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Investors have many options to diversify their dividend portfolio, ranging from low-yield, high-stability to high-yield, low-certainty dividend stocks. Learn what you should consider when evaluating your dividend stocks to buy. Which are the best dividend stocks with equity markets near all-time highs?

What are Dividend Stocks?

Dividend stocks refer to publicly listed companies that pay dividends to existing shareholders. Most US-based dividend companies pay an identical quarterly dividend throughout the fiscal year.

Here is an example:

• Company Y2Z declares a quarterly dividend of $1.25 per share
• Therefore, the company will pay $1.25 per share for each quarter of the fiscal year (for example, in April, July, October, and January)
• An investor with 1,000 shares would receive four payments of $1,250

Why Should You Consider Buying Dividend Stocks?

While the dividend yield stands out, investors should look beyond it and analyze the underlying companies using other metrics. Dividend stocks are not short-term trades but long-term passive-income-generating investments.

Here are a few things to consider in evaluating dividend stocks:

• Investors should favor dividend durability to ensure the company can sustain the dividend, even during times of economic uncertainty.
• Favor dividend stocks with a well-established dividend history.
• Undervalued dividend stocks can provide an additional portfolio boost.
• Focus on companies with a business model that does not struggle during economic difficulties.
• Invest in dividend stocks that have consistently grown their dividend.

What are the Downsides of Dividend Stocks?

Investors who chase dividend yields could find themselves holding troubled investments. High-yield dividend stocks look good on paper, and the math is appealing, but they come with risks.

Here is a shortlist of dividend stocks investors could consider as their next investments:

• First Community Bankshares (FCBC)
• Realty Income (O)
• Mastercard (MA)
• Zoetis (ZTS)
• SLB (SLB)
• Colgate-Palmolive (CL)
• AG Mortgage Investment Trust (MITT)
• MarketWise (MKTW)
• Northern Oil and Gas (NOG)
• Mondelez International (MDLZ)

An Update on My Previous Best Dividend Stocks to Buy Now

In my previous installment, I highlighted the upside potential of First Community Bankshares and Realty Income.

First Community Bankshares (FCBC) - A long position in FCBC between $35.64 and $37.39

FCBC initially advanced over 10% before correcting. I am holding on to my long positions, and traders who have not bought can do so at an attractive entry level now.

Realty Income (O) - A long position in O between $57.82 and $58.98

O has inched higher by less than 3% since my recommendation, and I will hold on to my position, as I see more gradual upside from here.

Colgate-Palmolive Fundamental Analysis

Colgate-Palmolive (CL) is a consumer products company with high brand recognition, including Colgate toothpaste and Palmolive soaps. Colgate-Palmolive is also a member of the S&P 100 and the S&P 500.

So, why am I bullish on Colgate-Palmolive despite its 18%+ correction?

I like the defensive nature of Colgate-Palmolive amid the expanding AI-led equity bubble. CL has an industry-leading return on equity, a super return on assets, and excellent profit margins. Valuations are low, and CL has cost advantages due to its scale and brand recognition, as it sells products that most consumers continue to buy despite economic shocks. Colgate-Palmolive is a dividend aristocrat that rewards patient, long-term dividend investors.

Colgate-Palmolive Fundamental Analysis Snapshot

The price-to-earnings (P/E) ratio of 21.91 makes CL an inexpensive stock. By comparison, the P/E ratio for the S&P 500 is 30.28.

The average analyst price target for Colgate-Palmolive is $90.21. This suggests moderate upside potential with decreasing downside risks.

Colgate-Palmolive Technical Analysis

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Colgate-Palmolive Price Chart

• The CL D1 chart shows price action between its descending 0.0% and 38.2% Fibonacci Retracement Fan.
• It also shows Colgate-Palmolive trading inside a horizontal support zone.
• The Bull Bear Power Indicator is bullish with an ascending trendline.

My Call on Colgate-Palmolive

I am taking a long position in Colgate-Palmolive between $76.68 and $79.29. The dividend is growing slowly but steadily, and CL has excellent defensive capabilities in a down market. The business is not exciting, which is ideal for a dividend investment.

Northern Oil and Gas Fundamental Analysis

Northern Oil and Gas (NOG) is the largest US non-operated, upstream energy asset owner focused on the Williston, Uinta, Permian, and Appalachian basins. It engages the acquisition, exploration, development, and production of oil and natural gas properties operated by leading operators.

So, why am I bullish on Northern Oil and Gas after a 35%+ plunge?

Northern Oil and Gas ranks among the most undervalued companies, and I am buying the dividend yield, operational excellence, and combination of oil and natural gas assets. The latest business update included better-than-expected performance across all four basins. I also like its strategic acquisitions, rising production quotas, and tightening capital expenditure guidance.

Northern Oil and Gas Fundamental Analysis Snapshot

The price-to-earnings (P/E) ratio of 3.56 makes NOG an inexpensive stock. By comparison, the P/E ratio for the S&P 500 is 30.28.

The average analyst price target for Northern Oil and Gas is $32.10. This suggests excellent upside potential with manageable downside risks.

Northern Oil and Gas Technical Analysis

(Click on image to enlarge)

Northern Oil and Gas Price Chart

• The NOG D1 chart shows price action between its descending 0.0% and 38.2% Fibonacci Retracement Fan.
• It also shows Northern Oil and Gas trading inside a horizontal support zone.
• The Bull Bear Power Indicator is bearish with a positive divergence.

My Call on Northern Oil and Gas

I am taking a long position in Northern Oil and Gas between $21.02 and $22.73. The oil and gas market remains volatile, but I like he business model NOG deploys, which shields it from several operational risks. The dividend yield above 8.40% compensates investors well for extra risks.

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