7 Dividend Stocks That Pay While Rivals Die

Finding the best dividend stocks with economic moats in 2026 means identifying companies that can both pay reliable dividends and defend those payments with durable competitive advantages. A high dividend yield means nothing if the business lacks the moat to sustain it. The intersection of moat strength and dividend reliability is where long-term wealth gets built.

This guide focuses on companies that score well on moat analysis and maintain strong dividend track records. These are businesses with pricing power, recurring revenue, and competitive positions that protect cash flows through economic cycles.

Why Moats Matter More Than Yield

Many investors chase the highest dividend yield without asking the most important question: can this company keep paying?

A stock yielding 7% sounds attractive until the company cuts the dividend because it lacks pricing power, faces new competition, or operates in a declining industry. Companies with economic moats, on the other hand, generate consistent free cash flow because their competitive advantages protect margins and revenue streams.

The best dividend investments combine:

  • A wide economic moat that protects earnings
  • Strong free cash flow generation that funds dividend payments
  • A reasonable payout ratio that allows for dividend growth
  • A track record of increasing dividends over time

The Moatifi stock screener helps identify companies with high moat scores, strong returns on capital, and sustainable financial profiles. Filtering for these qualities alongside dividend metrics reveals the highest-quality income investments.

Top Dividend Stocks With Strong Moats

Visa (V) - Network Effects Funding Growing Dividends

Moat Type: Network effects Dividend Yield: ~0.8% Dividend Growth (5-year CAGR): ~17%

Visa's moat profile on Moatifi shows one of the strongest competitive positions in the market. While Visa's current yield is low, the dividend growth rate is exceptional. Investors who bought Visa a decade ago are earning a much higher yield on their original cost basis.

Visa's payment network processes trillions of dollars in transactions globally. The asset-light model (Visa does not lend money or take credit risk) means that margins are extraordinarily high and free cash flow conversion is excellent. This gives Visa ample room to grow dividends while investing in the business.

The network effect moat ensures that Visa's competitive position strengthens over time. More merchants accept Visa because more consumers carry it, and vice versa. This self-reinforcing cycle has been compounding for decades.

Microsoft (MSFT) - Switching Costs and Platform Lock-In

Moat Type: Switching costs, platform ecosystem Dividend Yield: ~0.7% Dividend Growth (5-year CAGR): ~10%

Microsoft on Moatifi demonstrates the power of combining a wide moat with growing dividends. Microsoft 365 and Azure create deep switching costs that generate predictable recurring revenue. This predictability supports consistent dividend increases.

Microsoft has raised its dividend every year for over two decades. The payout ratio remains conservative (around 25-30% of earnings), leaving significant room for continued increases. With free cash flow exceeding $70 billion annually, the dividend is among the safest in the technology sector.

Johnson & Johnson (JNJ) - Diversified Healthcare Moat

Moat Type: Brand power, patents, regulatory advantages Dividend Yield: ~3.0% Dividend Growth: 62+ consecutive years of increases (Dividend King)

Johnson & Johnson's moat comes from its diversified healthcare portfolio spanning pharmaceuticals, medical devices, and consumer health (now separated as Kenvue). The pharmaceutical pipeline benefits from patent protection, while the medical device business has regulatory moats (FDA approval processes create barriers to entry).

JNJ's status as a Dividend King (62+ years of consecutive increases) reflects the durability of its competitive advantages. Healthcare spending is relatively recession-resistant, which supports dividend stability through economic downturns.

Procter & Gamble (PG) - Brand Power in Consumer Staples

Moat Type: Brand portfolio, distribution network Dividend Yield: ~2.4% Dividend Growth: 68+ consecutive years of increases (Dividend King)

Procter & Gamble owns some of the most recognized consumer brands in the world: Tide, Pampers, Gillette, Crest, and dozens more. This brand portfolio creates pricing power because consumers are willing to pay a premium for trusted products.

The distribution network adds another layer to the moat. P&G has relationships with retailers globally and the scale to negotiate favorable shelf space. A new competitor would need to build both brand recognition and distribution simultaneously, which requires billions of dollars and years of effort.

The 68+ year streak of dividend increases is a testament to how durable this moat is. Through recessions, wars, pandemics, and competitive threats, P&G has continued growing its dividend.

Costco (COST) - Membership Model and Scale Advantages

Moat Type: Cost advantages, membership model Dividend Yield: ~0.5% (plus special dividends) Dividend Growth (5-year CAGR): ~13%

Costco's moat on Moatifi highlights a unique competitive advantage. Costco's membership model generates billions in high-margin fee revenue, which allows the company to sell products at near-zero markup. Competitors cannot replicate this model without the scale and member loyalty that Costco has built over decades.

While the regular dividend yield is low, Costco periodically issues large special dividends (often $10-15 per share). Combined with the regular dividend growth rate, total shareholder returns from dividends are more meaningful than the headline yield suggests.

Texas Pacific Land (TPL) - Irreplaceable Asset Moat

Moat Type: Irreplaceable assets, cost advantages Dividend Yield: ~0.7% Dividend Growth: Rapid increases in recent years

Texas Pacific Land on Moatifi represents a unique moat based on irreplaceable assets. TPL owns approximately 880,000 acres in the Permian Basin, the most productive oil region in the United States. The company does not drill for oil itself. Instead, it collects royalties and fees from companies that operate on its land.

This asset-light royalty model generates enormous free cash flow with minimal capital expenditure. The land cannot be replicated (nobody is making more Permian Basin acreage), which creates one of the most durable moats in the energy sector.

Paychex (PAYX) - Switching Costs in Payroll Processing

Moat Type: Switching costs, recurring revenue Dividend Yield: ~3.0% Dividend Growth: Consistent increases for over a decade

Paychex on Moatifi showcases the power of switching costs in the payroll industry. Once a company implements Paychex for payroll, tax filing, and HR management, switching to a competitor involves significant time, cost, and risk. Payroll errors are catastrophic for employee morale and regulatory compliance, which makes companies extremely reluctant to change providers.

This sticky customer base generates highly predictable recurring revenue, which supports a generous and growing dividend. Paychex's ROE of approximately 42% reflects the capital-light, high-margin nature of the business.

How to Build a Dividend Moat Portfolio

Building a portfolio of dividend stocks with moats requires balancing several factors:

Diversify Across Moat Types

Do not concentrate entirely in one type of moat. A well-constructed portfolio might include:

  • Network effects (Visa, Mastercard)
  • Switching costs (Microsoft, Paychex)
  • Brand power (Procter & Gamble, Johnson & Johnson)
  • Cost advantages (Costco)
  • Irreplaceable assets (Texas Pacific Land)

This diversification ensures that if one type of moat faces industry-wide pressure, the portfolio is not entirely exposed.

Balance Yield and Growth

Some moat stocks (Visa, Microsoft, Costco) offer low current yields but high dividend growth rates. Others (JNJ, Paychex, P&G) offer higher current yields with more moderate growth. Combining both types creates a portfolio that generates income today while growing that income stream over time.

Watch the Payout Ratio

A company paying out 90% of earnings as dividends has little room for error. If earnings dip, the dividend may be cut. Companies with moats typically maintain conservative payout ratios (30-60%) because their competitive advantages generate more cash than they need for the dividend.

Reinvest During Downturns

Market corrections are opportunities to buy high-quality dividend stocks at better yields. Companies with moats tend to maintain their dividends through downturns (that is what the moat protects), so buying during temporary price declines locks in higher yields on cost.

Dividend Moat Stocks to Avoid

Not all dividend stocks have real moats. Be cautious of:

  • High-yield stocks in declining industries - A 6% yield in a business losing market share is a value trap
  • Companies with deteriorating returns on capital - Falling ROE and ROIC suggest the moat is weakening
  • Dividend payers with excessive debt - High debt levels can force dividend cuts during downturns
  • Cyclical businesses without pricing power - Dividends that swing with commodity prices are unreliable

Finding More Dividend Moat Opportunities

The Moatifi screener provides a starting point for identifying companies with strong moats and healthy financial profiles. By filtering for high ROE, strong ROIC, and low debt, investors can build a watchlist of potential dividend moat stocks.

The key insight is that the moat comes first. A company with a durable competitive advantage will generate the cash flows needed to pay and grow dividends over time. Starting with moat quality and then filtering for dividends produces better results than starting with yield and hoping the business can sustain it.