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.
5. Applied Materials, Inc. (NASDAQ:AMAT)
Year-to-Date Returns as of May 20: 42.4%
Applied Materials, Inc. (NASDAQ:AMAT) is an American manufacturing company that provides materials engineering solutions. The company’s revenue of $6.65 billion in the second quarter of 2024 fell in line with its revenue from a year-ago period. During the quarter, it generated $1.39 billion in operating cash flow and distributed $266 million to shareholders through dividends.
Applied Materials, Inc. (NASDAQ:AMAT), one of the best dividend stocks, delivered a 42.4% return since the start of 2024. The company offers a quarterly dividend of $0.40 per share, growing it by 25% in March this year. This marked the company’s seventh consecutive year of dividend growth. The stock’s dividend yield on May 21 came in at 0.73%.
Applied Materials, Inc. (NASDAQ:AMAT) was a part of 70 hedge fund portfolios at the end of Q4 2023, up from 68 in the previous quarter, as per Insider Monkey’s database. The stakes owned by these hedge funds have a collective value of over $6.1 billion.
4. Jackson Financial Inc. (NYSE:JXN)
Year-to-Date Returns as of May 20: 53.8%
Jackson Financial Inc. (NYSE:JXN) is an American financial services company. In the first quarter of 2024, the company remained committed to its shareholder obligation, returning $172 million to investors, including $56 million in dividends. It started paying dividends in 2021 and has raised its payouts every year since then. The company currently pays a quarterly dividend of $0.70 per share and has a dividend yield of 3.61%, as of May 21. Since the start of 2024, the stock has delivered a 53.8% return to shareholders, which makes JXN one of the best dividend stocks of 2024.
Jackson Financial Inc. (NYSE:JXN) was included in 26 hedge fund portfolios at the end of Q4 2023, up from 19 in the previous quarter, according to Insider Monkey’s database. Among these hedge funds, Mangrove Partners was the company’s leading stakeholder in Q4.
Here is what Miller Value Partners had to say about Jackson Financial Inc. (NYSE:JXN) in its Q1 2024 investor letter:
“Jackson Financial Inc. (NYSE:JXN) reported 4Q23 adjusted operating EPS of $2.53, compared to 4Q22 EPS of $5.66, below consensus of $3.49. Registered index-linked annuity (RILA) sales rose 78.6% Y/Y to $1.0B in the quarter, while FY23 annuity sales fell -18.5% Y/Y to $12.8B. The company returned $117MM to shareholders in 4Q23, bringing FY23 shareholder capital returns to $464MM, or ~9.1% of the company’s market cap. Management raised its quarterly dividend by 12.9% to $0.70/share (~4.2% yield), and established a 2024 shareholder capital return target of $600MM (11.7% of market cap) at the midpoint.”
3. Micron Technology, Inc. (NYSE:MU)
Year-to-Date Returns as of May 20: 56.6%
Micron Technology, Inc. (NYSE:MU) started paying dividends in 2021 and has paid regular dividends to shareholders since then. The semiconductor manufacturing company currently offers a quarterly dividend of $0.115 per share and has a dividend yield of 0.36%, as of May 21. It is one of the best dividend stocks on our list as the stock returned 56.6% to shareholders this year so far.
In fiscal Q2 2024, Micron Technology, Inc. (NYSE:MU) reported revenue of $5.8 billion, which showed a significant growth of 57.7% from the same period last year. During the quarter, the company’s operating cash flow came in at $1.22, up from $343 million in the prior-year period.
As of the end of the December quarter of 2023, 92 hedge funds held stakes in Micron Technology, Inc. (NYSE:MU), up from 90 in the previous quarter. These stakes are worth over $6 billion in total.
2. Dell Technologies Inc. (NYSE:DELL)
Year-to-Date Returns as of May 20: 99.9%
Dell Technologies Inc. (NYSE:DELL) is an American tech company, based in Texas. The company sells and develops computers and related products. On March 4, the company declared a 20.3% hike in its quarterly dividend to $0.445 per share. This was the company’s third consecutive dividend hike since it initiated its dividend policy in 2022. With a dividend yield of 1.21% as of May 21, DELL is one of the best dividend stocks of 2024.
At the end of Q4 2023, 56 hedge funds in Insider Monkey held stakes in Dell Technologies Inc. (NYSE:DELL), up from 53 in the previous quarter. These stakes have a collective value of more than $2.8 billion.
1. Vistra Corp. (NYSE:VST)
Year-to-Date Returns as of May 20: 147.12%
Vistra Corp. (NYSE:VST) tops our list of the best dividend stocks of 2024, returning over 147% to shareholders since the start of the year. On May 3, the company hiked its quarterly dividend by 1.2% to $0.2175 per share. It has raised its payouts every quarter since 2022. As of May 21, the stock has a dividend yield of 1.13%.
Insider Monkey’s database of Q4 2023 indicated that 56 hedge funds owned stakes in Vistra Corp. (NYSE:VST), worth over $1.3 billion collectively.
Third Point Management mentioned Vistra Corp. (NYSE:VST) in its Q4 2023 investor letter. Here is what the firm has to say:
“Vistra Corp. (NYSE:VST) is one of the largest independent power producers (“IPPs”) and retail electricity providers in the country. In 2023, Vistra’s natural gas, nuclear and coal plants generated over 20% of electricity consumed in Texas.
Unlike regulated utilities, where profits are determined by capital invested, Vistra operates in deregulated markets (primarily ERCOT and PJM), where they generate and sell electricity at market prices. Historically, Vistra has been valued at a steep discount to both the regulated utility sector and the broader market in part due to the challenging fundamentals of merchant power. Stagnant domestic electricity demand combined with an oversupply of natural gas has made US electricity prices among the lowest in the world. Meanwhile, significant growth in subsidized renewable generation has created major intraday price volatility in Vistra’s core markets, with power prices sometimes going negative during periods of abundant sunshine or wind. Bankruptcies, including Vistra’s former parent company TXU in 2014, have become commonplace in the sector over the last decade…” (Click here to read the full text)
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