15 of the Best Dividend Stocks to Buy for 2020

These are the best dividend stocks for 2020.

When the year began, stocks were about 11 years into the longest-ever uptrend in Wall Street history, with the American economy looking equally robust. The unemployment rate, at 3.5%, was the lowest in 50 years. Mere months later, interest rates have fallen to zero, the 10-year Treasury yield is less than 1% and more than 20 million jobs have disappeared, erasing all the gains made since the Great Recession. As income investors struggle to find investments with good yields, U.S. News has highlighted 15 of the best dividend stocks to buy for 2020. Each offers the potential for capital appreciation -- and yields that 10-year Treasurys can't touch. Here's a look at some of the top dividend-paying stocks.

Bristol-Myers Squibb (ticker: BMY)

Pharmaceutical giant Bristol-Myers Squibb, fresh off a year in which it gobbled up rival pharma mainstay Celgene and gained 28%, hasn't had quite the same blockbuster year in 2020, although it still looks like one of the best dividend stocks to buy right now. As is frequently the case with drugmakers, the strengths of BMY lie in its current drug portfolio and its pipeline. Its cancer treatment Opdivo takes in nearly $2 billion each quarter. The Celgene acquisition gives it a $10 billion annual cash cow in Revlimid, and analysts expect BMY to grow earnings 15% annually over the next five years. The current payout ratio is artificially high due to a short-term earnings hit, and in mid-June, one company director made a big insider purchase -- generally, that's a bullish indicator.

Market capitalization: $130 billion
Dividend yield: 3%
Payout ratio: 207%

Medifast (MED)

The best dividend stocks to buy are often ones that can both afford to pay shareholders a meaningful quarterly dividend -- preferably a sustainable and growing one -- and offer a shot at solid capital gains. Medifast, which sells healthy meals for its company-designed weight loss programs, checks both boxes. As the payout ratio indicates, it only pays out less than 60% of earnings to finance its dividend, using the rest to grow its business. Expected to grow earnings about 20% annually over the next half-decade, MED shares trade for about 19 times earnings -- not a bad price for such high expected growth. The potential price appreciation is arguably more attractive than the dividend, although investors should be aware of generally higher volatility.

Market capitalization: $1.4 billion
Dividend yield: 3.8%
Payout ratio: 58%

Energy Transfer (ET)

It's fair to say that the energy sector hasn't been an outperformer in 2020. Energy Transfer is a natural gas pipeline company operating as a master limited partnership, or MLP. This structure, similar to a real estate investment trust, allows MLPs to use a pass-through structure in which the entity avoids corporate taxes and instead distributes its available cash flows to investors. This makes for large payouts, and Energy Transfer's 90,000 miles of pipelines traversing 38 states are generating plenty of cash flows, as ET collects a toll for everything it transports. In an era of incredibly low interest rates, ET and its 15% yield goes down as one of the best dividend stocks for the rest of 2020. The worst pandemic demand concerns are likely in the past, and consensus price targets imply nearly 50% upside.

Market capitalization: $20 billion
Dividend yield: 15.5%
Payout ratio: 170%

British American Tobacco (BTI)

While the energy sector is often flush with high-yielding investment opportunities, the tobacco industry has also been a famous cash flow generator since time immemorial. Only a handful of global giants in this space have the global presence of British American, which is worth roughly $100 billion in normal times. Its portfolio of brands includes Camel, Lucky Strike, Dunhill, Pall Mall, Newport, Natural American Spirit, Kool, Grizzly snuff and Vuse e-cigarettes, to name a few. Although shares gained more than 40% in 2019, BTI remains oversold following a brutal vaping-driven 2018 overcorrection and 2020's pandemic-driven bear market. At around nine times forward earnings, this Steady Eddie with a nearly 7% yield is a perfect option for conservative investors.

Market capitalization: $85 billion
Dividend yield: 6.9%
Payout ratio: 65%

AbbVie (ABBV)

One of just two names among the best dividend stocks to buy for 2020 that also made the cut last year, mega-cap pharmaceutical AbbVie makes the world's bestselling drug, Humira. AbbVie's 2019 returns were jeopardized by the company's surprise $63 billion buyout of Botox-maker Allergan at a hefty 45% markup. Markets worried that the Chicago-based ABBV was overpaying for Allergan, but shares rebounded sharply from those mid-year woes. The sharp market-wide sell-off of 2020 gave way to an equally sharp rebound, and shares are handily outperforming the market this year. Still, ABBV trades for just more than eight times forward earnings. ABBV pays a sustainable dividend and has raised its payout annually for 47 straight years.

Market capitalization: $167 billion
Dividend yield: 4.9%
Payout ratio: 78%

AT&T (T)

Like AbbVie, telecom giant AT&T is one of the elite members of the dividend aristocrats, a list of S&P 500 companies that have raised their dividend every year for more than three decades. As one of the major players in the oligopolistic wireless business, AT&T's staying power is rivaled by few companies in America. On top of internet and cell service, AT&T is vertically integrated, owning cable and satellite TV services and -- after the $104 billion purchase of Time Warner in 2018 -- much of the content distributed over those services, too. It's important to keep in mind that AT&T isn't a growth stock and might best be considered an investment that merely preserves capital and provides solid income, which is one of management's most closely held prerogatives.

Market capitalization: $208 billion
Dividend yield: 6.9%
Payout ratio: 104%

Discover Financial Services (DFS)

The oft-forgotten fourth credit card company behind Visa (V), Mastercard (MA) and American Express (AXP), DFS is a company that tends to grow regularly year after year. DFS' former 2.1% dividend is now more than 3% following what appears to be an unnecessarily swift decline in the share price in the first half of 2020. Since it currently needs only a quarter of its earnings to fund that dividend, there's plenty of room to grow its payout. Setting aside a yield much higher than the 10-year Treasury, the potential for capital appreciation is what makes DFS one of the best dividend stocks to buy for the rest of 2020. The stock's price-earnings ratio of about 8 is well below its five-year average P/E of 10.8, and DFS' price-earnings-growth ratio of 0.8 indicates extreme value.

Market capitalization: $15 billion
Dividend yield: 3.2%
Payout ratio: 26%

Johnson & Johnson (JNJ)

The economy seemed fine heading into 2020 -- the U.S. had added jobs for 10 straight years, the longest streak ever in the 80 years of data available -- but there's simply no way to know when things can turn south. JNJ is well-positioned to outperform the market in a downturn, as health care stocks often outperform in late bull markets and recessions. Aided by its gargantuan size, impressive diversification and a 58-year streak of dividend increases, Johnson & Johnson is a must-have in any conservatively run income portfolio, and the fact that JNJ is working on what could be a leading vaccine candidate doesn't hurt either.

Market capitalization: $370 billion
Dividend yield: 2.8%
Payout ratio: 58%

Brookfield Renewable Partners (BEP)

Named one of the best energy stocks to buy this year, Brookfield Renewable differs from the rest of 2020's top dividend stocks. First off, technically BEP is an MLP, which allows the company to avoid corporate taxes by paying out mandatory dividends. Traditional P/E ratios aren't relevant here, as the funds from operations (FFO), not earnings, are what matter. Brookfield Renewable is a hybrid of sorts between an energy and a utility company, selling electricity it generates through hydropower, wind, solar and other renewable sources. BEP aims to increase its distribution by between 5% and 9% annually. FFO rose 13% last year.

Market capitalization: $8.5 billion
Dividend yield: 4.4%
Payout ratio: 88% of FFO

Healthpeak Properties (PEAK)

Like Brookfield, Healthpeak Properties is a little different from most other names on this list due to its structure: PEAK is a REIT, which, like an MLP, can avoid corporate taxes if it abides by certain rules. One such rule is that PEAK must distribute at least 90% of its income to shareholders each year. A way for investors to indirectly participate in the real estate market, PEAK specializes in high-quality health care real estate, focusing on senior housing, medical offices and life sciences. Trading at 15 times FFO, PEAK was named as one of the best stocks to buy for 2020, in part due to its potential to stabilize and hedge a broader portfolio. The pandemic has challenged that thesis year to date.

Market capitalization: $14 billion
Dividend yield: 5.6%
Payout ratio: 289%

Duke Energy Corp. (DUK)

The best dividend stocks are the "set it and forget it" type of investments -- companies you can buy, own and forget about, sleeping soundly at night while dreaming of your quarterly dividend check. This degree of safety is largely what made regional utility Duke Energy a member of both this list and U.S. News' Best Blue-Chip Stocks to Buy for 2020. The company, which sells electricity and natural gas to more than 9 million customers in the Carolinas, Tennessee, Florida and the Midwest, trades for 16 times earnings. Utility stocks like DUK are a favorite of income investors seeking stability and predictability, and DUK shares have been far less volatile this year than the market at large. Sadly, for many Americans, the checks may stop coming, but the bills don't.

Market capitalization: $59 billion
Dividend yield: 4.6%
Payout ratio: 74%

NetEase (NTES)

This next pick is far different from the average dividend-payer on this list. For one, it's a tech stock. Secondly, it's Chinese. Third, the e-commerce and online-gaming company has a new dividend policy, and it's only suitable for more aggressive, growth-seeking income investors. NetEase is best thought of as an online-gaming company, offering many of the most popular PC and mobile games in Asia. This specialty allowed NTES to avoid the 2020 bear market, with shares up more than 30% in the first half of the year. NTES plans to pay out between 20% and 30% of quarterly earnings as a dividend over the longer term. Net revenue for NTES in the first quarter was also up 18%.

Market capitalization: $57 billion
Dividend yield: 1.07%
Payout ratio: 45%

Intel Corp. (INTC)

Another (quite different) tech company making the cut as one of the best dividend stocks to buy for 2020 is Intel, the semiconductor giant and Dow member that is one of just two stocks that made both the 2019 and 2020 U.S. News Best Dividend Stocks lists. INTC is trying to reinvest and reposition itself with a focus on data, where its data center business now accounts for about 33% of all revenue. At less than 12 times earnings, INTC is not only a blue-chip dividend stock but a well-priced one. Another income stock that has shown less volatility than the overall market, INTC has been outperforming the S&P 500 year to date.

Market capitalization: $249 billion
Dividend yield: 2.2%
Payout ratio: 24%

McDonald's (MCD)

It's not merely McDonald's' roughly 3% yield that makes shares worthy of consideration for income investors; it's the staying power. The fast-food giant has grown its dividend payout annually since 1976. During the depths of the Great Recession in 2008, MCD outperformed the S&P by 46 percentage points as consumers and investors alike flocked to the "golden arches." Although shares may seem fully valued at 24 times earnings, investors are willing to pay up for sturdy cash cows in almost any market, making MCD one of the top dividend stocks to buy for 2020. Shares, despite losing ground, are roughly keeping pace with the wider market in 2020's pandemic-driven decline.

Market capitalization: $136 billion
Dividend yield: 2.7%
Payout ratio: 63%

Novartis (NVS)

Last but not least among the best dividend stocks for 2020 is Novartis, the large Swiss drugmaker also named one of the best blue-chip stocks to buy this year. With fast-growing drugs like Cosentyx and Entresto boosting its portfolio last year, revenue rose 9% overall. Modestly priced around 16 times forward earnings, NVS has made a series of bold acquisitions since CEO Vas Narasimhan took over in early 2018. The most recent major acquisition, The Medicines Company, developed a potential cholesterol and cardiovascular drug that's already set to go before U.S. and European Union regulators.

Market capitalization: $205 billion
Dividend yield: 3.4%
Payout ratio: 54%

The best dividend stocks to buy for 2020:

-- Bristol-Myers Squibb (BMY)

-- Medifast (MED)

-- Energy Transfer (ET)

-- British American Tobacco (BTI)

-- AbbVie (ABBV)

-- AT&T (T)

-- Discover Financial Services (DFS)

-- Johnson & Johnson (JNJ)

-- Brookfield Renewable Partners (BEP)

-- Healthpeak Properties (PEAK)

-- Duke Energy Corp. (DUK)

-- NetEase (NTES)

-- Intel Corp. (INTC)

-- McDonald's (MCD)

-- Novartis (NVS)