In this article, we will take a look at 10 best dividend stocks of 2024.
We are nearly halfway through the year, and the stock market is showing consistent signs of improvement. The S&P 500 has surged by 12.2% this year so far, with its 12-month return coming in at nearly 27%, as of the close of May 21. However, dividend stocks are still not keeping up with the broader market, with the S&P 500 Dividend Aristocrats Index returning just 3.85% since the start of 2024. Last year also didn’t go well for these equities as tech stocks rose to fame. That said, the tech stocks that drove the market rally, have decided to enhance their shareholder return by initiating dividend policies this year. This could have an impact on the performance of dividend stocks and the overall market. David Harrell, an editor of the Morningstar Dividend Investor newsletter, made the following comment in this regard:
“The inclusion of the big names [Meta, Alphabet] in any sort of dividend indexes or dividend growth indexes is very likely to increase their correlation with the broad market.”
While dividend stocks lagged behind the market last year, their long-term performance suggests otherwise. Dividend equities represented an average of 34% of the market’s overall return from 1940 to 2023. Not only this, but these stocks also showed resilience and demonstrated strong performance in comparison to other asset classes during periods of high inflation. In our article titled 25 Things Every Dividend Investor Should Know, we cited data from Hartford Funds and mentioned that during eight inflationary periods between 1970 and 2022, dividend stocks outperformed their non-dividend counterparts. Specifically, during the 1970s, a decade marked by high inflation, dividends accounted for nearly 73% of the S&P 500’s total return.
Also read: Jim Cramer’s Latest Stock Picks in May 2024
In addition to this, the dividend growth rate has also surpassed inflation over the years. According to data from Yale University’s Robert Shiller, dividends per share have grown 1.6 percentage points faster annually than inflation since 1871. This growth advantage has increased in recent decades as over the past 50 years, dividends have surpassed inflation by 2.5 percentage points annually, and in the last two decades, by 4.6 annualized percentage points. This ability of dividends to outpace inflation makes them a more attractive investment for long-term investors. Therefore, analysts suggest that investors should not be concerned about dividend stocks underperforming the broader market in the short term.
Another factor attracting investors to dividend stocks is the increasing amount of dividends US companies have paid over the years. According to recent data from S&P Dow Jones Indices, the S&P 500 companies paid $151.6 billion in dividends in the first quarter of 2024, up from $146.8 billion during the same period last year. The report also mentioned that 796 companies announced dividend hikes during the quarter, amounting to $22.7 billion, growing from $19.7 billion in the prior-year period. This indicates that dividend payments are on the right track this year. Analysts have also given a positive outlook for dividend stocks in 2024. American Express Company (NYSE:AXP), QUALCOMM Incorporated (NASDAQ:QCOM), and Applied Materials, Inc. (NASDAQ:AMAT) are some of the best dividend stocks of 2024, that have generated strong returns this year so far. In addition to these, we have also mentioned other best dividend stocks of 2024 in this article.
Image by Steve Buissinne from Pixabay
Our Methodology:
For this list, we scanned the list of year-to-date highest-returning stocks and selected dividend stocks with the highest stock price returns in 2024, as of May 21. We also considered hedge fund sentiment around each stock, according to Insider Monkey’s database for Q4 2023. The stocks are ranked in ascending order of their year-to-date returns.
10. American Express Company (NYSE:AXP)
Year-to-Date Returns as of May 20: 28.67%
American Express Company (NYSE:AXP) is a New York-based bank holding company that offers various financial and banking services to its consumers. On May 7, the company declared a quarterly dividend of $0.70 per share, which was in line with its previous dividend. The company has raised its payouts twice this year. The stock supports a dividend yield of 1.16%, as of May 21. With a year-to-date return of 28.6%, AXP is one of the best dividend stocks of 2024.
At the end of Q4 2023, 64 hedge funds tracked by Insider Monkey held stakes in American Express Company (NYSE:AXP), down from 74 in the previous quarter. The collective value of these stakes is over $31.8 billion. Among these hedge funds, Warren Buffett’s Berkshire Hathaway was the company’s leading stakeholder in Q4.
9. Tetra Tech, Inc. (NASDAQ:TTEK)
Year-to-Date Returns as of May 20: 30.09%
Tetra Tech, Inc. (NASDAQ:TTEK) is an American consulting and engineering services company that also offers program and construction management services to businesses and individuals. The company’s quarterly dividend comes in at $0.29 per share, having raised it by 11.5% in May this year. Through this increase, the company stretched its dividend streak to nine years. Moreover, it has been making regular dividend payments to shareholders for the past 40 consecutive quarters. Since the start of 2024, TTEK has returned over 30% to shareholders, which makes it one of the best dividend stocks of 2024.
In fiscal Q2 2024, Tetra Tech, Inc. (NASDAQ:TTEK) reported revenue of $1.25 billion, up 29% from the same period last year. The company generated $103 million in operating cash flow, which also showed a 17% growth from the same period last year.
At the end of Q4 2023, 27 hedge funds in Insider Monkey’s database owned stakes in Tetra Tech, Inc. (NASDAQ:TTEK), up from 23 in the previous quarter. The consolidated value of these stakes is over $292.3 million.
8. Broadcom Inc. (NASDAQ:AVGO)
Year-to-Date Returns as of May 20: 30.2%
Broadcom Inc. (NASDAQ:AVGO) is a global technology company that specializes in a wide range of semiconductors and infrastructure software solutions. The company currently offers a quarterly dividend of $5.25 per share and has a dividend yield of 1.49%, as recorded on May 21. It has been growing its dividends consistently for the past 13 years. Since the start of the year, the stock has delivered a 30.2% return to shareholders, which makes it one of the best dividend stocks of 2024.
In the first quarter of 2024, Broadcom Inc. (NASDAQ:AVGO) reported revenue of nearly $12 billion, which showed a 34% growth from the same period last year. The company’s operating cash flow for the quarter came in at $4.8 billion and its free cash flow, which represented 39% of its revenue, amounted to roughly $4.7 billion. During the quarter, the company returned $2.4 billion to shareholders through dividends.
The number of hedge funds tracked by Insider Monkey owning stakes in Broadcom Inc. (NASDAQ:AVGO) grew to 91 in Q4 2023, from 87 in the previous quarter. These stakes have a total value of over $8.8 billion. With over 2.1 million shares, Fisher Asset Management was the company’s leading stakeholder in Q4.
7. Carlisle Companies Incorporated (NYSE:CSL)
Year-to-Date Returns as of May 20: 35.4%
Carlisle Companies Incorporated (NYSE:CSL) is an Arizona-based construction company that deals in products belonging to various industries. It is one of the best dividend stocks on our list as it returned 35.4% since the start of the year. The company currently offers a quarterly dividend of $0.85 per share and has a dividend yield of 0.81%, as of May 21. The company is just three years away from becoming a Dividend King, holding a 47-year streak of consistent dividend growth.
At the end of December 2023, 35 hedge funds tracked by Insider Monkey held stakes in Carlisle Companies Incorporated (NYSE:CSL), compared with 37 in the previous quarter. These stakes are collectively valued at over $765.4 million. Generation Investment Management owned the largest stake in the company in Q4.
6. QUALCOMM Incorporated (NASDAQ:QCOM)
Year-to-Date Returns as of May 20: 41.03%
An American semiconductor and software company, QUALCOMM Incorporated (NASDAQ:QCOM) is next on our list of the best dividend stocks of 2024. The company has been growing its dividends consistently for the past 20 years and currently offers a quarterly dividend of $0.85 per share. As of May 21, the stock has a dividend yield of 1.72%. Its year-to-date returns stand at over 41%, as of the close of May 20.
In the second quarter of 2024, QUALCOMM Incorporated (NASDAQ:QCOM) reported revenue of $9.39 billion, which showed a 1.3% growth from the same period last year. During the quarter, the company returned $1.6 billion to shareholders, including $895 million in dividends.
QUALCOMM Incorporated (NASDAQ:QCOM) was a popular stock among elite funds at the end of Q4 2023 as hedge fund positions in the company grew to 78, from 67 in the previous quarter, according to Insider Monkey’s database. These stakes are valued at roughly $3 billion in total. With nearly 3 million shares, Two Sigma Advisors was the company’s leading stakeholder in Q4.