Texas Instruments (TXN), Broadcom (AVGO), Canadian Pacific (CP), T. Rowe Price (TROW) and JPMorgan Chase (JPM) count among the best dividend stocks for 2021, yoking solid yields to strong performance. Broadcom and the other top dividend stocks can give a big boost to growth and income portfolios.
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IBD screened for stocks offering more than the S&P 500’s 1.4% dividend yield, while outperforming the index over the past five years. That’s a high bar, which relatively few stocks meet.
Both share-price increases and attractive payouts play a part in successful dividend investing.
Best Dividend Stocks For 2021: Top 5
| Symbol | Yield | Five-year return | |
| S&P | SPY | 1.4% | 104% |
| Texas Instruments | TXN | 2.1 | 204 |
| Broadcom | AVGO | 3.1 | 202 |
| Canadian Pacific | CP | 4.0 | 191 |
| T. Rowe Price | TROW | 2.2 | 178 |
| JPMorgan Chase | JPM | 2.3 | 152 |
For investors looking for the best dividend stocks to buy and hold in 2021, several metrics matter.
Dividend stability reflects a long and steady track record of payouts. Dividend growth points to a company in sound financial health, working hard to make its stock more attractive to new and existing income investors.
A company with stable earnings is more likely to pay steady — and perhaps rising — dividends. The quality of earnings matters too.
The dividend payout ratio (dividend per share divided by earnings per share) can help you assess whether the dividend is sustainable. A ratio greater than 100% may warn of a potential cut.
Not all dividend stocks are smart investments. Use the information below as a starting point for your own research.
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Best Dividend Stocks: Texas Instruments
The chipmaker boasts 17 years in a row of growing dividends. Texas Instruments first declared a dividend in April 1962.
Dividend yield: Texas Instruments stock bears a $4.08 annual dividend, yielding 2.1%.
Five-year return: TXN stock delivered a 204% compound stock market return over the past five years (not including reinvested dividends), vs. 104% for the S&P 500, as tracked by SPDR S&P 500 ETF (SPY).
Dividend growth rate: 23%, measured over the past five years.
Dividend stability factor: 3, on a scale from zero (most stable) to 99 (most volatile), measured over the past five years.
Dividend payout ratio: 60%.
Earnings stability factor: 6, on a scale from zero (most stable) to 99 (least stable). Over the past three years, Texas Instruments grew EPS 4% annually.
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Best Dividend Stocks: Broadcom
The semiconductor and enterprise software maker has grown dividends 10 years in a row.
Dividend yield: Broadcom stock offers a $14.40 annual dividend per share, for a 3.1% yield.
Five-year return: AVGO stock delivered a 202% compound stock market return over the past five years (not including reinvested dividends), vs. 104% for the S&P 500, as tracked by SPDR S&P 500 ETF (SPY).
Dividend growth rate: 68%, measured over the past five years.
Dividend stability factor: 21, on a scale from zero (most stable) to 99 (most volatile), measured over the past five years.
Dividend payout ratio: 130%.
Earnings stability factor: 4, on a scale from zero (most stable) to 99 (least stable). Over the past three years, Broadcom grew earnings per share (EPS) 6% annually.
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Best Dividend Stocks: Canadian Pacific
The railroad operator has paid a regular cash dividend for nearly two decades.
Dividend yield: Canadian Pacific stock provides a $2.44 annual dividend, for a 4.0% yield.
Five-year return: 191%.
Dividend growth rate: 19%.
Dividend stability factor: 3.
Dividend payout ratio: n.a.
Earnings stability factor: 6. Over the past three years, Canadian Pacific grew EPS 16% annually.
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Best Dividend Stocks: T. Rowe Price
The global investment manager first paid a dividend in 1986. T. Rowe Price boasts 35 consecutive years of dividend increases.
Dividend yield: T. Rowe Price stock provides a $4.32 annual dividend, for a 2.2% yield.
Five-year return: 178%.
Dividend growth rate: 17%.
Dividend stability factor: 13.
Dividend payout ratio: 59%.
Earnings stability factor: 4. Over the past three years, T. Rowe grew EPS 17% annually.
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Best Dividend Stocks: JPMorgan Chase
The banking giant has paid dividends for more than 20 consecutive years and grown dividends for 10 straight years.
Dividend yield: JPMorgan stock bears a $3.60 annual dividend, yielding 2.3%.
Five-year return: 152%.
Dividend growth rate: 19%.
Dividend stability factor: 6.
Dividend payout ratio:29%.
Earnings stability factor: 12. JPMorgan Chase grew EPS by 3% over the past three years, the IBD Stock Checkup tool shows.
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