Investors looking for the best dividend stocks during this period of economic uncertainty and market volatility might consider adding undervalued, quality dividend stocks to their portfolios, suggests Susan Dziubinski, a Morningstar investment specialist.
“Quality companies have the financial stability to maintain their dividends during questionable economic periods, and price risk is reduced when investors can buy the stocks of these companies on the cheap,” Dziubinski writes in a new blog post.
Dziubinski’s colleague David Harrell, editor of Morningstar DividendInvestor, suggests that investors focus on companies with management teams that are supportive of their dividend strategies and favor those with competitive advantages, or economic moats.
“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.
To find the best dividend stocks, Morningstar analysts turned to the firm’s Dividend Yield Focus Index. The dividend stocks on this list are among the index’s top constituents, and they were also undervalued, with Morningstar Ratings of 4 and 5 stars as of Sept. 13.
See the gallery for the 10 best dividend stocks, according to Morningstar. Year-to-date performance is as of Sept. 15.