Best U.S. Dividend Stocks

Indian retail investors can now easily invest in the U.S. stock market through SEBI-registered Indian trading platforms/brokerages. Over the last few years, Indian retail investors have been investing a significant portion of their investible funds into U.S. equities. These mid/large cap stocks are basically tech savvy & innovation heavy like Apple, Microsoft, Nvidia, Amazon, Alphabet, Meta and Tesla-the, so the so-called U.S. ‘magnificent seven’.

Long-term investors usually prefer quality mid/large cap stocks for not only capital gain, but also near risk-free, consistent dividends, comparable to U.S. 10Y bond yields around 3-4%; this is like a bank FD. These companies have adequate operating positive cash flow to take care of both the need for fresh CAPEX and the consistent return of shareholders in form of dividends. Long-term investors usually like to have both, i.e. appreciation of share prices despite no intention to book profit (capital gains), while getting interest on their investments in the form of consistent dividends paid out.

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Overview of some U.S. stocks, providing consistent dividends with decent yields & earnings growth:

1) Verizon Communications (VZ) – Telecommunications

VZ is a blue-chip U.S. telecom & digital service provider in b2c and b2b segments.

Engaged in wireless/mobile voice & data, as well as FWA (Fixed Wireless Access) broadband through its wireless network.

It also offers wireline services through its fibre-optic network.

Average Dividend yield: 6.75% (PA).

2) ExxonMobil (XOM) – Oil & Gas (Energy)

Exxon Mobil is involved in the exploration & production (E&P) of crude oil and natural gas in the U.S. and also in many other countries like Canada, Mexico, Guyana, Venezuela, the U.K., Singapore, and France, upstream & downstream (derived by-products like Chemicals & speciality petchem products).

XOM also offers sustainable aviation turbine fuel (ATF).

XOM sells its products under the Exxon, Esso, and Mobil blockbuster brands not only in the US, but also globally.

Average Dividend Yield: ~3.75%.

3) Chevron (CVX) – Oil & Gas (Energy)

Chevron is involved in the exploration & production (E&P) of crude oil and natural gas (NG) in the U.S. and globally in both upstream & downstream.

The Downstream segment refines crude oil into various petroleum products & byproducts; markets crude oil, refined products, and lubricants; manufactures and markets renewable (RE) fuels.

Dividend Yield: ~4.65%.

4) Johnson & Johnson (JNJ) – Healthcare/Pharma

JNJ is involved in the R&D, manufacture, and sale of various pharma products globally in the prescription & OTC segments.

The Innovative Prescription Medicine segment covers various critical therapeutic areas.

The MedTech segment provides electrophysiology products to treat heart rhythm disorders; hips, knees, trauma, spine, breasts, sports-related and others.

It also offers contact lenses under the ACUVUE brand and TECNIS intraocular lenses (IOL) for cataract surgery.

It distributes its products to wholesalers, hospitals, and retailers, as well as physicians, nurses, hospitals, eye care professionals, and clinics; i.e. b2b distribution format.

Dividend Yield: ~3%.

Conclusions

For longer-term portfolio investments in the U.S. stock market targeting both capital gains & consistent dividends, Indian retail investors should do their due diligence & research. Also, position sizing and money management are important.

Investing in U.S. dividend-paying stocks can add a layer of stability and consistency to an Indian investor’s portfolio. Many American companies operate in mature, globally diversified businesses with a long record of paying and increasing dividends through different economic cycles. Indian investors can now invest in dollar-based income streams which provide them with reduced exposure to domestic market volatility while allowing them to benefit from leading global corporate financial stability. The combination of U.S. dividend stocks with Indian equities through strategic investment allows investors to obtain stable returns and generate steady income while they build their portfolio to protect against market volatility.