For decades, income-minded investors have searched for the best dividend stocks out there. In my experience, the main criteria to look for when betting on great dividend stocks are a history of strong fundamentals, increasing dividend distributions over time, great entry points (technicals), and a history of bullish trading activity in the shares.

The hallmark way I go about finding the best dividend stocks – the outliers – is by looking for quiet unusual trading activity. Oftentimes, that can be institutional activity … i.e. big money. I'll go over what that unusual trading activity looks like in a bit. But the five stocks I see as long-term dividend growth candidates are Bristol-Myers Squibb Company (BMY), Merck & Co., Inc. (MRK), The Home Depot, Inc. (HD), Texas Instruments Incorporated (TXN), and Nike, Inc. (NKE).

Over decades, I've learned that the true tell on great stocks is that big money consistently finds its way into the best companies out there … especially dividend-paying stocks. Some of the biggest returns ever have come from holding stocks for many years and reinvesting dividends. I am a very long-term minded person and see dividend investing as a pillar in personal finance and financial independence. I marry what I've learned on Wall Street and decades of investment experience in my blog, PersonalFinanceKid.

I take a well-rounded approach and rank each stock by technicals (long-term), fundamentals (long-term), and if there is big money supporting the stock. I want the odds on my side when looking for the highest-quality dividend stocks … and I own many of them. Many times, when a stock is under pressure, it's worthy of inspection. As stock prices head lower, the dividend yield increases. That is important for dividend seekers.

Up first is Bristol-Myers Squibb Company (BMY), which is a health care leader that is consistently growing and raising its dividend. When deciding on a strong candidate for long-term dividend growth, I like to look for prior leading companies experiencing buying in the shares:

  • Three-month performance: +27.53%
  • Recent big money buy signals

Just to show you graphically how I like to look at stocks, below are the big money signals Bristol-Myers Squibb stock has made over the past year. Green bars are showing that Bristol-Myers Squibb was likely being bought by an institution according to Mapsignals, while red bars indicate selling. It is clear that there is a lot of green recently with this stock. That's exactly what you want to see when looking for a great dividend growth name after a lengthy pullback the prior year.

Chart showing the unusual institutional (UI) signals made by Bristol-Myers Squibb Company (BMY)
www.mapsignals.com

On top of technicals, when deciding on the best dividend stock, you should look under the hood to see if the fundamental picture supports a long-term investment. As you can see, Bristol-Myers Squibb has a strong dividend history:

  • Three-year dividend growth rate: +2.6%
  • Current dividend per share: $0.45
  • Current yield: 2.81%
  • Three-year earnings growth rate: +166.40%

Next up is Merck & Co., Inc. (MRK), which is a leading health care company. Merck has a rich dividend history and recently announced another dividend raise. When deciding on a strong candidate for long-term dividend growth, I like to look for prior leading companies experiencing unusual buying in the shares:

  • Three-month performance: +9.44% 
  • Recent big money sell signals

Below are the big money signals that Merck stock has made over the past year. It is clear that the stock is seeing demand.

Chart showing the unusual institutional (UI) signals made by Merck & Co., Inc. (MRK)
www.mapsignals.com

On top of technicals, when deciding on the best dividend stock, you should look under the hood to see if the fundamental picture supports a long-term investment. As you can see, Merck has a strong dividend history:

  • Three-year dividend growth rate: +3.2%
  • Current dividend per share: $0.61
  • Current yield: 2.67%
  • Three-year earnings growth rate: +39.05%

Next, I’m looking at The Home Depot, Inc. (HD), which is a leading home improvement chain. When deciding on a strong candidate for long-term dividend growth, I like to look for prior leading companies experiencing a pullback:

  • Three-month performance: -4.59%
  • Recent big money sell signals

Below are the big money signals that Home Depot has made over the past year. It is clear the stock is well off of its highs.

Chart showing the unusual institutional (UI) signals made by The Home Depot, Inc.. (HD)
www.mapsignals.com

On top of technicals, when deciding on the best dividend stock, you should look under the hood to see if the fundamental picture supports a long-term investment. As you can see, Home Depot has a strong dividend history:

  • Three-year dividend growth rate: +20.4%
  • Current dividend per share: $1.36
  • Current yield: 2.47%
  • Three-year earnings growth rate: +21.52%

Next, I'm looking at Texas Instruments Incorporated (TXN), which is a leading semiconductor company. When deciding on a strong candidate for long-term dividend growth, I like to look for prior leading companies experiencing a pullback or flat performance:

  • Three-month performance: +0.24% 
  • Recent big money sell signals

Below are the big money signals that Texas Instruments has made over the past year.

Chart showing the unusual institutional (UI) signals made by Texas Instruments Incorporated (TXN)
www.mapsignals.com

On top of technicals, when deciding on the best dividend stock, you should look under the hood to see if the fundamental picture supports a long-term investment. As you can see, Texas Instruments has a strong dividend history:

  • Three-year dividend growth rate: +23.4%
  • Current dividend per share: $0.90
  • Current yield: 2.8%
  • Three-year earnings growth rate (+27.63%)

Lastly, I'm looking at Nike, Inc. (NKE), which is a leading athletic clothing company. When deciding on a strong candidate for long-term dividend growth, I like to look for leading companies experiencing buying in the shares:

  • Three-month performance: +8.43%
  • Recent big money buy signals

Below are the big money signals that Nike. has made over the past year. The latest earnings report was very strong.

Chart showing the unusual institutional (UI) signals made by Nike, Inc. (NKE)
www.mapsignals.com

On top of technicals, when deciding on the best dividend stock, you should look under the hood to see if the fundamental picture supports a long-term investment. As you can see, Nike has a strong dividend history:

  • Three-year dividend growth rate: +11.5%
  • Current dividend per share: $0 .245
  • Current yield: 0.96%
  • Three-year earnings growth rate (+25.55%)

The Bottom Line

Shares of Bristol-Myers Squibb, Merck, The Home Depot, Texas Instruments, and Nike represent a potential buying opportunity for the long-term dividend investor. Given the strong historical dividend growth and recent big money sell signals from unusual trading, these stocks could be worth a spot in a yield-oriented portfolio. 

Disclosure: The author holds long positions in Bristol-Myers Squibb, Merck, The Home Depot, Texas Instruments, and Nike at the time of publication.