Table of Contents
Dividends are a portion of a company’s earnings distributed to shareholders as their direct share of the profits. Many investors favor dividend-paying stocks in an effort to generate regular income without needing to sell off their investments. Like other equities, these stocks also offer the potential for long-term growth through capital appreciation.
However, dividends are not guaranteed. Companies can reduce or eliminate payouts at any time. In addition, the market price of dividend stocks can fluctuate, meaning investors still face risk of capital loss. If you’re considering adding dividend stocks to your portfolio, it’s important to understand how they work and how to evaluate them effectively.
Key Points
• Dividends are a distribution of a company’s earnings to shareholders, offering investors the potential to earn regular income.
• Investors may also benefit from the stock’s long-term price appreciation.
• Buying dividend stocks also involves risk, since dividend payouts are not guaranteed and stock prices can fall.
• To evaluate dividend stocks, it’s a good idea to focus on the payout ratio, dividend growth, and free cash flow for sustainability, rather than just the yield.
• Dividend investing provides potential benefits like passive income and stability but also has trade-offs, including limited growth potential and possible tax liabilities.
Top 10 Dividend Stocks
If you’re curious about dividend stocks, here are ten dividend stocks listed on the S&P 500® Dividend Aristocrats® Index, ranked by market performance, as of May, 2026. The Dividend Aristocrats® is comprised of companies that have increased their dividend payout consecutively for 25 or more years.
Keep in mind that there are many different types of dividend stocks available, so thorough due diligence on any potential investment is necessary to ensure it aligns with your portfolio goals.
| Dividend Stock | Ticker | Market Cap | P/E Ratio | Dividend Yield | 1-Month Return | 1-Year Return |
|---|---|---|---|---|---|---|
| Nucor Corp. | NUE | $50.4 billion | 19.63 | 1.01% | 9.4% | 94.0% |
| Caterpillar Inc. | CAT | $393.7 billion | 41.98 | 0.71% | 7.1% | 145.1% |
| Archer-Daniels-Midland Co. | ADM | $38.1 billion | 22.07 | 2.63% | 15.5% | 63.5% |
| Exxon Mobil Corp. | XOM | $667.4 billion | 27.68 | 2.56% | 9.7% | 56.0% |
| Franklin Resources Inc. | BEN | $16.3 billion | 14.85 | 4.21% | 13.1% | 49.2% |
| West Pharmaceutical Services Inc. | WST | $21.5 billion | 37.65 | 0.29% | 9.7% | 40.8% |
| Chevron Corp. | CVX | $387.7 billion | 35.15 | 3.66% | 7.2% | 46.5% |
| Johnson & Johnson | JNJ | $554.6 billion | 25.22 | 2.33% | -0.1% | 55.3% |
| Walmart Inc. | WMT | $1.1 trillion | 52.22 | 0.74% | 5.1% | 37.9% |
| Expeditors International of Washington Inc. | EXPD | $20.6 billion | 25.39 | 1.03% | 5.3% | 34.7% |
Source: Data from SoFi and Bloomberg, as of May 19, 2026. Universe of stocks includes the S&P 500 Dividend Aristocrats®, S&P 500 companies that have increased dividends every year for the last 25 consecutive years. Stocks ranked according to a blend of short-term and long-term performance.
Nucor Corp.
Nucor Corp. (NUE) is the largest manufacturer of steel and fabricated steel products in North America, as well as its largest recycler. Based in Charlotte, North Carolina, the company produces roughly a quarter of all raw steel in the U.S. using sustainable Electric Arc Furnace (EAF) technology and recycled scrap.
Caterpillar Inc.
Caterpillar Inc. provides construction and mining equipment, diesel and natural gas engines, industrial turbines, and diesel-electric locomotives in the United States and around the world. Founded in 1925 and headquartered in Irving, Texas, the company operates a large global footprint through its trademarked “CAT” yellow machinery and a network of over 150 independent dealers.
Archer-Daniels-Midland Co.
Archer-Daniels-Midland Co. (ADM) is an American multinational food-processing and commodities-trading corporation. Headquartered in Chicago, Illinois, ADM connects farmers to the global food system, transforming crops like cereal grains and oilseeds into food, animal feed, and industrial products.
Exxon Mobil Corp.
Exxon Mobil Corp. (XOM) is an American multinational oil and gas corporation and one of the largest publicly traded energy providers and chemical manufacturers in the world. Formed in 1999 by the merger of Exxon and Mobil — both of which trace their roots back to John D. Rockefeller’s Standard Oil Company — the company is headquartered in Spring, Texas and operates across the entire energy value chain.
Franklin Resources Inc.
Franklin Resources, Inc. is a global investment management holding company operating under the well-known name Franklin Templeton. Headquartered in San Mateo, California, it is one of the world’s largest asset managers, providing mutual funds, exchange-traded funds, and institutional investment services in over 150 countries.
West Pharmaceutical Services Inc.
West Pharmaceutical Services Inc. (WST) is a leading global designer and manufacturer of technologically advanced containment and delivery systems for injectable medicines. Founded in 1923 and headquartered in Exton, Pennsylvania, the company plays a key role in the global drug supply by providing components that keep injectable drugs safe, sterile, and stable.
Chevron Corp.
Chevron Corp. (CVX) is one of the world’s largest multinational energy corporations, predominantly specializing in oil, natural gas, and petrochemicals. Headquartered in Houston, Texas, it operates in over 180 countries across every phase of the energy industry — from the exploration and extraction of crude oil to selling gas at local stations.
Johnson & Johnson
Johnson & Johnson (JNJ) is a large multinational healthcare corporation headquartered in New Brunswick, New Jersey. Founded in 1886, the company focuses on researching, developing, and distributing advanced medical technologies and prescription pharmaceuticals globally. It operates hundreds of subsidiary companies with manufacturing and commercial operations spanning more than 60 countries worldwide.
Walmart Inc.
Walmart Inc. (WMT) is an American multinational retail corporation operating a global network of brick-and-mortar stores and e-commerce platforms. It ranks as the world’s second-largest company by revenue, trailing only Amazon. Headquartered in Bentonville, Arkansas, the company manages over 10,700 retail stores and wholesale clubs across 19 countries.
Expeditors International of Washington Inc.
Expeditors International of Washington Inc. (EXPD) is a Fortune 500 global logistics and supply chain management company headquartered in Bellevue, Washington. Operating in over 100 countries, it specializes in air and ocean freight forwarding, customs brokerage, and warehousing.
What Are Dividend Stocks?
Dividend stocks are shares of companies that return a portion of their profits to investors. These payments are typically issued as cash and deposited into a brokerage account, though in some cases they may be paid as additional shares of stock.
Many investors use a dividend reinvestment plan (DRIP), which automatically uses dividend payments to purchase more shares of the same stock. Over time, this can potentially create a compounding effect, increasing both an investor’s share count and future dividend income.
Dividends are most commonly paid quarterly, although some companies pay monthly or annually. To receive a dividend, a shareholder must own the stock at the appropriate time, which is determined by three key dates:
• Record date: This is the cutoff date when the company determines which shareholders are eligible for the dividend.
• Ex-dividend date: This is the deadline to purchase shares and still receive the upcoming dividend. You must buy the stock before this date.
• Payment date: This is the date the dividend is actually distributed to shareholders.
In short, to qualify for a dividend, you need to own the stock before the ex-dividend date.
What Impacts the Price of Dividend Stocks?
Dividend stock prices are influenced by a variety of factors — not just their history of payouts. While the opportunity for income is a major draw, broader business performance and market conditions play a significant role in determining value.
Key factors include:
• Company performance: Revenue growth, earning, profit margins, debt levels, and future outlook all influence dividend stock prices. Strong financial results can drive prices higher — even if the dividend remains unchanged.
• Dividend amount and reliability: Consistent and sustainable dividends tend to attract investors and support stock prices. Conversely, dividend cuts often lead to price declines.
• Interest rates: Dividend stocks compete with fixed-income investments like bonds. When interest rates rise, bonds may become more attractive, potentially putting downward pressure on dividend stock prices.
• Market sentiment: In volatile markets, investors often look to dividend-paying stocks as a source of potential stability. In strong bull markets, however, attention may shift toward faster-growing companies.
Ultimately, dividend stocks are valued based on a mix of income potential, financial strength, and economic conditions.
How to Evaluate Dividend Stocks
Selecting quality dividend stocks requires looking beyond headline yields and focusing on sustainability. In addition to standard evaluation metrics like price-to-earnings (P/E) ratio and earnings per share (EPS), consider the following:
• Dividend yield: This can be a good place to start but it’s important to be cautious. An unusually high yield can sometimes signal trouble, such as a falling stock price or an unsustainable payout. It may be better to focus on stable, reasonable yields rather than the highest available.
• Payout ratio: This measures the percentage of earnings paid as dividends. Lower ratios generally indicate that the company has room to maintain or increase its dividend, while very high ratios may signal risk, especially during downturns.
• Dividend growth: Companies that consistently increase dividends over time often demonstrate strong financial health and resilience across economic cycles.
• Free cash flow (FCF): Free cash flow reflects the cash a company generates after expenses. Strong FCF suggests the company can sustain and potentially grow its dividend without relying on debt.
Whether investing online or through a brokerage, the best dividend stocks to buy and hold typically combine reliable income with solid underlying business performance.
Pros and Cons of Investing in Dividend Stocks
Dividend investing offers both advantages and trade-offs.
Pros
Here’s a look at some of the potential benefits of investing in dividend stocks:
• Opportunity to earn an income stream: Dividend stocks may provide a steady stream of cash, which can be particularly beneficial for retirees or income-focused investors.
• Companies tend to be mature and financially stable: Dividends are more often associated with established companies that have a solid track record of stability and performance. These stocks may experience fewer ups and downs during periods of volatility.
• Potential for long-term growth: In addition to regular income, many dividend-paying companies provide growth opportunities through rising share prices.
• Compounding growth: Reinvesting dividends through a DRIP allows you to buy more shares, which may accelerate portfolio growth over time.
Cons
Dividend stocks also come with some potential downsides. Here are some to keep in mind:
• Limited growth potential: Companies paying high dividends often reinvest less into their own expansion, which may limit capital appreciation.
• Dividends may be reduced or eliminated: Payouts are never guaranteed; a company facing financial trouble can reduce or suspend its dividend at any time, often causing the stock price to go down simultaneously.
• Dividends may be taxed: In a taxable account, you must pay taxes on dividends in the year they are distributed, giving you less money to reinvest and compound over time.
• High yields may be unsustainable: A very high yield can sometimes be a warning sign of a falling stock price and a business in distress rather than a sign of strength.
How to Invest in Dividend Stocks
Getting started in dividend investing is straightforward:
Step 1: Open a Brokerage Account
Choose a brokerage account to hold your investments. This can be a taxable account for flexibility or a tax-advantaged account like a 401(k) or Roth IRA. You might consider using an online brokerage with low commissions, strong research tools, and an easy-to-use platform. Fund the account by linking your bank account.
Step 2: Choose Your Dividend Stocks
Research potential dividend stocks by evaluating yield, payout ratio, dividend history, and cash flow. A payout ratio below 50% is often considered sustainable, though this varies by industry. Consistency and financial strength are key.
Step 3: Execute Your Trade
Place an order through your brokerage by selecting the number of shares. A market order buys at the current price, while a limit order sets a maximum purchase price.
To receive the next dividend, you must own the stock before the ex-dividend date. Be cautious with limit orders, as they may not execute in time.
After purchasing, you can choose to receive dividends as cash or reinvest them through a DRIP.
Things to Avoid When Investing in Dividend Stocks
A disciplined approach may help reduce risk when investing in dividend stocks. Common mistakes include:
• Chasing high yields: High yields can be misleading and often signal underlying problems.
• Ignoring payout ratios: An excessively high ratio suggests the company is stretching to maintain payments, which may lead to future dividend cuts.
• Poor timing: Buying a stock without checking the ex-dividend date may result in missing the upcoming payout.
• Lack of diversification: Concentrating too heavily in one sector can increase risk. Consider diversifying across industries to help protect your portfolio.
The Takeaway
Dividend stocks have the potential to serve as a tool for generating income and building long-term wealth. However, successful investing generally requires focusing on quality, sustainability, and diversification — not just high yields. Carefully evaluating companies and maintaining a long-term perspective can help you build a balanced portfolio.
Invest in what matters most to you with SoFi Active Invest. In a self-directed account provided by SoFi Securities, you can trade stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, options, and more — all while paying $0 commission on every trade. Other fees may apply. Whether you want to trade after-hours or manage your portfolio using real-time stock insights and analyst ratings, you can invest your way in SoFi's easy-to-use mobile app.
FAQ
Is a higher dividend yield always better?
No. While a high yield means more income relative to the stock price, it can sometimes be a warning sign. An unsustainably high yield may be the result of a rapidly falling stock price or a high payout ratio, suggesting the company is straining its finances to pay the dividend. It’s generally safer to prioritize companies with moderate, consistent, and growing yields that are backed by strong financial health.
What’s a Dividend Aristocrat?
A Dividend Aristocrat is a company within the S&P 500 Index that has consistently increased its dividend payout for at least 25 consecutive years. These companies are generally viewed as financially stable and resilient, often operating in mature, non-cyclical industries. Because they have a long history of raising payouts, they are popular among investors hoping for reliable income and capital preservation.
How should I build a dividend portfolio?
Building a dividend portfolio starts with choosing a brokerage account, like a taxable account or Roth IRA. When selecting stocks, it’s wise to look beyond high yields — which can sometimes be “dividend traps” — and prioritize companies with sustainable payouts. Evaluate their dividend payout ratio and free cash flow to ensure they can maintain and grow their distributions. It’s also important to diversify across various sectors to mitigate industry-specific risks.
Once you are ready to trade, ensure you buy shares before the ex-dividend date to qualify for the next payout. Finally, consider using a dividend reinvestment (DRIP) to automatically reinvest your earnings.
Photo credit: iStock/insta_photos
INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
For disclosures on SoFi Invest platforms visit SoFi.com/legal. For a full listing of the fees associated with Sofi Invest please view our fee schedule.
¹Probability of member receiving $1,000 is 0.026%. If you don’t make a selection in 45 days, you’ll no longer qualify for the promo. Customer must fund their account with a minimum of $50.00 to qualify. Probability percentage is subject to decrease.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
Investment Risk: Diversification can help reduce some investment risk, but cannot guarantee profit nor fully protect in a down market.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
SOIN-Q126-093