The 2 top dividend stocks of 3% or more to buy without hesitation right now

Dividend stocks can provide a fantastic way to grow your returns over time and provide extra cash to reinvest or keep on the sidelines as savings. Not all dividend stocks are the same, and it’s important to consider the various elements of the underlying business to ensure the company aligns with your overall portfolio goals.

The best dividend stocks have a history of paying and growing dividends and strong businesses that can support those payments. Here are two top dividend stocks to consider for your portfolio right now.

1. AbbVie

AbbVie (ABBV -0.59%) was created as a spin-off of the healthcare giant Abbott Laboratories over a decade ago. This means that the company has achieved the dividend history of the parent company, which spans 52 years and counting consecutive dividend increases. The stock yields about 3.1% based on current share prices, with an annual dividend of about $6.20. In the past five years alone, AbbVie’s dividend has grown 45%.

AbbVie’s biggest hurdle right now is losing patent exclusivity on the autoimmune disease drug Humira, which at one point was the world’s best-selling drug. The company has plenty of other well-known products in its portfolio and a rapidly developing pipeline to deal with this patent cliff, one that management had been planning for several years. In the second quarter of 2024, AbbVie’s net income totaled $14.5 billion, up 4.3% from the year-ago quarter. This growth was facilitated by a 2.3% increase in revenue from its immunology portfolio and a 10.5% increase in revenue from its oncology portfolio.

AbbVie’s best-selling products include Skyrizi (used to treat plaque psoriasis, psoriatic arthritis, and Crohn’s disease), Rinvoq (used to treat conditions including rheumatoid arthritis, active psoriatic arthritis, and Crohn’s disease), and Venclexta (an oral drug). therapy for certain blood cancers). Q2 revenue from these three drugs — Skyrizi, Rinvoq and Venclexta — rose about 45%, 56% and 12%, respectively, from a year ago.

A new addition to AbbVie’s portfolio is Elahere, approved for the treatment of numerous types of cancer, including epithelial ovarian cancer, fallopian tube cancer and primary peritoneal cancer. The drug was acquired through the company’s acquisition of Immunogen, which it completed earlier this year.

In the phase 3 study of Elahere, it became the first drug to achieve an overall survival benefit in patients with platinum-resistant ovarian cancer (those with disease progression or reduced response to treatment early in the treatment process). Elahere received accelerated approval in late 2022 and won full approval from the US Food and Drug Administration only earlier this year, but is on track to bring in $500 million in sales in 2024 and could bring in top annual sales 2 billion dollars by the end. of the 2020s.

Other top-selling products in AbbVie’s wheelhouse include Botox Therapeutic, Botox Cosmetic and Vraylar (used to treat schizophrenia, bipolar mania, bipolar depression and major depressive disorder), along with migraine drugs Ubrelvy and Qulipta. In the first half of 2024, AbbVie posted net earnings of $2.75 billion, a healthy 21% year-over-year increase. With a portfolio of profitable products, a long-standing commitment to its dividends, and a superior growth track ahead, income investors and those with other investment styles can find a lot to like about this stock.

2. Kraft Heinz

Kraft Heinz (KHC 1.23%) was created as a result of the merger between HJ Heinz Company and Kraft Foods in 2015. Both companies had a history of over a century. The modern Kraft Heinz is known for its namesake brands Kraft and Heinz and brands such as Velveeta, Jell-O, Oscar Mayer, Maxwell House and Lunchables.

The company has faced some struggles since its inception in 2015, along with headwinds from peak and post-pandemic economic changes. In 2019, Kraft Heinz cut its dividend and enacted a $15 billion write-down of its flagship brands following news that it was under investigation by the Securities and Exchange Commission (SEC). In September 2021, the SEC indicted Kraft Heinz and two former executives for what it alleged were years-long accounting schemes.

The company ended up paying $62 million to the SEC as part of a settlement, along with issuing restatements of several years of financial reporting. Kraft Heinz has gone through several CEO changes since its scandal. While the company sells brands classified as consumer staples, the economic turmoil that followed the pandemic era has continued to affect spending, even in more essential areas, which will take time to recover.

It’s worth noting that Kraft was faithfully paying a dividend before its merger with HJ Heinz. Kraft Heinz has a yield of 4.6% based on current share prices, partly a function of its tepid stock performance. This generous dividend yield is about three times higher than the stock’s average trading on S&P 500 it pays and helps offset the fact that the stock is down year-to-date and up single digits from a year ago. Its annual dividend is $1.60 per share.

This is not a high-growth stock, but one that can provide successive returns for long-term shareholders, revolving around a range of historic brands. Kraft Heinz has reworked and rebranded its range of well-known brands, and while growth numbers are still heavily affected by consumer spending patterns, the company remains profitable.

In the last 12 months, Kraft Heinz reported net income of just $2 billion on revenue of $26 billion. It also delivered operating cash flow of $4 billion and free cash flow of about $2.3 billion over the same time frame. Kraft Heinz has been actively working to right the ship in recent years and stabilize business growth. It remains a leader among food and beverage companies globally.

The stock also trades at a modest 1.7 on a price-to-sales basis, which is in line with recent historical levels. While Kraft Heinz can only control changing consumer sentiment to a certain extent, it is not necessarily a long-term factor in light of a minimum investment of five years or more.

The Oracle of Omaha himself, Warren Buffett, remains a longtime shareholder in the business, with a stake of around 26% through the multinational conglomerate. Berkshire Hathaway. While that alone shouldn’t prompt you to buy the stock, the company’s leading presence in the consumer goods space — along with a generous dividend yield — may justify adding the stock to an otherwise well-diversified portfolio.