Many investors can pigeon hole buying dividend stocks as a particular investment style that may not fit with their long-term goals. Indeed, investing in growth stocks has clearly been the winning strategy for a very long time – companies that tend to pay higher dividends and trade at more reasonable valuations have largely underperformed, as investors continue to reach for the best-quality growth stocks off the shelf.

I’m not sure that trend will necessarily slow down anytime soon, but I do think dividend stocks make for excellent long-term core portfolio holdings for a number of reasons. Typically, companies that pay out a significant portion of their earnings in dividends to investors have very steady cash flow streams and expect to see consistent earnings growth over time. In terms of portfolio stability, that’s a great thing. Additionally, these companies tend to be more affordable and less prone to steep selloffs when the market does take a hit, from time to time.

For long-term investors looking to load up on some dividend stocks in December and hold these positions for a long time (I say “forever,” but nothing is really forever), here are three top dividend stocks I think are worthy of consideration right now.

Key Points About This Article:

• Dividend investing can be for everyone, and most investors can find a place in their portfolio for high-quality companies producing solid total long-term returns.
• These companies not only provide stable and growing dividends, but excellent growth prospects for those looking to buy and hold for the long-term.
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

Merck (MRK)

Merck (NYSE:MRK) is among the top big pharma companies in the world, and as such, is what I would consider to be a top blue chip stock in a very safe and defensive sector. For long-term investors, this business model provides a tremendous amount of value on its own and should be a key consideration for those thinking long-term.

Merck’s stock chart looks rather boring, with a five-year gain of only 22%. That’s some significant underperformance relative to the overall market over this time frame, but factoring in dividends over this period, the picture improves considerably. Currently, investors can pick up a dividend yield of 3.2% by owning MRK stock, and the company’s distribution has increased consistently over time. So, these returns are closer to 40% over this time frame (like many blue-chip dividend stocks, dividends make up a significant portion of the company’s long-term returns).

I think that trend will continue, given the company’s strong financials and recent results. The company surpassed Q3 expectations with $16.7 billion in revenue and $1.57 adjusted EPS, driven by Keytruda sales. However, its full-year earnings outlook dropped due to a $0.24 per share one-time charge linked to deals with Curon Biopharmaceutical and Daiichi Sankyo.

If the company can continue to see positive results, as it has with recent reports around its Phase 3 results for ZENITH in high-risk PAH patients, an underlying growth thesis could be built around this stock once again. I think Merck is likely to remain a slow and steady grower with a sustainable dividend that’s worth considering on dips. 

InterDigital (IDCC)

Based in Wilmington, DE, InterDigital (NASDAQ:IDCC) specializes in advanced mobile technologies for wireless communication, including 3G, 4G, and IEEE 802 networks. Recent analyst revisions boosted the Zacks Consensus Estimate by $3.15 to $13.53 per share. InterDigital averaged a 163.7% earnings surprise in recent quarters.

InterDigital’s global presence, diverse product portfolio, and market penetration drive its growth. Beyond wireless technology, adding sensor, interface, and video solutions boosts licensing opportunities in a vast market. Licensing agreements with top firms like Huawei, Samsung, LG, and Apple strengthen its core market. InterDigital actively pursues unlicensed customers in handset and consumer electronics markets. Focused on mobile, IoT, and related tech, it leverages R&D expertise to lead in innovation while expanding licensing revenue through new agreements and adjacent technologies.

For 2024, InterDigital raised its revenue forecast to $855-$865 million, up from $690-$740 million, driven by agreements with Oppo and Lenovo. Adjusted EBITDA projections increased to $533-$543 million, with non-GAAP earnings expected at $14.69-$14.99, surpassing earlier estimates of $9.70-$10.95. This company represents a relatively overlooked stock in the telecom sector, but is one I think long-term investors should keep an eye on due to the company’s recent earnings growth and potential for long-term outperformance at current levels. 

Chevron (CVX)

Chevron (NYSE:CVX) is among the world’s leading oil and gas producer, supporting global energy needs through an impressive portfolio of assets all around the world and in the resource-rich Permian Basin. The company’s U.S. production growth positions Chevron for continued success, and in terms of dividends, this company stands out as a top option to consider. Chevron has raised its dividend for 37 consecutive years, has a low debt ratio and an AA credit rating, while also offering reliable returns for long-term investors.

The company’s 4% dividend yield exceeds industry averages and has grown annually for 37 years, proving its reliability. As an integrated energy company, it balances sector volatility with operations across production, transport, and refining. Most oil investments break even under $50 per barrel, ensuring flexibility.

Chevron’s diversified operations and low leverage, with a debt-to-equity ratio of 0.17, prepare it for oil market volatility. Its strong balance sheet ensures consistent dividends, even during inevitable downturns. Moreover, the company stands out for dividend reliability, unlike BP and Shell, which cut payouts during the pandemic for financial flexibility. TotalEnergies maintained dividends and expanded into renewables, appealing to investors seeking clean energy diversification.

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