The 10 Best Dividend Stocks

What should investors look for when it comes to choosing the best dividend stocks to buy today?

At Morningstar, we think that the best dividend stocks aren’t simply the highest dividend stocks or the top-performing dividend stocks. We suggest that investors look beyond a stock’s yield and short-term performance—instead, choose stocks with durable dividends and buy those when they’re undervalued.

How to Find the Best Dividend Stocks

“Tempting as they might be, the stock market’s juiciest yields are often illusory,” explains Dan Lefkovitz, strategist for Morningstar Indexes. “High dividend yields are often found in risky sectors, industries, and companies.” And as a result, such high-dividend yields can’t always be maintained.

David Harrell, the former editor of Morningstar DividendInvestor, suggests focusing on companies with management teams that support their dividend strategies and favoring companies with competitive advantages, or

.

“A moat rating does not guarantee dividends, of course, but we have seen some very strong correlations between economic moats and dividend durability,” Harrell says.

Investors looking for good dividend stocks to buy might consider adding undervalued dividend stocks with economic moats to their portfolios.

10 Best Dividend Stocks to Buy

To find the best dividend stocks to invest in, we turn to the Morningstar Dividend Yield Focus Index. The dividend stocks on this list are among the index’s top constituents, have economic moats, and had Morningstar Ratings in the 4- and 5-star range as of Aug. 10, 2026.

1. Verizon Communications VZ
2. Procter & Gamble PG
3. Pfizer PFE
4. PepsiCo PEP
5. McDonald’s MCD
6. Medtronic MDT
7. Lockheed Martin LMT
8. Oneok OKE
9. Mondelez International MDLZ
10. Kimberly-Clark KMB

Here’s a little bit about each cheap dividend stock, along with some key Morningstar metrics. All data is through August 10.

Verizon Communications

• Morningstar Rating
  : 4 stars
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield
  : 6.02%
• Sector
  :
  Communication Services

Verizon is one of the highest-yielding stocks on our list of the best dividend stocks to buy. The stock is trading 13% below our fair value estimate of $54 per share. Morningstar senior analyst Mike Hodel notes that price cuts have revived customer growth this year. He adds that Verizon directed 60% of 2025’s cash flows to the dividend and has started to repurchase shares.

Review Verizon Communications’ dividend history.

Procter & Gamble

• Morningstar Rating: 4 stars
• Morningstar Economic Moat Rating: Wide
• Forward Dividend Yield: 2.97%
• Sector:
  Consumer Defensive

The first of four consumer defensive companies on our list of the best dividend stocks to buy, Procter & Gamble is trading just 6% below our $155 fair value estimate. With a portfolio of leading brands such as Tide, Charmin, and Pampers, the company has carved out a wide economic moat. Morningstar director Erin Lash notes that Procter & Gamble is in solid financial health, and we forecast that it will increase its dividend at a high-single-digit pace, implying an average annual

of around 70%. Procter & Gamble is a dividend aristocrat, which means it has increased its dividend for at least 25 consecutive years.

Review Procter & Gamble’s dividend history.

Pfizer

• Morningstar Rating: 4 stars
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 6.36%
• Industry:
  Healthcare

Pfizer is the highest-yielding stock on our list of best dividend stocks to buy. We assign Pfizer stock a $32 fair value estimate, and it currently trades 15% below that. “We think Pfizer is well poised to return to growth after near-term headwinds,” says Morningstar director Karen Andersen. Those headwinds include some patent losses in 2026-28. She notes that Pfizer holds a very strong financial position, adding that the company has generally targeted close to a 50% payout in dividends as a percentage of normalized earnings, which seems about right for a more mature industry.

Review Pfizer’s dividend history.

PepsiCo

• Morningstar Rating: 4 stars
• Morningstar Economic Moat Rating: Wide
• Forward Dividend Yield: 4.30%
• Sector: Consumer Defensive

The first dividend king on our list, Pepsi trades 19% below our $169 fair value estimate. Dividend kings are companies that have raised their dividends for 50 years or more. We don’t expect near-term challenges from consumer belt-tightening to derail Pepsi’s growth from innovation and international expansion, reports Morningstar senior analyst Kristoffer Inton. Over the next decade, we expect Pepsi’s payout ratio to stabilize in the low 70s on average and the dividend payment to increase at a mid-single-digit pace annually, Inton says.

Review PepsiCo’s dividend history.

McDonald’s

• Morningstar Rating: 4 stars
• Morningstar Economic Moat Rating: Wide
• Forward Dividend Yield: 2.72%
• Sector:
  Consumer Cyclical

McDonald’s is the second dividend aristocrat on our list of best dividend stocks to buy, trading 7% below our $295 fair value estimate. The company earns a wide economic moat rating thanks to its strong intangible assets and a cost advantage. Morningstar analyst Ari Felhandler notes that the company’s sturdy balance sheet has supported generous shareholder distributions, with the company returning, on average, 56% of earnings as dividends over the past five years. We anticipate a 59% payout profile on average over our 10-year forecast, with dividends growing at a 9.4% rate annually, Felhandler says.

Review McDonald’s dividend history.

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Medtronic

• Morningstar Rating: 4 stars
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 3.22%
• Sector: Healthcare

The third dividend aristocrat on our list of best dividend stocks to buy, Medtronic shares trade 20% below our $112 fair value estimate. The largest pure-play medical-device maker is a key partner for its hospital customers, thanks to its diversified product portfolio aimed at a wide range of chronic diseases, Morningstar senior analyst Debbie Wang explains. The company aims to return a minimum of 50% of its annual free cash flow to shareholders, but this has been in the 60% to 70% range in recent years, says Wang.

Review Medtronic’s dividend history.

Lockheed Martin

• Morningstar Rating: 4 stars
• Morningstar Economic Moat Rating: Wide
• Forward Dividend Yield: 2.29%
• Sector:
  Industrials

The only company from the industrials sector on our list of good dividend stocks, Lockheed Martin is trading 7% below our $650 fair value estimate. As a bet on the defense industry, wide-moat Lockheed is hard to beat, argues Morningstar analyst Nicolas Owens. “Biggest isn’t always best, but Lockheed (and investors) benefit from the sheer scale of its tens of billions of dollars of contracts that provide defined decades-long revenue and profit streams,” he explains. Given the company’s conservatively run balance sheet, stable business model, and strong history of returning capital to shareholders, the dividend will likely remain a priority.

Review Lockheed Martin’s dividend history.

ONEOK

• Morningstar Rating: 4 stars
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 4.74%
• Sector:
  Energy

Oneok is the only energy stock on our list of top dividend stocks. The company earns a narrow economic moat rating because of its efficient scale. “Midstream firms like Oneok command efficient scale because it is difficult and unattractive for competitors to build competing transport routes,” notes Morningstar analyst Adam Baker. Management practices a dividend-focused return policy, planning to distribute 75% to 85% of free cash flows through dividends and buybacks, he adds. Shares trade 8% below our $98 fair value estimate.

Review Oneok’s dividend history.

Mondelez International

• Morningstar Rating: 4 stars
• Morningstar Economic Moat Rating: Wide
• Forward Dividend Yield: 3.25%
• Sector: Consumer Defensive

Mondelez International is the fifth and final wide-moat company on our list of best dividend stocks to buy. “Mondelez has proved unrelenting in its commitment to remove further complexity from its operations by rationalizing its supplier base, parting ways with unprofitable brands, and continuing to upgrade its manufacturing facilities,” argues Morningstar’s Lash. We forecast the company will increase its dividend in the high-single-digit range on average through fiscal 2035, according to Lash. We think this top dividend stock is worth $77, and shares trade 20% below that.

Review Mondelez’s dividend history.

Kimberly-Clark

• Morningstar Rating: 4 stars
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 4.74%
• Sector: Consumer Defensive

Kimberly Clark rounds out our list of the best dividend stocks to buy. One of four consumer defensive stocks, Kimberly-Clark is trading 19% below our $133 fair value estimate. The company’s portfolio of well-known tissue and hygiene brands, which includes Huggies, Depend, and Kleenex, generates significant excess cash, Lash notes. Lash’s long-term outlook calls for mid-single-digit annual dividend growth. Kimberly-Clark is also a dividend king.

Review Kimberly-Clark’s dividend history.

What Is the Morningstar Dividend Yield Focus Index?

A subset of the Morningstar US Market Index (which represents 97% of equity market capitalization), the Morningstar Dividend Yield Focus Index tracks the top 75 high-yielding stocks that meet our screening requirements for quality and financial health.

How are the stocks selected for the index? Only securities whose dividends are qualified income are included; real estate investment trusts are tossed out. Companies are then screened for quality using the

and . Specifically, companies must earn a moat rating of narrow or wide and an Uncertainty Rating of Low, Medium, or High; companies with Very High or Extreme Uncertainty Ratings are excluded. The index includes a screen for financial health using 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.

The 75 highest-yielding stocks that pass the quality screen are included in the index, and constituents are weighted according to the total dividends paid by the company to investors.

The Best Dividend Stocks: More Ideas to Consider

Investors who would like to uncover more cheap dividend stocks to research can do the following:

• Review the full list of dividend stocks included in the Morningstar Dividend Yield Focus Index. Those dividend stocks with Morningstar Ratings of 4 or 5 stars are undervalued, according to our metrics.
• Browse our list of Best Investments: Exemplary Stewards With High Dividends. The list includes companies with durable competitive advantages that are run by excellent capital allocators whose stocks trade well below our fair value estimate and offer at least a 4% dividend yield.
• Bookmark our dividends topic page to stay up to date on Morningstar’s newest dividend stock content.

How to Screen for More Top Dividend Stocks

Dividend-stock investors can use our Morningstar Investor Screener tool to find stocks with above-average dividend yields that offer maintainable dividend income potential. To build your screen, include the following filters:

Dividend per share growth (10Y): Click the Add Filter button on the left-hand side of the Screener, then search for the data point. Set the range you’d like to target, for example, greater than or equal to 5%, either by entering a figure or dragging the slider.

Dividend yield (trailing): Scroll to the bottom of the left-hand side of the Screener and set your range, for example, greater than or equal to 4%.

Morningstar Rating for Stocks: While not directly related to dividends, filtering to see only 4- or 5-star (undervalued) stocks helps you find overlooked dividend stocks with potential upside.

Economic Moat: Similarly, while moat isn’t directly tied to dividends, selecting stocks with a wide or narrow economic moat can identify companies with durable competitive advantages—and perhaps more secure dividend payments, too.