3 Excellent Dividend Stocks to Buy

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Investors looking to purchase dividend-paying stocks have hundreds, if not thousands, of options to choose from. However, just because a company pays a dividend doesn’t make it a quality investment. Furthermore, many of the companies that pay dividends pay very small ones and can hardly be counted as quality dividend stocks.

In what follows, I provide investors with three excellent stocks that dividend investors should consider adding to their portfolios. These companies pay large dividends that people can easily afford. Furthermore, they are quality companies that are highly profitable and are leaders in their respective industries. With that being the case, I think they are worth adding to your portfolio on weakness.

1. AT&T (NYSE:T)

AT&T is the highest-paying dividend stock in the Dow Jones Industrial Average. This is more likely a case of mispricing than of weakness. The company pays a 5.2 percent dividend while the S&P 500 pays a paltry 1.9 percent yield. Yet AT&T still trades at just over 10 times earnings, making it one of the least expensive Dow stocks. The company has a very stable business as America’s leading telecommunications provider. While there has been some encroachment by competitors during the mobile era of the past 20 years or so, there is still an extremely high barrier to entry.

Furthermore, switching telecom companies is much more difficult than switching shampoos or coffee brands. While AT&T has been criticized for providing an inferior service, it has been updating its infrastructure in order to improve both its mobile and cable-Internet services. The company is well positioned to finance this while still being able to pay a hefty dividend and repurchasing shares. Going forward, it should continue to be a winner, and it is a great stock to own if you are a retiree or looking for some income.

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