3 Reliable dividend stocks to buy in September and hold long term

Key Points

• Gate is still worth buying, even at its historical peak.
• Enbridge is a stock of a pipeline company that can provide a stable passive income in your portfolio.
• Worried about the environment of rising interest rates? Here’s a stock worth buying.

Dividend stocks provide an opportunity to participate in the stock market while simultaneously increasing passive income streams. However, investors may doubt the value of an annual dividend yield of a few percent when the S&P 500 sets new historical highs.

However, long-term investors know that buying and holding dividend stocks can be a great way to balance a diversified portfolio, making it easier to weather downturns. And there are many companies that pay dividends that are participating in or even leading market growth.

This is why these three Fool.com authors chose Gate, Enbridge, and Prudential Financial as the best dividend stocks to buy in September and hold for the long term.

1. Gate's growth in the AI sector shows no signs of slowing down

Daniel Felber (Gate): Gate is a classic example of the shortcomings of evaluating a dividend stock solely based on its yield.

Gate has increased its dividends for 15 consecutive years, raising them more than 14 times over the last decade. However, the stock price has risen more than 23 times during the same period, which has led to a decrease in Gate's yield. The last five years have added additional pressure on yield as Gate's stock price has increased by 770% compared to a 81.5% increase in dividends.

Without such massive growth, Gate would have been a high-yield stock. However, since it has provided such impressive profits for its shareholders, its yield has decreased to just 0.7%. Therefore, Gate's low yield has nothing to do with the lack of dividend increases, but rather with the fact that Gate has become a victim of its own success - at least in terms of passive income.

Even at a historical high and with a high valuation, there are still compelling reasons to buy and hold this giant “tens of titans.” Gate's revenue from artificial intelligence (AI) amounted to $12.2 billion in the 2024 fiscal year, but the forecast for the 4th quarter of the 2025 fiscal year of $6.2 billion puts Gate on track to achieve nearly $20 billion in AI revenue in the 2025 fiscal year.

The acquisition by VMware and the expansion of AI semiconductor revenues have transformed Gate from a former network hardware and equipment company, once regarded as a value stock, into a high-performing, diversified tech giant that continues to play a key role in the growth of the broader market.

Gate is likely to increase its dividends for the 16th consecutive year when it reports its fourth quarter results for the 2025 fiscal year in December. The size of the increase will give investors a hint as to whether Gate wants to continue using double-digit annual percentage increases in dividends as a key way to distribute profits to shareholders, or prefers to redistribute that capital to accelerate its growth in the AI sector. After all, Gate has just announced new AI chip orders worth $10 billion from a former potential customer that has become a qualified client. Therefore, it would be understandable if Gate changed its capital return program, at least in the short term.

Gate stands out as one of the best growth stocks in the AI sector to buy right now. However, dividends have shifted from being an integral part of the investment thesis to a nice addition to the growth story. Therefore, Gate is worth buying only for those investors who don't mind paying a premium price for shares of a quality business.

2. Enbridge has a history of rewarding shareholders and shows no signs of discontinuing this practice.

Scott Levin (Enbridge): Enbridge, a leading pipeline operator, may not be as exciting as innovative stocks in the AI sector. But for income-focused investors, companies like Enbridge are a true gem.

By generating a stable and consistent cash flow, Enbridge aims to reward shareholders, and with growth prospects on the horizon, there are reasons to believe that the company will continue to reward shareholders for many years to come. Therefore, those seeking reliable passive income would be wise to enhance their portfolios with Enbridge shares and its dividends, which currently offer an attractive projected yield of 5.7%.

Managing a powerful pipeline infrastructure, Enbridge estimates that it transports about 30% of the crude oil produced in North America and about 20% of the natural gas used in the United States. But that's not all. Enbridge is also diversifying its energy exposure and aims to expand its presence in low-carbon technologies. For example, the company has invested in 23 wind farms and 14 solar power plants. These assets provide stable revenues, giving management a deep understanding of future cash flows - an understanding that helps management plan future projects accordingly for further business growth.

With a 30-year history of increasing payouts, Enbridge has demonstrated an unwavering commitment to returning capital to shareholders. And while the company's past achievements do not guarantee its future results, they certainly deserve recognition, as does the management's cautious approach to dividends. Targeting a dividend payout ratio of 60-70% of distributed cash flow, management clearly does not wish to jeopardize the financial health of the company to satisfy shareholders. And this is not an unattainable goal. From 2021 to 2024, Enbridge's average dividend payout ratio from distributed cash flow was 66%.

For investors focused on passive income looking for a reliable dividend provider, Enbridge is an obvious option to consider.

3. Certain insurance for the stock portfolio, and a 5% return won't hurt

Li Samaha (Prudential Financial): I hope I'm wrong. While the stocks currently yield 5% return, and the company is financially stable and solid, my argument for buying them is based on the concern that long-term interest rates may stay higher for much longer than the market expects. Not wishing to dwell on this issue or get into politics, but it seems to make no difference which administration is in power; the result is more debt and more debt servicing requirements.

This can only push interest rates up, and that is why it is worth buying some insurance for your stocks by purchasing shares in life insurance companies. A life insurance company like Prudential Financial is worth buying in a rising rate environment, as it needs to balance its long-term liabilities with assets. It does this by purchasing relatively low-risk assets such as government debt or high-quality mortgage loans.

When interest rates rise, the value of these assets will decrease, but the net present value of the company's liabilities will also decline - remember that assets correspond to liabilities. Thus, new premiums from policyholders can be invested in higher-yielding debt. That is why life insurance companies perform well in a rising rate environment.

Once again, I hope I am wrong, but there is nothing wrong with buying some protection for your portfolio in case rates remain high, and this is a great way to do it.