3 High-Quality Dividend Stocks for Long-Term Income and Growth in 2026

Building a portfolio of dividend-paying stocks with strong economic moats and sustainable growth potential is a cornerstone of long-term wealth creation. As 2026 unfolds, investors seeking resilient income streams and capital appreciation should focus on companies that combine competitive advantages with disciplined financial management. Three names stand out: Merck (MRK), Bristol-Myers Squibb (BMY), and Chevron (CVX). Each offers a compelling mix of dividend security, robust business models, and growth catalysts, even amid macroeconomic uncertainties.

1. Merck (MRK): A Biopharma Giant with a Wide Moat

Merck, a leader in the biopharmaceutical sector, boasts a wide economic moat and a forward dividend yield of 3.24% as of late 2025. Its crown jewel, Keytruda, dominates the immuno-oncology market, generating over $20 billion in annual sales. Analysts at Morningstar highlight Merck's strategic investments in R&D and acquisitions, such as Cidara Therapeutics, as critical to maintaining its edge. While a patent cliff on Keytruda in 2028 poses a risk, Merck's pipeline of experimental therapies and cost-cutting initiatives provide a buffer.

Importantly, Merck's dividend is well-supported by its financial strength. Despite concerns about revenue concentration in a few blockbuster drugs, its trailing payout ratio remains conservative, and its balance sheet is rated investment-grade by S&P Global. For investors with a long-term horizon, Merck's combination of innovation and disciplined capital allocation makes it a compelling choice.

2. Bristol-Myers Squibb (BMY): A Pharma Powerhouse with a 5.3% Yield

Bristol-Myers Squibb (BMY) is another biopharma titan with a wide economic moat and a dividend yield of 5.3% as of December 2025. The company has increased its dividend for 17 consecutive years, with a current payout ratio below 50%-a strong indicator of sustainability. BMY's recent performance, including outperforming guidance in Q1 2025 and launching therapies like Cobenfi (Lecanemab), underscores its ability to adapt to patent expirations and competitive pressures.

3. Chevron (CVX): Energy's Dividend King with a Narrow Moat

Chevron (CVX), an integrated energy giant, offers a trailing dividend yield of 4.41% and a 38-year streak of dividend growth. Despite a narrow economic moat, its financial discipline and exposure to energy's undervalued sector make it a standout. As of January 2026, Chevron trades 16% below its fair value estimate of $176 per share, according to Bloomberg. The company's 2026 capital expenditure plans, focusing on U.S. shale and offshore projects, are expected to drive free cash flow growth.

Critics highlight Chevron's high payout ratio of 95%, which raises sustainability concerns. However, S&P Global's AA- credit rating and Chevron's $7 billion in adjusted free cash flow (Q3 2025) demonstrate its ability to manage risks. Analysts at Morningstar argue that Chevron's cost-cutting initiatives and strategic investments in high-return projects provide a buffer against oil price volatility. For investors comfortable with energy's cyclical nature, Chevron's yield and growth potential make it a valuable addition to a diversified portfolio.

Conclusion: A Balanced Approach to Dividend Investing

The three stocks above exemplify the principles of dividend investing: strong moats, sustainable payouts, and growth potential. Merck and BMY offer stability in the biopharma sector, while Chevron provides exposure to energy's rebound. Together, they form a diversified core for a long-term income portfolio. As Morningstar notes, 2026 could be a breakout year for dividend stocks as investors seek stable returns amid economic shifts. By prioritizing companies with durable competitive advantages and disciplined capital allocation, investors can build a resilient portfolio poised for both income and growth.