Broadcom (AVGO), Texas Instruments (TXN), Eaton (ETN), T. Rowe Price (TROW) and Automatic Data Processing (ADP) 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 1.6% dividend yield, while outperforming the index over the past five years. That’s a high bar, which relatively few stocks meet, especially given choppy stock markets in the past year.
Both share-price increases and attractive payouts play a part in successful dividend investing.
Best Dividend Stocks For 2021: Top 5
| Company/Benchmark Index | Symbol | Yield (%) | 5-Yr Return (%) |
| S&P | SPY | 1.6 | 94 |
| Broadcom | AVGO | 3.3 | 237 |
| Texas Instruments | TXN | 2.5 | 221 |
| Eaton | ETN | 2.5 | 141 |
| T. Rowe Price | TROW | 2.4 | 127 |
| Automatic Data Processing | ADP | 2.1 | 126 |
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 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 high-dividend stocks are smart investments. Use the information below as a starting point for your own research.
Best Dividend Stocks: Broadcom
The semiconductor and enterprise software maker has grown dividends nine years in a row.
Dividend yield: Broadcom stock offers a $14.40 annual dividend per share, for a 3.3% yield.
Five-year return: AVGO delivered a 237% compound stock market return over the past five years (not including reinvested dividends), vs. 94% for the S&P 500, as tracked by SPDR S&P 500 ETF (SPY).
Dividend growth rate: 75%, measured over the past five years.
Dividend stability factor: 16, on a scale from zero (most stable) to 99 (most volatile), measured over the past five years.
Dividend payout ratio: 211%.
Earnings stability factor: 6, on a scale from zero (most stable) to 99 (least stable). Broadcom grew earnings per share (EPS) 8% on average over the past three years and 7% on average over the last three quarters.
Best Dividend Stocks: Texas Instruments
The chipmaker boasts 16 years in a row of growing dividends. It first declared a dividend in April 1962.
Dividend yield: Texas Instruments stock bears a $4.08 annual dividend, yielding 2.5%.
Five-year return: 221%.
Dividend growth rate: 23%.
Dividend stability factor: 2.
Dividend payout ratio: 70%.
Earnings stability factor: 7. Texas Instruments grew EPS 6% annually over the past three years. EPS fell 6% on average over the past three quarters.
Best Dividend Stocks: Eaton Corp.
The maker of power management technologies first paid a dividend in 1923 and has increased dividends for six consecutive years.
Dividend yield: Eaton stock has a $2.92 annual dividend, yielding 2.5%.
Five-year return: 141%
Dividend growth rate: 7%.
Dividend stability factor: 1.
Dividend payout ratio: 86%.
Earnings stability factor: 8. EPS fell 3% on average over the past three years. It fell 29% on average over the past three quarters.
Best Dividend Stocks: T. Rowe Price
The global investment manager first paid a dividend in 1986. T. Rowe Price has grown dividends for three straight years.
Dividend yield: T. Rowe Price stock provides a $3.60 annual dividend, for a 2.4% yield.
Five-year return: 127%.
Dividend growth rate: 5%.
Dividend stability factor: 21.
Dividend payout ratio: 40%.
Earnings stability factor: 5. T. Rowe Price grew EPS 17% on average over the past three years and 11% on average over the past three quarters.
Best Dividend Stocks: Automatic Data Processing
The provider of HR and payroll solutions has a dividend history that stretches back to at least 1989.
Dividend yield: ADP stock pays a $3.72 annual dividend per share, yielding 2.1%.
Five-year return: 126%.
Dividend growth rate: 14%.
Dividend stability factor: 31.
Dividend payout ratio: 64%.
Earnings stability factor: 4. ADP grew earnings per share 17% on average over the past three years and 4% on average over the past three quarters.
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