Did you know that the latter part of December is historically a great time to invest in the stock market? There’s even a phenomenon known as the Santa Claus rally, where stocks often rise beginning in the last few days of the year.
But investing in stocks that pay juicy dividends can pay off even if Santa doesn’t deliver year-end merriment. Here are three top dividend stocks to buy in December.
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AbbVie‘s (NYSE: ABBV) dividend yield of slightly above 3% isn’t as high as it has been in the past. However, this isn’t because of dividend cuts. The major drugmaker has increased its dividend for 53 consecutive years, making it a member of the Dividend Kings – an elite group of stocks that have raised their dividends for at least 50 years in a row.
The reason for AbbVie’s lower yield is more positive: Its stock has soared this year. Has this strong performance made AbbVie’s valuation overly frothy? Not at all. Its shares still trade at a forward price-to-earnings ratio of only 16.8, which is lower than the S&P 500(SNPINDEX: ^GSPC) healthcare sector’s average forward earnings multiple of 18.7.
Two autoimmune disease drugs, Rinvoq and Skyrizi, stand out as AbbVie’s primary growth drivers. Combined sales of these two products increased by more than 40% year over year in the latest quarter.
The success of Rinvoq and Skyrizi also highlights AbbVie’s resilience. In 2023, the company faced the loss of exclusivity in the U.S. for its longtime best-selling drug, Humira. However, AbbVie prepared well for this patent cliff by investing in internal research and development, as well as making strategic acquisitions. Those investments are paying off nicely now.
Ares Capital(NASDAQ: ARCC) hasn’t been such a big winner so far in 2025. However, the long-term picture for the business development company (BDC) looks much better than the short term. Ares Capital has delivered total returns that are more than 40% higher than those of the S&P 500 since its IPO in 2004.
Those total returns continue to be boosted by Ares Capital’s dividend. The BDC’s forward dividend yield tops 9.1%. Ares Capital has either maintained or grown its dividend for more than 16 consecutive years.
The company’s long-term prospects look bright. Demand for direct lending is growing. Ares Capital estimates its total addressable market to be around $5.4 trillion, encompassing both the traditional middle market and organizations with annual revenue exceeding $1 billion.
But what about the near term? It looks good, too. Ares Capital CEO Kort Schnabel said in the BDC’s third-quarter earnings call that the market appears to be healthier now. He noted that Ares “saw a noticeable acceleration in the volume of transactions under review, both sequentially and compared to the prior year, with more deals reviewed in September than in any month this year.”
Enbridge(NYSE: ENB) arguably offers the best of all worlds. Let’s start with the dividend. This energy company’s dividend yields roughly 5.8%. And Enbridge has increased its dividend for an impressive 30 consecutive years.
In addition to this attractive dividend, Enbridge has rewarded shareholders with solid share price appreciation. Its stock has jumped by a double-digit percentage year to date.
If you’re looking for safety, Enbridge could be just the ticket for you. The company has a history of delivering market-beating risk-adjusted returns. It has minimal exposure to volatile oil and gas prices. Around 80% of its EBITDA is protected from inflation. Now that Enbridge is the largest natural gas utility in North America, in addition to being one of the largest pipeline operators, its business is even more stable.
This stock also offers promising growth prospects. The rapid build-out of data centers is driving increased demand for natural gas. More coal-powered plants are also converting to natural gas. Enbridge foresees $50 billion in growth opportunities through 2030, with nearly half of that amount stemming from its gas transmission business.
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Keith Speights has positions in AbbVie, Ares Capital, and Enbridge. The Motley Fool has positions in and recommends AbbVie, Ares Capital, and Enbridge. The Motley Fool has a disclosure policy.
