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 is 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 AbbVie Inc. (ABBV), Texas Instruments Incorporated (TXN), Extra Space Storage Inc. (EXR), Altria Group, Inc. (MO), and 3M Company (MMM).

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), as well as 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 AbbVie, Inc. (ABBV), which is a health care leader. The company 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: +31.36%
  • Recent big money buy signals

Just to show you graphically how I look to look at stocks, below are the big money signals AbbVie stock has made over the past year. Green bars are showing that AbbVie was likely being bought by an institution, according to Mapsignals, while red bars indicate selling. It is clear 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 signals (UI) made by AbbVie, Inc. (ABBV)
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, AbbVie has a strong dividend history:

  • Three-year dividend growth rate: +21.10%
  • Current dividend per share: $1.18
  • Current yield: 5.49%
  • Three-year earnings growth rate: +5.81%

Next up is Texas Instruments Incorporated (TXN), which is a leading semiconductor company. Texas Instruments has a rich dividend history, but the stock has been under pressure recently as the company had a weak earnings report. 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: -3.10%
  • Recent big money sell signals

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

Chart showing the unusual institutional signals (UI) 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: 3.1%
  • Three-year earnings growth rate: +27.63%

Next, I’m looking at Extra Space Storage Inc. (EXR), which is a leading storage real estate investment trust (REIT). 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: -12.43% 
  • Recent big money sell signals

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

Chart showing the unusual institutional signals (UI) made by Extra Space Storage Inc. (EXR)
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, Extra Space Storage has a strong dividend history:

  • Three-year dividend growth rate: +14.5%
  • Current dividend per share: $0.90
  • Current yield: 3.41%
  • Three-year earnings growth rate: +33.95%

Next, I'm looking at Altria Group, Inc. (MO), which is a leading tobacco company. When deciding on a strong candidate for long-term dividend growth, I like to look for prior leading companies experiencing buying shortly after a pullback:

  • Three-month performance: +6.07% 
  • Recent big money buy signals

Below are the big money signals that Altria stock has made over the past year.

Chart showing the unusual institutional signals (UI) made by Altria Group, Inc. (MO)
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, Altria has a strong dividend history:

  • Three-year dividend growth rate: +11.4%
  • Current dividend per share: $0.84
  • Current yield: 6.88%
  • Three-year earnings growth rate: +38.36%

Lastly, I'm looking at 3M Company (MMM), which is a leading industrials and consumer company. When deciding on a strong candidate for long-term dividend growth, I like to look for prior leading companies experiencing buying after a big pullback:

  • Three-month performance: +8.29%
  • Recent big money buy signals

Below are the big money signals that 3M stock has made over the past year. The latest weakness in the stock is a long-term opportunity.

Chart showing the unusual institutional signals (UI) made by 3M Company (MMM)
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, 3M has a strong dividend history:

  • Three-year dividend growth rate: +9.9%
  • Current dividend per share: $1.44
  • Current yield: 3.49%
  • Three-year earnings growth rate: +5.75%

The Bottom Line

AbbVie, Texas Instruments, Extra Space Storage, Altria, and 3M 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: At the time of publication, the author holds long positions in AbbVie, Texas Instruments, Extra Space Storage, and Altria stock but no position in 3M.