When inflation drops, as we saw in the November consumer price index report, the Federal Reserve typically continues to cut interest rates, making fixed-income alternatives less attractive. With some firms, like Goldman Sachs, predicting two more 25-basis-point cuts in 2026, and the prospect of a new Federal Reserve chair willing to back rate cuts, quality dividend stocks are a must-own for conservative growth and income investors next year.
Dividends have accounted for 40% of stock market returns since 1930. Companies with strong dividend-growth histories can continue to provide income even as the economic environment shifts. We focus on finding companies with sustainable payout ratios (below 70%), consistent free cash flow generation, and long track records of dividend increases through various economic cycles.
We screened our 24/7 Wall St. blue chip quality dividend list, and five of the top companies have dividend stocks that growth and income investors can buy now, tomorrow, next week, or next year and hold for the long term. All are rated Buy at top Wall Street firms that we cover here at 24/7 Wall St.
Why do we cover quality dividend stocks
Quality dividend stocks are a favorite among investors for good reason. They provide a steady income stream and offer a promising avenue for total return. Total return, a comprehensive measure of investment performance, encompasses interest, capital gains, dividends, and distributions realized over time.
AbbVie
AbbVie Inc. (NYSE: ABBV | ABBV Price Prediction) is generally ranked sixth among the most prominent biomedical companies by revenue and has pivoted from blockbuster drug revenues with growing oncology and neuroscience segments. This is a top healthcare stock pick across Wall Street, and it pays a dependable 2.93% dividend. AbbVie discovers, develops, and manufactures pharmaceuticals worldwide.
The company offers:
- Humira, an injection for autoimmune and intestinal Behçet’s diseases and pyoderma gangrenosum
- Skyrizi to treat moderate to severe plaque psoriasis, psoriatic disease, and Crohn’s disease
- Rinvoq to treat rheumatoid and psoriatic arthritis, ankylosing spondylitis, atopic dermatitis, axial spondyloarthropathy, ulcerative colitis, and Crohn’s disease
- Imbruvica for the treatment of adult patients with blood cancers
- Epkinly to treat lymphoma
- Elahere to treat cancer
- Venclexta/Venclyxto to treat blood cancers
It also provides:
- Facial injectables, plastics, and regenerative medicine, body contouring, and skin care products
- Botox therapeutic
- Vraylar for depressive disorder
- Duopa and Duodopa to treat advanced Parkinson’s disease
- Ubrelvy for the acute treatment of migraine in adults
- Qulipta for episodic and chronic migraine
In addition, the company offers Ozurdex for eye diseases, Lumigan/Ganfort and Alphagan/Combigan for reducing elevated intraocular pressure in patients with open-angle glaucoma or ocular hypertension, Restasis to increase tear production, and other eye care products.
Further, it provides:
- Mavyret/Maviret to treat chronic hepatitis C virus genotype 1-6 infection
- Creon, a pancreatic enzyme therapy
- Lupron to treat advanced prostate cancer, endometriosis, and central precocious puberty, and patients with anemia caused by uterine fibroids
- Linzess/Constella to treat irritable bowel syndrome with constipation and chronic idiopathic constipation
- Synthroid for hypothyroidism
Morgan Stanley has an Overweight rating with a $269 target price.
Exxon Mobil
Exxon Mobil Corp. (NYSE: XOM) manages an industry-leading portfolio of resources and is one of the world’s largest integrated fuels, lubricants, and chemical companies. The decline in oil prices presents investors with an excellent entry point, as the company can defend its dividend for at least two years, even if oil prices average $30 per barrel.
Exxon has a strong balance sheet capacity and pays a strong 3.33% dividend yield. It is the world’s largest international integrated oil and gas company, exploring for and producing crude oil and natural gas in the United States, Canada/South America, Europe, Africa, Asia, and Australia/Oceania.
The energy giant also manufactures and markets commodity petrochemicals, including olefins, aromatics, polyethylene, and polypropylene plastics, as well as specialty products. Additionally, the company transports and sells crude oil, natural gas, and petroleum products.
Top Wall Street analysts expect the company to remain a key beneficiary in a stable oil price environment. Most remain optimistic about the company’s sharp positive inflection in capital allocation strategy, particularly in the Upstream portfolio and its leverage to a further demand recovery. Exxon offers greater Downstream/Chemicals exposure than its peers.
Exxon completed its purchase of oil shale giant Pioneer Natural Resources in an all-stock transaction valued at $59.5 billion in 2024. The deal created the largest U.S. oilfield producer and guarantees a decade of low-cost production.
Wells Fargo has a Buy rating on the shares with an $80 target.
Lockheed Martin
This American aerospace and defense manufacturer with worldwide interests has 40% of its revenue tied to cost-plus contracts that pass higher costs to customers. With an A− credit rating and a conservative payout ratio near 50%, Lockheed Martin Corp. (NYSE: LMT) is one of the top aerospace and defense stocks to buy and pays a dependable 2.77% dividend. The company researches, designs, develops, manufactures, integrates, operates, and sustains advanced technology systems, products, and services.
The company operates in five principal business segments:
- Aeronautics
- Missiles and Fire Control
- Mission Systems and Training
- Space Systems
- Information Systems and Global Solutions
It also provides a wide range of defense electronics products and IT services.
As the Pentagon’s prime contractor, Lockheed Martin plays a crucial role in national defense, offering a diverse portfolio of global aerospace, defense, security, and advanced technologies.
Its leveraged presence in the Army, Air Force, Navy, and IT programs ensures a steady flow of follow-on orders from the U.S. government and many foreign allies.
Morgan Stanley has an Overweight rating with a $630 price target.
Medtronic
Medtronic PLC (NYSE: MDT) is a leading medical technology company that pays a dependable dividend, making it a solid choice for investors seeking a safe investment in the healthcare devices sector. The company develops, manufactures, and sells device-based medical therapies to healthcare systems, physicians, clinicians, and patients worldwide. Trading at 17% undervalued at a 0.83 price-to-fair-value, shares of this medical device giant offer a 2.89% yield, and Medtronic has not lowered dividend payouts since 1978. The company typically returns 60% to 70% of free cash flow to shareholders.
The Cardiovascular Portfolio segment offers:
- Implantable cardiac pacemakers
- Cardioverter defibrillators
- Cardiac resynchronization therapy devices
- Cardiac ablation products
- Insertable cardiac monitor systems
- TYRX products, remote monitoring, and patient-centered software
It also provides aortic valves, surgical valve replacement and repair products, endovascular stent grafts and accessories, transcatheter pulmonary valves, percutaneous coronary intervention products, and percutaneous angioplasty balloons.
The Neuroscience Portfolio segment offers:
- Medical devices and implants
- Biologic solutions
- Spinal cord stimulation and brain modulation systems
- Implantable drug infusion systems
- Interventional products
- Nerve ablation systems under the Accurian name
The segment offers products for spinal surgeons, neurosurgeons, neurologists, pain management specialists, anesthesiologists, orthopedic surgeons, urologists, urogynecologists, interventional radiologists, ear, nose, and throat specialists, and energy surgical instruments.
The Medical Surgical Portfolio segment offers:
- Surgical stapling devices
- Vessel sealing instruments
- Wound closure and electrosurgery products
- AI-powered surgical video and analytics platform
- Robotic-assisted surgery products
- Hernia mechanical devices
- Mesh implants
- Gynecology products
- Gastrointestinal and hepatologic diagnostics and therapies
- Therapies to treat other non-exclusive diseases and conditions, and patient monitoring and airway management products
The Diabetes Operating Unit segment provides insulin pumps and consumables, continuous glucose monitoring systems, and InPen, an innovative insulin pen system.
The $115 target price at BofA Securities accompanies a Buy rating.
McDonald’s
The world’s leading fast-food chain has delivered 49 consecutive years of dividend increases. Since 2020, McDonald’s Corp. (NYSE: MCD) dividends have grown from $1.25 to $1.77 per share, a 41.6% increase. Currently, the dividend is 2.25%.
This global foodservice retailer operates via these segments:
- U.S.
- International Operated Markets
- International Developmental Licensed Markets
- Corporate
The U.S. segment is its largest market and is 95% franchised.
The International Operated Markets segment is 89% franchised and comprises markets or countries in which it operates and franchises restaurants, including:
- Australia
- Canada
- France
- Germany
- Italy
- Poland
- Spain
- United Kingdom
The International Developmental Licensed Markets & Corporate segment comprises developmental licensee and affiliate markets, including equity-method investments in China and Japan. This segment is 99% franchised.
The McDonald’s menu features hamburgers and cheeseburgers, the Big Mac, the Quarter Pounder with Cheese, the Filet-O-Fish, and several chicken sandwiches, such as the McChicken and McCrispy, as well as Chicken McNuggets, Fries, shakes, sundaes, cookies, soft drinks, coffee, and other beverages.
Wells Fargo has an Overweight rating with a $345 price objective.
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