14 dividend stocks selected for long-term growth

By Philip van Doorn

These stocks feature attractive dividend payouts and are trading low to the companies' intrinsic value, according to John Buckingham of Value87 Investment Partners

These are three of 14 dividend stocks selected by John Buckingham of Value87 Investment Partners, who is also the editor of the "Patient Prospector" newsletter.

There are a variety of ways to select dividend stocks. John Buckingham, a veteran value-oriented stock picker, believes the best approach is to focus on a stock's total return potential, which means emphasizing long-term growth first, and income second.

Buckingham was the editor of "The Prudent Speculator" newsletter for more than 25 years until he and his colleagues Jason Clark and Christopher Quigley founded Value87 Investment Partners in May. The team now manages about $1.1 billion for individual clients following the same strategy they used to select portfolios described and shared through "The Prudent Speculator."

Their new newsletter, with Buckingham again editing, is titled "A Patient Prospector." While the team's value-oriented investment strategy has evolved over the years, the Hulbert Financial Digest has tracked its performance continuously, carrying through to the present. The renamed strategy ranks very high for total return performance against other investment newsletters tracked by Mark Hulbert, especially the 30-year and 1-year returns, which you can see here.

'In a world with people worried about viability and prospects for "growthy" stocks, you might want to put these in your portfolio as a hedge against the Nvidias of the world not living up to their potential.'John Buckingham, co-founder of Value87 Investment Partners and editor of "A Patient Prospector"

This has been a good year for stocks of dividend-paying companies. Before discussing Buckingham's dividend-stock selections, let's take a look at how four exchange-traded funds that take different passive approaches to holding portfolios of dividend stocks have performed against the S&P 500 SPX. These are total returns for 2026 through Thursday, with dividends reinvested:

Many exchange-traded funds holding dividend-paying stocks have outperformed the S&P 500 during 2026.

-- The Schwab U.S. Dividend Equity ETF SCHD tracks the Dow Jones U.S. Dividend 100 Index, which is a group of stocks with high dividend yields, subject to a variety of quality screens done annually. The stocks in the index are weighted by a combination of market capitalization and quality scores. This ETF quotes a 30-day Securities and Exchange Commission yield of 3.06% and has been the best performer of 2026 among the four ETFs on the chart.

-- The iShares Core High Dividend ETF HDV has been the second-best performer among the four this year. It quotes a 30-day yield of 3.10% and holds 73 stocks to track the Morningstar Dividend Yield Focus Index, which also is designed to select high-yielding dividend stocks for quality. The index is reconstituted quarterly, with stocks weighted by the value of each component company's dividend payment.

-- The ProShares S&P 500 Dividend Aristocrats ETF NOBL quotes a 30-day yield of 2.28% and holds 68 stocks as it tracks the S&P 500 Dividend Aristocrats Index XX:SP50DIV of companies that have raised their regular dividend payouts for at least 25 consecutive years. You can read more about the Dividend Aristocrats in this article from Nov. 6.

-- The Invesco S&P 500 High Dividend Low Volatility ETF SPHD quotes a 30-day yield of 4.26%. It tracks the S&P 500 Low Volatility High Dividend Index. This index is reconstituted twice a year, at which time S&P Dow Jones Indices narrows the list of 75 stocks in the S&P 500 with the highest dividend yields to the 50 that have shown the lowest price volatility over the previous year. These 50 stocks are then weighted by trailing 12-month dividend yields.

Buckingham's 'myth busting'

Investors are always concerned about inflation and the Federal Reserve's interest-rate policies. But Buckingham felt it was important to point out that the core consumer-price index (all items minus food and energy) of 2.6% for September wasn't particularly high. That is the most recent official core CPI number, because the government shutdown last year kept the Bureau of Labor Statistics from publishing the figure for October.

Buckingham said that according to Bloomberg's data, the average CPI going back to 1955 was 3.7%.

Then, using data going back to Jan. 31, 1958, from the Fama-French data library and Bloomberg, he showed that for the most part, stocks in various categories performed better during periods of higher inflation than during periods of lower inflation.

Stocks have tended to perform even better during periods of high inflation.

For the above and following charts, the value- and growth-stock camps are based on traditional price-to-book value measures used in the Fama-French data, Buckingham said, while emphasizing that his team's approach is more focused on earnings than book value.

Here's a similar chart showing how stocks have performed during periods during which the federal-funds rate has been higher or lower than the current target range of 3.75% to 4%. The tendency has been for stocks to perform better during periods of higher rates, which runs counter to the continual warnings to investors about rising rates.

Stocks have also tended to perform better during periods of higher short-term interest rates.

Buckingham's point was that most investors are better off sticking with their long-term strategies rather than reacting to headlines about inflation, Fed policy, elections or other events.

Buckingham's dividend-stock picks

Buckingham selected 14 dividend stocks with an average yield of 4.24%, which he called "fairly decent," especially when the main focus of his selection criteria is long-term growth potential.

The approach taken by Buckingham and his colleagues to stock selection makes use of various traditional measures of company valuations to sales, earnings, cash flow and other items. "We look out one to two years" to estimate companies' profit growth, "even though we are three-to-five-year investors," he said.

"We are applying what we think is a fair [price-to-earnings] multiple of where a stock should trade over that time span," he said.

So the 14 dividend stocks are "all trading at significant discount to our determination of long-term value," he said. Here they are, sorted alphabetically:

 
Company                                           Dividend yield  Oct. 12 price  Estimated EPS for next 12 months  Estimated EPS for following 12 months  Year 2 forward P/E 
Archer Daniels Midland                                     2.93%         $70.97                             $5.81                                  $5.90                12.0 
Bristol Myers Squibb                                       4.04%         $62.32                             $6.67                                  $5.48                11.4 
Comcast                                                    5.32%         $24.80                             $3.50                                  $3.71                 6.7 
Dick's Sporting Goods                                      3.43%        $145.66                            $12.73                                 $14.49                10.1 
Kimberly-Clark                                             4.78%        $107.19                             $7.32                                  $7.94                13.5 
Las Vegas Sands                                            3.05%         $39.33                             $3.00                                  $3.22                12.2 
Medtronic                                                  2.85%        $100.99                             $6.20                                  $6.67                15.1 
Meritage Homes                                             2.89%         $64.80                             $4.29                                  $5.31                12.2 
Prudential Financial                                       4.57%        $122.41                            $13.83                                 $15.25                 8.0 
Molson Coors Beverage                                      4.85%         $39.56                             $4.40                                  $4.72                 8.4 
Truist Financial                                           4.17%         $49.89                             $4.78                                  $5.38                 9.3 
TotalEnergies                                              4.44%         $89.55                            $11.83                                  $9.98                 9.0 
United Parcel Service                                      5.94%        $110.38                             $7.95                                  $8.51                13.0 
Verizon Communications                                     6.08%         $46.55                             $5.26                                  $5.57                 8.4 
                                                                                                                              Sources: Value87 Investment Partners, FactSet 

The table includes consensus earnings-per-share estimates among analysts polled by FactSet for the next 12 months, and those for the following 12-month period. The forward P/E figures in the right-most columns are based on Thursday's closing prices and the EPS estimates for the following 12-month period. On the same Year 2 basis, the S&P 500 trades at a forward P/E of 15.7.

"In a world with people worried about viability and prospects for 'growthy' stocks, you might want to put these in your portfolio as a hedge against the Nvidias of the world not living up to their potential," Buckingham said.

Click the tickers for more about each stock, ETF or index in this article.

An earnings-season Deep Dive: 22 stocks of companies with tremendous sales growth

(MORE TO FOLLOW) Dow Jones Newswires

11-13-26 1101ET