In this article, we will take a look at some of the best diversified dividend stocks.
Diversified stocks refer to companies involved in multiple sectors, industries, or regions. These businesses, often large conglomerates like Warren Buffett’s Berkshire Hathaway, generate income from a variety of operations. The main goal of diversification is to lower risk by spreading investments across various areas, reducing the potential negative impact of poor performance in any one stock or sector. Nathan Wallace, principal wealth manager at Savvy Advisors, also supported the idea of diversifying portfolio. Here are some comments from the analyst:
“Through intelligent portfolio building and diversifying, investors can create a portfolio of risky assets with an aggregate volatility that is lower than any of the individual securities. The key here is to buy securities with attractive risk profiles that are not correlated to each other in a significant way with the goal that when one asset is performing poorly, another asset will pick up the slack through positive performance.”
That said, diversification doesn’t guarantee a lack of correlation between your investments. For example, owning 100 tech stocks might reduce risk compared to holding just one, but those 100 stocks are likely to be correlated with each other. To truly minimize risk, it’s important to diversify beyond just one sector. According to analysts, the higher yields on Treasury bonds could provide some protection in the event of a major stock market decline. Despite this, those who believe in diversification are facing uncertainty. US stocks continue to outperform year after year, driven by the consistent profits of American companies, making other investments seem like a path to underperformance.
On the other hand, a recent study by Preqin revealed that institutions, including pensions, endowments, and foundations, hold $21 trillion in traditional diversified strategies, as of June 2024. These strategies allocate funds across various investments such as bonds, stocks, real estate, and cash.
The year 2024 proved to be exceptional for US stocks, with the broader market rising over 23%. The Nasdaq outperformed with a nearly 29% gain, while the Nasdaq 100 rose close to 25%. These impressive gains were largely driven by the Magnificent 7 stocks, which surged by nearly 67%, along with other mega-cap companies. This marked the second consecutive year that the broader market achieved gains exceeding 20%, a feat last seen in the late 1990s.
Regardless of market conditions, investors have consistently sought comfort in dividend stocks. Among these, dividend growth stocks have gained significant interest. A report from BlackRock revealed that, over time, stocks that consistently increased or maintained their dividends have tended to perform better than those that didn’t pay dividends or cut their payouts. In times of market decline, dividend-paying stocks often offer a safeguard against fluctuating share prices. Companies that pay dividends typically aim to sustain these payments and are usually hesitant to reduce them unless it’s essential.
When considering dividend stocks, investors typically assess the dividend yield. Experts suggest targeting yields between 3% and 6%, as yields higher than this could signal potential yield traps. Brian Bollinger, president of Simply Safe Dividends, has highlighted this advice. Below are some insights from the analyst:
“I generally like to advocate for an approach of targeting great businesses that might pay closer to a 3% to 4% dividend yield.”
In this article, we will take a look at some of the best diversified dividend stocks.
Photo by Karolina Grabowska: https://www.pexels.com/photo/hands-holding-us-dollar-bills-4968630/
Our Methodology:
For this list, we scanned Insider Monkey’s database of Q3 2024 and selected conglomerate firms that specialize in several different businesses and pay regular dividends to shareholders. The list is ranked in ascending order based on the number of hedge funds having stakes in the companies.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
10. Church & Dwight Co., Inc. (NYSE:CHD)
Number of Hedge Fund Holders: 32
Church & Dwight Co., Inc. (NYSE:CHD) is an American manufacturing company that focuses on personal care, household, and specialty products. The company offers one of the most stable product portfolios in the industry, with sales of many items growing during the pandemic. It has been broadening its product range under well-known brands like Arm & Hammer and also owns other leading brands such as Trojan, OxiClean, and Orajel.
In the third quarter of 2024, Church & Dwight Co., Inc. (NYSE:CHD) reported revenue of $1.51 billion, which showed a 3.8% growth from the same period last year. All three of the company’s divisions experienced robust organic growth during the quarter. The Domestic Division saw a 3.3% organic growth, with five out of seven power brands gaining market share. The International Division achieved an 8.1% organic growth, driven by strong performance from both its country subsidiaries and the Global Markets Group. The Specialty Products Division posted a 7.5% organic sales increase, continuing its strategy of optimizing the business to focus on more profitable growth.
In addition to its strong financial performance, Church & Dwight Co., Inc. (NYSE:CHD) also showed a solid cash position. In the first nine months of the year, the company generated $864 million in operating cash flow and now expects operating cash flow of approximately $1.1 billion for FY24. Its cash position has enabled the company to increase its payouts for 28 consecutive years. The company currently offers a quarterly dividend of $0.2838 per share and has a dividend yield of 1.06%, as of January 22.
At the end of Q3 2024, 32 hedge funds tracked by Insider Monkey held stakes in Church & Dwight Co., Inc. (NYSE:CHD), compared with 36 in the previous quarter. These stakes have a total value of more than $1.4 billion.
9. Carlisle Companies Incorporated (NYSE:CSL)
Number of Hedge Fund Holders: 40
Carlisle Companies Incorporated (NYSE:CSL) is an Arizona-based manufacturing company. It functions across four key segments: construction materials, weatherproofing technologies, interconnect technologies, and fluid technologies. The company recently announced that it has reached a definitive agreement to acquire ThermaFoam, a Texas-based manufacturer of expanded polystyrene insulation. This acquisition aligns with Carlisle’s Vision 2030 strategy and its shift towards becoming a focused building products company, with a greater emphasis on innovation and synergistic mergers and acquisitions.
In the third quarter of 2024, Carlisle Companies Incorporated (NYSE:CSL) reported revenue of $1.33 billion, which saw a 6% growth from the same period last year. Carlisle Construction Material (CCM) maintained its strong momentum from its 2024 achievements into the third quarter, driven by solid contractor backlogs, strong re-roofing activity, and excellent margin performance. Sales for CCM increased by 9% year-over-year, supported by inventory normalization in the channel and the acquisition of MTL. The division’s impressive 32.8% adjusted EBITDA margin in the third quarter was a result of strong volume leverage, a favorable raw material environment, and excellent operational execution through the Carlisle Operating System (COS).
Carlisle Companies Incorporated (NYSE:CSL) also reported a strong cash position in the first nine months of the year. The company reported an operating cash flow of $662 million and its free cash flow came in at $597 million, an increase of $22 million versus the prior year. It remained committed to its shareholder obligation, returning $127 million to investors through dividends during this period. In August 2024, the company achieved its 48th consecutive annual dividend growth, which makes CSL one of the best dividend stocks on our list. It pays a quarterly dividend of $1.00 per share and has a dividend yield of 1.01%, as of January 22.
As of the close of Q3 2024, 40 hedge funds in Insider Monkey’s database owned stakes in Carlisle Companies Incorporated (NYSE:CSL), compared with 44 in the previous quarter. These stakes have a consolidated value of nearly $500 million. Among these hedge funds, Holocene Advisors was the company’s leading stakeholder in Q3.
8. TE Connectivity plc (NYSE:TEL)
Number of Hedge Fund Holders: 44
TE Connectivity plc (NYSE:TEL) is an Ireland-based company that designs and produces a diverse range of electronic components and electrical parts, such as different types of connectors, heat shrink tubing, automotive relays, and various sensors. The company reported strong earnings in fiscal Q1 2025. In the transportation segment, the company continued to manage a fluctuating global vehicle production landscape, achieving strong results while fostering innovation among global customers in growth areas like electrification and next-generation vehicle data connectivity. The company also achieved double-digit sales growth in its industrial segment, expanding margins due to strong momentum in AI programs with multiple customers and leveraging ongoing strength in its AD&M and energy businesses.
TE Connectivity plc (NYSE:TEL) reported revenue of $3.84 billion in fiscal Q1 2025, up 0.65% from the same period last year. Orders totaled $4.0 billion, reflecting a 6% year-over-year increase and a 4% rise sequentially, primarily driven by the Industrial segment and growing momentum in artificial intelligence programs. The operating margin was 18%, while the adjusted operating margin reached a quarterly record of 19.4%, fueled by strong operational execution.
The London Company highlighted the strengths of TEL in its Q2 2024 investor letter. Here is what the firm has to say:
“Initiated: TE Connectivity Ltd. (NYSE:TEL) – TEL designs and manufactures connectors and sensors, supplying solutions to the transportation, industrial, and communications industries. The critical components that TEL sells have long life cycles and they make up a small percent of the overall cost of materials for a complex electronic systems (i.e. low cost but high-cost failure products), creating high switching costs and barriers to entry. TEL has leading share in the global connector market (including 30-35% share in automotive) with leverage to secular growth from the ‘electrification’ of multiple end markets. TEL’s management team has enacted successful cost- realignment strategies, driving significant margin improvement and leading to mid-teens returns on invested capital. TEL fits our process well. It has a low level of net debt, generates healthy cash flows, returns a significant amount of capital back to shareholders through its dividend and buyback program, and it currently trades at a discount to our estimate of intrinsic value and a discount to its peers. Given its strong competitive position, capital allocation philosophy, and favorable industry tailwinds, we believe TEL presents an opportunity to own a high quality compounder.”
TE Connectivity plc (NYSE:TEL), one of the best dividend stocks, reported a strong cash position which is sufficient to fund its dividend payouts. The company’s operating cash flow for the quarter came in at $878 million, which saw a 22% growth from the prior-year period. Its free cash flow also jumped to 18% on a YoY basis at $674 million. The company also returned approximately $500 million to shareholders through dividends and share repurchases. It has been growing its payouts for 10 consecutive years and offers a quarterly dividend of $0.65 per share. The stock supports a dividend yield of 1.67%, as of January 22.
TE Connectivity plc (NYSE:TEL) was included in 44 hedge fund portfolios at the end of Q3 2024, down from 46 in the preceding quarter, according to Insider Monkey’s database. The stakes owned by these hedge funds have a total value of roughly $2 billion.
7. Corning Incorporated (NYSE:GLW)
Number of Hedge Fund Holders: 46
Corning Incorporated (NYSE:GLW) is an American multinational technology company that specializes in advanced optics, ceramics, and specialty glass. The company’s glass products are some of the most specialized and high-margin items in the industry. It is an innovator in materials science, producing a variety of glass, ceramic, and fiber optic products that are essential in areas like high-speed communications, touchscreens, display panels, and life sciences. The stock has generated solid returns in the past year, surging by nearly 77%.
In the third quarter of 2024, Corning Incorporated (NYSE:GLW) reported revenue of $3.73 billion, which showed an 8% growth from the same period last year. The company is achieving key milestones in its ‘Springboard’ plan. In the Display Technologies segment, it implemented price increases and expects to generate net income between $900 million and $950 million in 2025, while maintaining a net income margin of 25%. In the Optical Communications segment, new products designed for generative AI are experiencing strong demand, driving record year-over-year growth in the Enterprise business. In addition, the company recently announced a multiyear supply agreement valued at over $1 billion with AT&T, aimed at providing next-generation fiber, cable, and connectivity solutions to support the expansion of AT&T’s fiber network and deliver high-speed internet to more Americans.
Corning Incorporated (NYSE:GLW) also generated stable cash in the most recent quarter. The company’s operating cash flow and free cash flow came in at $699 million and $553 million, respectively. It currently pays a quarterly dividend of $0.28 per share and has a dividend yield of 2.07%, as of January 22.
Corning Incorporated (NYSE:GLW) was a popular buy among elite funds at the end of Q3 2024 as hedge fund positions in the company grew to 46, from 35 in the previous quarter, according to Insider Monkey’s database. The stakes held by these funds are worth over $851 million.
6. Colgate-Palmolive Company (NYSE:CL)
Number of Hedge Fund Holders: 54
Colgate-Palmolive Company (NYSE:CL) is a prominent global consumer products company, recognized for its products in Oral Care, Personal Care, Home Care, and Pet Nutrition. In the past 12 months, the stock has surged by nearly 9%. Recently, the company has focused heavily on sustainability and broadening its product offerings. Its goal of making all packaging recyclable by 2025 highlights the increasing environmental concerns of consumers and regulators. Through efforts like partnering on renewable energy projects, the company is adjusting its operations to align with future market needs and regulatory standards.
In the third quarter of 2024, Colgate-Palmolive Company (NYSE:CL) reported revenues of $5.03 billion, marking a 2.4% increase compared to the same quarter last year, surpassing analysts’ expectations by $27.2 million. The company continues to dominate the toothpaste market with a 41.6% global market share year-to-date, and it remains the leader in the manual toothbrush category, holding a 32.3% global market share during the same period.
Colgate-Palmolive Company (NYSE:CL)’s financial position also remained strong in 2024, generating nearly $3 billion in operating cash flow during the first nine months of the year. This solid cash flow has allowed the company to increase its dividends for 62 consecutive years. Currently, it pays a quarterly dividend of $0.50 per share and has a dividend yield of 2.28%, as of January 22.
As per Insider Monkey’s database of Q3 2024, 54 hedge funds owned stakes in Colgate-Palmolive Company (NYSE:CL), up from 52 in the previous quarter. The overall value of these stakes is over $3.4 billion. With over 9.3 million shares, GQG Partners was the company’s leading stakeholder in Q3.
5. Honeywell International Inc. (NASDAQ:HON)
Number of Hedge Fund Holders: 55
Honeywell International Inc. (NASDAQ:HON) ranks fifth on our list of the best diversified dividend stocks. The American multinational conglomerate company recently made it to headlines as the company announced that it is moving forward with a breakup after facing ongoing pressure from activist investor Elliott Investment Management, according to Bloomberg’s David Carnevali. The industrial company intends to separate into two independent publicly traded companies, one focused on automation and the other on aerospace and defense. Sources indicate that Honeywell may officially announce the plans alongside its fourth-quarter earnings report, which is set for release in early February.
Before the separation takes place, let’s review the company’s performance in the third quarter of 2024. The company reported revenue of $9.73 billion, which saw a 5.6% growth from the same period last year. Segment profit rose by 6% compared to the previous year, driven by strong performance in Aerospace Technologies and the full-quarter impact of the Access Solutions acquisition. In addition, segment margin remained steady year over year at 23.6%, surpassing the upper end of the company’s guidance range by 30 basis points.
Honeywell International Inc. (NASDAQ:HON) has grabbed investors’ attention due to its strong cash generation. The company generated $2 billion in operating cash flow in the most recent quarter and its free cash flow came in at $1.7 billion, up 10% on a YoY basis.
In September 2024, Honeywell International Inc. (NASDAQ:HON) declared a 4.6% hike in its quarterly dividend to $1.13 per share. This was the company’s 15th dividend hike in the past 14 years. The stock has a dividend yield of 2.03%, as of January 22.
The number of hedge funds tracked by Insider Monkey owning stakes in Honeywell International Inc. (NASDAQ:HON) grew to 55 in Q3 2024, from 50 in the previous quarter. These stakes have a total value of more than $877 million.
4. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 68
The Procter & Gamble Company (NYSE:PG) is an American multinational consumer goods company. It recently released its fiscal Q2 2025 earnings and reported revenue of $21.9 billion. The revenue showed a 2% YoY growth and also beat analysts’ estimates by over $291 million. The company’s organic sales, which exclude the effects of foreign exchange, divestitures, and acquisitions, grew by 3%. This growth occurred even after the company stopped raising prices, demonstrating its ability to achieve volume growth, which is considered more valuable than simply increasing revenue through price hikes. Organic volume increased by 2%, while prices remained unchanged. The baby, feminine, and family care segment performed particularly well, with both organic volume and sales rising by 4%.
Looking ahead, investors were optimistic about The Procter & Gamble Company (NYSE:PG)’s guidance, which projected organic sales growth of 3% to 5% and overall revenue growth of 2% to 4%, surpassing the consensus estimate of 1.4% growth. The company also expects core EPS growth of 5% to 7%, with earnings ranging from $6.91 to $7.05, excluding foreign exchange challenges. This outlook is slightly above analysts’ estimates of $6.93.
The Procter & Gamble Company (NYSE:PG) is one of the best dividend stocks on our list as the company holds one of the longest dividend growth track records in the market, spanning over 68 years. Its cash position has enabled the company to achieve this feat. In the most recent quarter, the company reported an operating cash flow of $4.8 billion and its free cash flow productivity was 84%. Moreover, the company paid $2.4 billion worth of dividends to shareholders. Its quarterly dividend comes in at$1.0065 per share and has a dividend yield of 2.44%, as of January 22.
Of the 900 hedge funds tracked by Insider Monkey at the end of Q3 2024, 68 funds held stakes in The Procter & Gamble Company (NYSE:PG), up from 64 in the previous quarter. These stakes have a collective value of over $8.8 billion.
3. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 81
Johnson & Johnson (NYSE:JNJ) is an American pharmaceutical company, based in New Jersey. The company specializes in a wide range of biotech and medical products and offers related services to consumers. It is gaining attention for its continued innovation and recent acquisitions. It recently revealed plans to invest more than $14 billion to acquire Intra-Cellular Therapies, aiming to enhance its focus on central nervous system disorders. The acquisition will be funded through a combination of cash reserves and debt, with the deal expected to close later this year. This marks the largest biotech acquisition in over a year, indicating a rebound in healthcare mergers and acquisitions after a slowdown in 2024, as major pharmaceutical companies took time to integrate their earlier post-pandemic acquisitions.
In its recently announced Q4 2024 earnings, Johnson & Johnson (NYSE:JNJ) reported revenue of $22.5 billion, up 5.2% from the same period last year. As a healthcare company focused on disease, the company is enhancing the standard of care across a wide range of conditions with significant unmet needs, such as multiple myeloma, lung cancer, inflammatory bowel disease, and heart failure. Its MedTech’s global operational sales increased by 6.2%, with net acquisitions and divestitures contributing 1.5% to this growth. The primary drivers of this growth were electrophysiology products and Abiomed in the Cardiovascular sector, as well as wound closure products in General Surgery.
Johnson & Johnson (NYSE:JNJ) is one of the best dividend stocks on our list as the company has raised its payouts for 62 years in a row. The company offers a quarterly dividend of $1.24 per share and has a dividend yield of 3.41%, as of January 22.
As of the close of Q3 2024, 81 hedge funds tracked by Insider Monkey reported having stakes in Johnson & Johnson (NYSE:JNJ), up from 80 in the previous quarter. These stakes are collectively valued at over $5.4 billion.
2. 3M Company (NYSE:MMM)
Number of Hedge Fund Holders: 82
3M Company (NYSE:MMM) is a Minnesota-based multinational conglomerate that operates in a wide range of industries. While the company is currently presenting a more positive outlook, it faced considerable challenges last year, including spinning off its healthcare division and cutting its dividend by 50%. In addition, it has been dealing with ongoing legal and regulatory pressures for several years. However, 3M is actively working to manage these challenges with a strategic plan to handle related costs. This effort is evident in the stock’s performance, which has risen over 65% over the past 12 months.
In its Q4 2024 earnings, 3M Company (NYSE:MMM) reported revenue of over $6 billion, which beat analysts’ estimates by $157 million. Recently, the company has been focusing its efforts on core business areas. Innovation continues to be a key priority, with substantial investments in proprietary technologies and patents strengthening its competitive position. In addition, it has worked on improving operational efficiency, particularly in its supply chain, leading to a 70% improvement in supplier on-time delivery. The company’s ability to navigate regulatory requirements and manage ongoing litigation has also been crucial for maintaining financial stability and building investor confidence.
3M Company (NYSE:MMM)’s cash position remained stable in FY24. The company reported an operating cash flow of $1.8 billion and its free cash flow came in at $4.9 billion. During the year, it also returned $3.8 billion to shareholders through dividends and share repurchases, which makes MMM one of the best dividend stocks on our list. The company offers a quarterly dividend of $0.70 per share and has a dividend yield of 1.88%, as of January 22.
The number of hedge funds tracked by Insider Monkey owning stakes in 3M Company (NYSE:MMM) jumped to 82 in Q3 2024, from 66 in the previous quarter. These stakes have a total value of roughly $3.6 billion. With over 2.7 million shares, Citadel Investment Group was the company’s largest stakeholder in Q3.
1. Danaher Corporation (NYSE:DHR)
Number of Hedge Fund Holders: 98
Danaher Corporation (NYSE:DHR) is an American global conglomerate that designs, manufactures, and markets products and services belonging to various industries. As is typical for a biotechnology, life sciences, and diagnostics company, the company’s revenue and earnings have fluctuated in recent years, largely due to the pandemic. In addition to producing PCR tests for COVID-19 detection, Danaher also supplied life sciences equipment used in vaccine research. The stock has surged by over 5% in the past 12 months.
The decline in demand following the surge during the pandemic presents short-term challenges for Danaher Corporation (NYSE:DHR). As a result, management anticipates a year of modest, low single-digit core revenue declines. However, the third quarter earnings suggest that investors may need to adjust their expectations in the near future. The company reported $5.8 billion in revenues in Q3, up 3.2% from the same period last year. The revenue also beat analysts’ estimates by $210 million.
Madison Investments highlighted DHR in its Q3 2024 investor letter. Here is what the firm has to say:
“Danaher Corporation (NYSE:DHR) released its 2024 Corporate Sustainability Report. It highlighted several milestones across its three pillars of sustainability (building the best team, innovating products that improve lives and the planet, and protecting the environment). The company has committed to setting greenhouse gas emission reduction targets in line with the Science Based Targets initiatives (SBTi), including reaching net-zero value chain emissions by 2050.”
Danaher Corporation (NYSE:DHR) currently offers a quarterly dividend of $0.27 per share, having raised it by 12.5% in February 2024. The stock has a dividend yield of 0.44%, as of January 22.
Danaher Corporation (NYSE:DHR) was included in 98 hedge fund portfolios at the end of Q3 2024, growing from 83 in the previous quarter, according to Insider Monkey’s database. The stakes owned by these hedge funds are worth over $6 billion in total.
Overall Danaher Corporation (NYSE:DHR) ranks first on our list of the best diversified dividend stocks. While we acknowledge the potential for DHR as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DHR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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