As dividend stock investors, we’re focused on finding great stocks to buy for long-term wealth accumulation. There are many ways to accumulate wealth in the stock market, but we believe the most proven method is to find great stocks with durable competitive advantages and long dividend histories. When we combine those criteria with an additional screen of high-yielding dividend stocks, we can end up with some truly great picks.
In this article, we’ll take a look at three dividend stocks we believe are good buys for investors with long-term time horizons, given their strength in dividend longevity, durability and very high dividend yields of more than 6%.
|BNS||Bank of Nova Scotia||$48.36|
Our first stock is Verizon (NYSE:VZ), which is a communications and technology company that operates globally, but principally in the U.S. The company provides postpaid and prepaid wireless phone service plans, internet access for consumers and businesses, associated hardware, data security and more. Verizon has about 150 million different connections to customers through its full suite of services and products. The vast majority of those are attributed to its ubiquitous wireless service.
Verizon was founded in 1983 and generates about $137 billion in annual revenue. It trades with a market cap of $153 billion.
Verizon’s competitive advantage stems from its enormous 5G wireless network that spans the entire U.S. Together with AT&T (NYSE:T), the two companies operate what amounts to a duopoly in wireless service. Verizon is the larger of the two. The network Verizon has built out would require tens of billions of dollars of spending from a new entrant, so its market position is extremely secure. This helps protect the company’s earnings stream for the future, which, in turn, makes it a better dividend stock.
Speaking of the dividend, Verizon’s dividend has risen for the past 18 years consecutively. The company’s average increase during that time was less than 3% annually. However, given Verizon’s utility-like nature, relatively modest dividend increases should be expected.
That’s still been good enough for Verizon to sport a 7.2% yield today, which is an all-time high for the stock. Shares have been punished this year while Verizon continues to raise the dividend, so the current yield is outstanding.
In addition, we see Verizon’s dividend as highly secure given it has very predictable earnings and a payout ratio of only 50% for this year. That means Verizon could suffer sizable earnings declines, although we don’t believe that will occur under any reasonable scenario, and still pay out its dividend for years to come. This combination of factors — including the payout ratio and Verizon’s competitive advantage — means the stock is a great by for those with long time horizons.
Bank of Nova Scotia (BNS)
Our next stock is Bank of Nova Scotia (NYSE:BNS), or Scotiabank, as it is otherwise known. Scotiabank operates across a wide area of the Western Hemisphere, conducting business in Canada, the U.S., Mexico, Peru, Chile, Colombia, the Caribbean and parts of Central America. The bank offers a full suite of banking services, including traditional checking and deposit accounts, investments, credit cards, mortgages and other loan products, insurance, business banking, wealth management, and more. The bank operates about 1,000 branches in Canada and a further 1,300 outside of Canada.
Scotiabank was founded in 1832 and produces about $23 billion in annual revenue. It trades with a market value of $57 billion.
Scotiabank’s competitive advantage comes from its combination of its huge footprint in the Canadian banking market, its international growth story and its reputation that has been built over nearly 200 years. Scotiabank has a core Canadian business that doesn’t grow very quickly but generates steady earnings. Its international business is more volatile, but growth rates and potential for those markets over time is much higher. This combination of factors means we believe Scotiabank will be competitive for many years to come. That’s good news for dividend investors.
Scotiabank just hit 10 years of consecutive dividend increases, coming out of the financial crisis that saw just about every bank cut their dividends. Scotiabank has raised its payout at a rate of about 4% annually in the past decade as it has tried to maintain a payout ratio of under 50%. This year, the payout ratio is expected to be 48%. That is right in line with historical tendencies. It also means the dividend should be safe in all but the harshest of recessions going forward.
Finally, Scotiabank’s current yield is 6.3%, which is among the highest yields the bank has ever produced. The stock has traded down significantly in 2022, creating a great opportunity for long-term dividend investors to pick up a yield that is about four times that of the S&P 500.
V.F. Corporation (VFC)
Our final pick for dividend stocks to buy and hold is V.F. Corporation (NYSE:VFC), which is a company that designs, markets and distributes branded lifestyle apparel, footwear and accessories globally. V.F. operates in three segments: outdoor, active and work. Through these segments, the company offers a variety of premium products for men, women and children. Its brands include well-known favorites such as Vans, Supreme, Timberland, North Face and Dickies, among others.
V.F. was founded in 1899 and generates about $12 billion in annual revenue. It has a current market cap of $11 billion.
We like V.F. for its outstanding portfolio of premium brands that have decades of success backing them. The company has collected brands over the years with strong reputations among consumers. On the whole, this collection of products makes a consolidated company with diversified exposure across a wide variety of use cases for its products, price points and demand profiles.
V.F. has boosted its dividend for 49 consecutive years. That means it is just one more annual increase away from being a Dividend King. That alone puts V.F. in rare company, but among apparel distributors, it is in a class of its own. The dividend has also grown at about 10% annually in the past decade, a tremendous growth profile for a company with nearly half a century of increases under its belt.
VFC stock has a current yield of over 7%. That is about triple the level it generally has been over the years. That’s due to its cheap valuation and the fact that the stock has been punished in 2022.
The current payout is $2 per share annually. Earnings guidance is about $2.45 for this year, so the payout ratio is elevated. However, the company has defended the dividend during brief periods of the payout exceeding earnings before, and we believe it would again. Current earnings will cover the payout, so this is not an issue at the moment. And we don’t believe the dividend is in danger of being cut.
On the date of publication, Bob Ciura did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.