4 No-Brainer Dividend Stocks to Buy Right Now - And a 17 % Yield to Avoid

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  Stocks and Investing on Wed, Nov 19th, 2025 by The Motley Fool

4 No‑Brainer Dividend Stocks to Buy Right Now – And a 17 % Yield to Avoid

When the market’s volatility reminds us that capital preservation is as important as growth, dividend‑paying stocks can serve as a reliable source of income and a buffer against downturns. A recent MSN Money feature highlighted four stalwart dividend earners that investors can consider adding to their portfolios immediately, while cautioning against a particular high‑yield play that promises a staggering 17 % return but may be more risky than it looks. Below is a concise synthesis of the key points, company‑specific data, and the underlying reasoning that makes these recommendations—and the warning—worth noting.

1. The Four Dividend “No‑Brainer” Stocks

Why These Four?

1. Proven Track Record
   All four firms have maintained a steady dividend increase for decades. Johnson & Johnson, for instance, has raised its dividend 48 times in a row, a record in the S&P 500. Coca‑Cola, PG, and XOM have each also posted consistent growth, making them attractive for investors who value reliability.

2. Solid Balance Sheets
   The combined debt‑to‑equity ratio of these companies sits comfortably below the industry averages, and their cash‑flow generation far outpaces dividend payments. This reduces the risk of a dividend cut in a downturn.

3. Diversified Exposure
   With JNJ (healthcare), KO & PG (consumer staples) and XOM (energy), the portfolio automatically spreads risk across sectors. Consumer staples and healthcare typically hold up better in recessions, while the energy sector can deliver high yields when commodity prices are favorable.

4. Yield‑Growth Trade‑Off
   While the yields are moderate (2.6–3.1 % for the staples and 6.5 % for XOM), the growth rates are robust. Investors looking for income that keeps pace with inflation can comfortably rely on these stocks.

The MSN article cites data from Bloomberg and the companies’ 2023 annual reports, and provides a handy table that makes the comparison quick and clear. A link to the underlying data spreadsheet (downloadable on the page) allows readers to verify the numbers for themselves.

2. The 17 % Yield Dividend Stock to Avoid

While the article’s headline promises a “17 % dividend yield to avoid,” the narrative makes it clear that this high return is a red flag, not an opportunity. The stock in question is M3, a small‑cap, high‑yield energy play whose dividend has been climbing to an eye‑watering 17 % in 2023. But the numbers behind the yield spell trouble.

Why It’s Risky

1. Over‑Leveraged
   M3’s debt‑to‑equity ratio is nearly double the industry average, meaning it relies heavily on borrowing to sustain its dividend. A slight drop in commodity prices or a rise in interest rates could choke cash flow.

2. Weak Cash Flow Cushion
   Cash generated from operations barely covers the debt service requirement, leaving little room to weather an earnings dip. In a scenario where the company cannot meet debt obligations, the dividend could be cut or suspended.

3. Negative Revenue Trend
   With a decline in revenues, the firm is already under pressure. A sustained negative growth trajectory signals that the business model may be unsustainable.

4. High Payout Ratio
   A 90 % payout ratio leaves virtually no room for reinvestment or growth. If future earnings falter, the company’s ability to maintain the dividend becomes tenuous.

The article includes a link to a recent analyst note from Seeking Alpha that expands on the balance‑sheet concerns, and a reference to a Bloomberg piece on the risk of “high‑yield, high‑leverage” stocks in volatile markets. Together, these resources reinforce the cautionary message.

3. Putting the Pieces Together

The central takeaway is simple: high yield does not always equal high value. For the average investor, dividend yield should be weighed alongside a company’s fundamentals—cash flow, debt level, earnings history, and growth prospects.

The four “no‑brainer” picks illustrate how a balanced approach—moderate yields paired with strong fundamentals—can provide a steadier stream of income. Meanwhile, the 17 % dividend example serves as a stark reminder that exceptionally high yields often mask underlying fragility.

Quick Checklist for Dividend Investors

1. Check the payout ratio – anything above 70–80 % is a red flag.
2. Examine debt levels – a debt‑to‑equity ratio above 1.0 for a stable dividend is worrisome.
3. Look at cash flow – cash flow to debt should comfortably cover debt service.
4. Assess dividend history – consistent increases are a sign of commitment to shareholders.
5. Diversify – spread across sectors to reduce concentration risk.

Final Thoughts

In an environment where inflation, interest‑rate hikes, and geopolitical uncertainties loom, dividend stocks can offer a degree of stability and predictability. The MSN Money article’s focus on a small set of tried‑and‑tested companies underscores that “no‑brainer” dividends are often more about consistency than spectacular yields. At the same time, the cautionary note about the 17 % dividend reminds investors that high returns can be a trap if the underlying fundamentals are shaky.

Armed with this information—and the downloadable data sheet linked in the article—investors can evaluate whether the four suggested stocks fit within their risk tolerance and income needs. And they can steer clear of the “too‑good‑to‑be‑true” 17 % dividend, recognizing that it may be more cost than benefit in the long run.