10 Dividend Stocks to Buy Now: Morningstar

Investors looking for the best dividend stocks to buy during this period of economic uncertainty and stock market volatility might consider adding undervalued, quality dividend stocks to their portfolios, Morningstar investment specialist Susan Dziubinski writes in a new blog post.

This is because quality companies have the stability to maintain their dividends during fraught economic periods, and price risk is reduced when investors can buy these companies’ stocks cheaply.

Investors look past a stock’s yield and choose stocks whose dividends are durable and buy them when they are undervalued, Dziubinski said.

To find the best dividend stocks, analysts looked to the 75 high-yielding stocks on the Morningstar Dividend Yield Focus Index, a subset of the firm’s U.S. Market Index, which represents 97% of equity market capitalization. Only securities whose dividends are qualified income are included; real estate investment trusts are excluded.

Analysts then screen companies for quality, using the Morningstar Economic Moat and Morningstar Uncertainty Ratings. Companies must earn a moat rating of narrow or wide and an uncertainty rating of low, medium or high; those with very high or extreme uncertainty ratings are excluded.

The index includes a screen for financial health with a distance-to-default measure, which uses market information and accounting data to determine how likely a firm is to default on its liabilities. It is a measure of balance-sheet strength.

See the accompanying gallery for the top 10 dividend stocks to buy now. The stocks are among the index’s top constituents and were also undervalued, with Morningstar Ratings of 4 and 5 stars as of Nov. 14. Year-to-date performance is as of mid-day on Nov. 17.