend stock .

Should you invest $1,000 in Abbott Laboratories right now?

Before buying shares in Abbott Laboratories, consider the following:

The Motley Fool Stock Advisor the analyst team has just identified what they think they are 10 best stocks for investors to buy now… and Abbott Laboratories was not one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you would have $763,374!*

Stock advisor provides investors with an easy-to-follow blueprint for success, including portfolio construction guidance, regular updates from analysts, and two new stock picks every month. The Stock advisor the service has more than four times return of the S&P 500 since 2002*.

See the 10 stocks »

*The stock advisor returns as of August 12, 2024

David Jagielski has no position in any of the listed stocks. The Motley Fool has positions in and recommends Abbott Laboratories and Goldman Sachs Group. The Motley Fool recommends Intel and recommends the following options: long January 2025 $45 calls on Intel and short August 2024 $35 calls on Intel. The Motley Fool has a disclosure policy.

Looking for safe dividend income? These 3 stocks have solid payouts. was originally published by The Motley Fool