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Dividend stocks have the ability to handily outperform non-dividend-paying stocks over decades.
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One of Wall Street’s true special dividend stocks, it has increased dividends to shareholders more than 130-fold since it went public in 1994.
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Meanwhile, another unknown income generator has increased its dividend every year since the mid-1950s.
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10 stocks we like better than Real Estate Income ›
With thousands of publicly traded stocks and ETFs to choose from, there’s no shortage of ways to build wealth on Wall Street. But among the countless wealth-building stock market strategies, few are more consistently profitable than buying and holding high-quality dividend stocks.
Companies that pay regular dividends usually check all the appropriate boxes. They are almost always consistently profitable, have proven they can weather downturns, and can provide investors with transparent long-term growth forecasts.
What investors appreciate most about income stocks is their long-term outperformance. In “The Power of Dividends: Past, Present and Future,” analysts at Hartford Funds teamed up with Ned Davis Research to compare the performance and volatility of dividend-paying stocks to non-dividend-paying stocks over a 51-year period (1973 to 2024). On average, those who pay dividends earn more than double the annualized returns of those who don’t (9.2% vs. 4.31), and they do so with much less volatility.
However, not all dividend stocks are created equal. While investors typically focus on high yields, other variables come into play, including factors such as the sustainability of the payments and the prospects of the underlying company.
But a handful of dividend stocks – some of which are completely under investors’ radars – stand head and shoulders above the rest and can truly be classified (by me) as the “Top Three Dividend Stocks on Wall Street.”
One of the easiest ways to spot greatness in the dividend space is for a company to have its own registered trademark. Senior Retail Real Estate Investment Trust (REIT) real estate income (NYSE: O) Known as the “Monthly Dividend Company®”.
Since its initial public offering (IPO) in 1994, Realty Income has announced 667 consecutive monthly stock dividends, has increased dividends for 113 consecutive quarters, and has increased dividends 133 times cumulatively. As far as I know, no public company raises payouts more frequently than Realty Income.
One of the factors that allows the company to support strong dividend growth is its resilient commercial real estate (CRE) portfolio. As of the third quarter, the company owned more than 15,500 commercial real estate properties, many of which are resilient to economic downturns and e-commerce pressures. Realty Income primarily provides leasing services to branded independent businesses in industries that appeal to consumers in any economic climate, such as grocery stores, drug stores, convenience stores, dollar stores and automotive services.
Management also has a long history of excellent lease reviews and deserves credit. Only a small proportion of tenants have historically failed to pay rent, with the weighted average lease term at the end of September being almost nine years. Realty Income’s ability to generate highly predictable funds from operations has driven unparalleled growth in its monthly dividends.
Additionally, Realty Income has been expanding its horizons beyond retail. In the past few years, it has entered the gaming industry and formed a joint venture to lease custom data centers to take advantage of the artificial intelligence revolution.
However, not all of the stock market’s highest dividend stocks are as famous as real estate income. Remember, production is not everything and hydropower facilities are relatively unknown America’s water services (NYSE: AWR) A unique distinction among dividend payers.
Heading into 2026, nearly five dozen public companies qualify as Dividend Kings, defined as companies that have raised their base annual dividends for at least 50 consecutive years. American States Water topped the list, announcing in October 2025 that it would increase its dividend for the 71st consecutive year. The company said it aims for a “long-term dividend compound annual growth rate of over 7%.”
From an investment perspective, one of the great things about utility stocks is that they operate as a monopoly or duopoly in the areas they serve. Given the high cost of installing the necessary infrastructure, utilities like State Water don’t have to worry about losing their customers to competitors. This results in highly predictable demand for water and electricity from year to year.
From a more company-specific perspective, the company’s contract services segment sets it apart. Although its water and wastewater business is its most profitable segment, its contract services subsidiary American States Utility Services provides maintenance and construction management for water distribution, collection and treatment facilities at military installations in 12 California counties. The contract associated with this government work is for 50 years.
In addition, its water subsidiary Golden State Water Company is regulated by the California Public Utilities Commission (CPUC). Although regulated utilities cannot increase rates for their customers without approval from the state public utility commission (in this case, the CPUC), it also ensures that state water utilities across the U.S. do not face unpredictable wholesale pricing.
American States Water is a $2.8 billion company with an average of 282,000 shares traded daily, while the Pennsylvania-based company york water company (NASDAQ: YORW) is a truly under-the-radar income stock. It’s a $479 million water and sewer company that trades fewer than 83,000 shares a day and serves just 57 cities in four counties in south-central Pennsylvania. I bet 99% of investors have never heard of York Water.
But when it comes to dividend consistency, no public company can match this small water company. York Water has been paying out dividends to shareholders (drum roll) despite not guaranteeing a dividend increase every year… 209 consecutive years! Viewed in this light, York has paid dividends under every U.S. president except the first three. The next closest listed company, Stanley Black & Deckera full sixty years (149 years) behind the continuous payment of dividends.
York Water and U.S. state water companies share the common characteristic of being regulated utilities. Last year, York asked the Pennsylvania Public Utilities Commission (PPUC) to significantly increase rates to cover continued investments in new and existing infrastructure. If approved by the PPUC, the company’s full-year revenue would be 32% higher than in 2024.
York’s management team will also use bolt-on acquisitions as a source of stable growth. Because demand for water and sewer services remains fairly constant from year to year, the company’s operating cash flow is generally transparent and predictable. This predictability comes in handy when added to existing services.
However, what may be most attractive to investors is York’s historically low valuation. York Water shares currently trade at a forward price-to-earnings (P/E) ratio of 19.4x, a 34% discount to the average forward P/E ratio over the past five years.
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Sean Williams has no position in any of the stocks mentioned. The Motley Fool has an interest in and recommends Realty Income. The Motley Fool has a disclosure policy.
Say hello to 3 of Wall Street’s highest dividend stocks — 2 of which most investors don’t even realize exist Originally published by The Motley Fool