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Motley Fool Unveils JNJ, PG, and NextEra as 2026 Dividend Leaders

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  Published in Stocks and Investing on Friday, December 19th 2025 at 14:18 GMT by The Motley Fool

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Summary of “3 of the Best Dividend Stocks to Buy in 2026” – Motley Fool (Dec 19 2025)

The Motley Fool’s December 2025 piece, “3 of the Best Dividend Stocks to Buy in 2026,” offers a concise yet thorough look at three high‑quality dividend‑paying equities that, according to the writers, should form the core of any long‑term income portfolio for the coming year. The article is framed around the idea that “dividend investing is a proven way to generate steady cash flow and protect against inflation,” and it lays out a clear, data‑driven framework for selecting stocks that not only pay a healthy dividend today but are also positioned to grow those payments over time.

1. The Selection Framework

Before presenting the three picks, the article outlines the criteria the analysts used:

The authors point out that a “balanced approach” is preferable to chasing the highest yield alone, as excessive payouts often signal risk of cuts. They also reference a linked guide on the Dividend Aristocrats and Dividend Kings to help readers understand the difference between “growth” and “value” dividend stocks.

2. The Three Picked Stocks

A. Johnson & Johnson (JNJ)

• Why JNJ?
  JNJ has a 59‑year streak of dividend increases, ranking it among the Dividend Kings. The company’s diversified portfolio—consumer health, pharmaceuticals, and medical devices—provides a defensive cushion. Its 2025 earnings forecasted a 6.3% CAGR, with a 2025 dividend yield of roughly 2.6%. The payout ratio sits near 60%, comfortably below the 70% threshold that the authors warn against.
• Growth Drivers
  The authors cite ongoing drug pipeline successes (particularly in oncology and immunology) and the expected lift from the launch of a new generics platform. A recent 2025 merger with a specialty pharma firm is highlighted as a catalyst for future cash flow.
• Valuation & Risks
  The P/E sits at ~17x forward earnings, suggesting a modest discount to the sector average. Potential downside risks include regulatory scrutiny in the EU and the ongoing price‑pressure pressure in the U.S. healthcare market.

B. Procter & Gamble (PG)

• Why PG?
  PG’s 65‑year dividend increase streak makes it a Dividend King as well. The article points to its strong brand portfolio (e.g., Tide, Pampers, Gillette) that is resilient to economic cycles. The 2025 yield is around 2.5%, with a 5‑year dividend growth rate of 4.5%. The payout ratio is ~63%, indicating plenty of earnings left over to keep paying.
• Growth Drivers
  The writers highlight PG’s aggressive push into “personal care” and “wellness” segments, which are growing faster than traditional staples. Recent expansion into direct‑to‑consumer channels via e‑commerce platforms is seen as a way to capture higher margins.
• Valuation & Risks
  Forward P/E of ~20x is slightly above the consumer staples median but justified by the company’s growth potential. Risks mentioned include increased commodity costs for packaging and a potential slowdown in the U.S. retail sector.

C. NextEra Energy (NEE)

• Why NextEra?
  A departure from the consumer‑goods trio, NextEra represents the growing renewable‑energy sector. The company’s 2025 dividend yield is 1.9%, but its 5‑year CAGR of 10% is the highest of the trio. With a payout ratio near 53%, it balances growth with sustainability. NextEra’s 2025 earnings are expected to rise 9%, driven by a surge in wind and solar capacity additions.
• Growth Drivers
  The article emphasizes the federal clean‑energy incentives slated for 2026, as well as NextEra’s acquisition of a major battery‑storage firm, positioning it as a “utility of the future.” The firm’s dividend is also supported by a robust free‑cash‑flow moat.
• Valuation & Risks
  A forward P/E of ~28x is higher than the average for utilities, but the authors argue that this is compensated by the company’s growth potential. They caution, however, about the risk of policy shifts or higher interest rates that could compress energy‑sector valuation multiples.

3. Additional Context and Resources

Throughout the piece, the authors interlink to other Fool content for deeper dives:

1. Dividend Aristocrats Overview – A primer on the 25 companies that have raised dividends for 25+ years, helping readers compare the authors’ picks to the broader set.
2. How to Build a Dividend Portfolio – A step‑by‑step guide covering asset allocation, tax considerations, and the importance of reinvesting dividends.
3. The Impact of Rising Interest Rates on Dividend Stocks – An analysis that explains why the authors still favor utilities and consumer staples, even as rates climb.

These links provide a broader framework for readers to assess their own portfolios and understand how macro factors—such as Fed policy or global commodity prices—can affect dividend yields.

4. Key Takeaways

5. Final Thoughts

The Motley Fool’s article is less a “stock‑pitch” and more a case study in disciplined dividend investing. By grounding each recommendation in a set of objective metrics—yield, growth, payout ratio, and valuation—the writers create a transparent rationale that investors can replicate. The inclusion of supplementary links ensures that even readers new to dividend investing can follow up on concepts like the Dividend Aristocrats, reinvestment strategies, and macro‑economic impacts.

Overall, the article serves as a useful guide for anyone looking to add stable, income‑generating stocks to their portfolio in 2026. It demonstrates that, when chosen carefully, dividend stocks can provide both a hedge against inflation and a growing stream of passive income that compounds over time.