Finding the best dividend stocks to buy is about much more than near-term yield. As a long-term investor, I’m not just searching for big dividends today. I’m looking for companies whose profits outlook and balance sheet should deliver big, sustainable dividends for years to come.
Here are three top-quality FTSE 100 dividend stocks I’d happily buy right now.
Generally brilliant
Like all financial services firms, Legal & General Group (LSE: LGEN) is highly geared to the performance of markets. Profits can take a dive when, say, share prices crash, and this can, theoretically, pose a threat to shareholder returns.
One thing Legal & General has in its favour is its strong balance sheet however. This could give it the financial strength to continue paying big dividends, even if trading conditions become suddenly troubled. Let’s not forget its Solvency II coverage ratio rose to a healthy 183% as of June.
There’s a lot I like about Legal & General. It’s been around for almost 200 years and has one of the strongest brands in the business. A rapidly-ageing population bodes well for its retirement services division. Poor returns from traditional savings products should keep demand for its investment and services operations bubbling nicely as well.
By the way, for 2022, Legal & General’s dividend yield sits at a fatty 6.4%.
A FTSE 100 share I own
The forward yield at Unilever (LSE: ULVR) by comparison sits at a far-more-modest 3.8%. Still, this is a number I don’t think is to be sniffed at. Besides, for those like me seeking reliable dividend growth year after year, I think this FTSE 100 stock is hard to beat. It’s why I own it in my own shares portfolio today.
Unilever’s got many decades of consistent dividend growth behind it. It’s a testament to the company’s broad stable of essential personal care and household goods labels and their considerable brand power.
These qualities give it terrific earnings stability and, consequently, the clout and the confidence to keep raising dividends. Unilever’s products like Dove soap and Lipton tea are used by a staggering 2.5bn people across the world every day.
Unilever faces intense competition from other major fast-moving consumer goods makers and more local operators. But I’m encouraged by its excellent track record of strong shareholder returns.
Cash rich
I also believe Vodafone Group (LSE: VOD) will remain one of the FTSE 100’s best dividend stocks to buy. Firstly, the telecoms titan is a highly-cash-generative business, which gives it the robustness to pay gigantic dividends.
It has also recently bulked up its balance sheet by selling its European towers business last year. This explains why the yield sits at a mammoth 6.9% for this fiscal year (to March 2022).
Vodafone has plenty of profits opportunities through the steady adoption of 5G technology. It also stands to gain from surging data demand in both developing and emerging regions.
I’m confident these factors should underpin big dividends beyond the current year. That’s even though the highly-regulated nature of its business can throw up unexpected trouble for profits.