In this article, we will discuss some of the best performing stocks in 2024.
Over time, dividend stocks have shown consistent resilience in difficult market conditions. Despite the recent focus on AI, the long-term appeal of these stocks has grown. Income investors have noticed this shift, reflected in the increasing role of dividends in personal income. A report by S&P Dow Jones Indices reveals that the share of dividend income has risen from 2.68% in the fourth quarter of 1980 to 7.88% in the second quarter of 2024, emphasizing the importance of dividends as a key income source. The report also noted that since 1936, dividends have accounted for more than a third of total equity returns in the broader market, with the rest coming from capital gains.
The dividend growth strategy seems to be working for long-term investors as these stocks have generated strong returns over the years. Considering inflation, dividends have outpaced it, suggesting that investors should focus on these stocks. A report by Wisdom Tree highlighted that from 1957 to 2023, dividends grew at an average annual rate of 5.7%, which is over 2% higher than the inflation rate. The report also pointed out that dividends have only decreased in six years during the past 64 years, and only once by more than 5%. In comparison, stock prices fell in 18 of those years, with the worst decline exceeding 40% and an average drop of over 11%. Stock prices were more than twice as volatile as dividend cash flows, as short-term price movements are more influenced by market sentiment, while long-term value is driven by the stability of cash flows.
Also read: 10 Dividend Stocks For Steady Income
This year, dividend stocks have underperformed compared to the broader market. The Dividend Aristocrat Index has gained only 6% year-to-date, while the market has surged by over 27%. Although this might seem discouraging for dividend investors, seasoned investors recognize that this presents a great opportunity to buy dividend stocks. Chris O’Keefe, a portfolio manager at Logan Capital Management, pointed out that the widening performance gap between the market and dividend stocks in 2024 creates an ideal time for investors to consider these equities. Along with O’Keefe, many analysts are encouraging investors to focus on dividend stocks due to their favorable outlook. The Dividend Aristocrats index has struggled to keep pace with the market since 2020. Dividend stocks saw a brief resurgence in 2022 as recession concerns led investors to seek out stable sectors like utilities and consumer goods, but the recovery was short-lived. By 2023, rising interest rates made bond and money-market returns more attractive than dividend yields, causing companies to adopt a more cautious stance and conserve cash amid economic uncertainty. This year, many of the top-performing stocks from the COVID era have once again driven the market to new highs.
Despite underperforming for the past two consecutive years, analysts remain optimistic about dividend stocks. They believe that dividend-paying equities could see a resurgence in 2025, as investors are increasingly seeking cash returns. The broader market’s dividend yield recently dropped to a 20-year low, falling below 1.19%, significantly lower than the long-term historical average of 4.3%. With interest rates rising on risk-free investments like Treasuries, companies are recognizing the growing competition for yield. As a result, many are responding by increasing dividends or introducing them for the first time. Notably, several major technology companies began paying dividends in 2024, signaling to the market that they are positioning themselves as value plays within a high-growth sector. Given this, we will discuss the best performing dividend stocks in 2024.
Our Methodology:
For this article, we first used a stock screener to identify stocks that have reported positive returns in 2024 so far. From this selection, we chose dividend stocks with the highest year-to-date (YTD) as of December 25. The stocks were then arranged in ascending order of their YTD gains. We also considered hedge fund sentiment around each stock using Insider Monkey’s data for Q3 2024.
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. The Bank of New York Mellon Corporation (NYSE:BK)
Year-to-Date Return as of December 25: 49.01%
The Bank of New York Mellon Corporation (NYSE:BK) is a New York-based financial services company that was established in 2007 through the merger of the Bank of New York and Mellon Financial Corporation and became the largest custodian bank globally. Unlike conventional banks that focus on commercial and consumer services such as accepting deposits and offering loans, BNY Mellon specializes in providing security services to asset owners, including other financial institutions. The stock has surged by over 49% in 2024 so far.
The bank’s performance was also highlighted by Parnassus Investments in its Q3 2024 investor letter. Here is what the firm has to say:
“The Bank of New York Mellon Corporation (NYSE:BK) posted better-than-expected second-quarter profit and revenue, driven in part by higher fees. Further, the Federal Reserve’s interest rate cut is expected to reduce funding costs and improve BNY’s margins.”
The Bank of New York Mellon Corporation (NYSE:BK) delivered solid results for the third quarter, showcasing growth across its three business segments and steady progress on its strategic goals. For the first time, assets under custody and administration surpassed $50 trillion. The company reported earnings of $1.50 per share, marking a 22% increase compared to the previous year. Adjusted for notable items, earnings per share rose to $1.52, reflecting a 20% year-over-year improvement, while the return on tangible common equity reached 23% during the quarter. Its total revenue for the quarter came in at $4.7 billion, which showed a 7% growth from the same period last year.
On October 11, The Bank of New York Mellon Corporation (NYSE:BK) declared a quarterly dividend of $0.47 per share, which was in line with its previous dividend. In 2024, the company stretched its dividend growth streak to 14 years, which makes BNY one of the best performing stocks that pay dividends. Moreover, in the most recent quarter, it returned $353 million to shareholders through dividends. The stock has a dividend yield of 2.41%, as of December 25.
At the end of Q3 2024, 45 hedge funds tracked by Insider Monkey held stakes in The Bank of New York Mellon Corporation (NYSE:BK), compared with 50 in the previous quarter. These stakes have a collective value of nearly $1.5 billion.
9. The Goldman Sachs Group, Inc. (NYSE:GS)
Year-to-Date Return as of December 25: 50.09%
The Goldman Sachs Group, Inc. (NYSE:GS) is an American investment banking company that offers a wide range of financial services to its consumers. A key component of the bank’s operations is its asset and wealth management division, which oversees trillions of dollars in assets and contributes significantly to its revenue. Investors are keen for Goldman to expand this segment, as its stable revenue stream often leads to higher market valuations. The firm has also been shifting this business towards a more capital-efficient model by scaling back its equity and debt investments. This approach not only simplifies growth but also enhances stability and increases reliance on fee-based income. With a YTD return of over 50%, GS is one of the best performing stocks on our list.
In the third quarter of 2024, The Goldman Sachs Group, Inc. (NYSE:GS) reported revenue of $12.7 billion, which showed a 7.4% growth from the same period last year. Global Banking & Markets reported quarterly net revenues of $8.55 billion, driven by robust performance in Equities and record-breaking revenues in Fixed Income, Currency, and Commodities (FICC) financing. The firm maintained its top position globally in announced and completed mergers and acquisitions, as well as common stock offerings, for the year to date. Meanwhile, the Asset & Wealth Management division achieved $3.75 billion in net revenues for the quarter, supported by record-high management and other fees. Total assets under supervision grew by $169 billion during the quarter, reaching an all-time high of $3.10 trillion.
The Goldman Sachs Group, Inc. (NYSE:GS) is a strong dividend payer as the company has been making regular dividend payments since 1999. In the most recent quarter, it returned $978 million to shareholders through dividends. The company currently pays a quarterly dividend of $3.00 per share for a dividend yield of 2.06%, as of December 25.
The number of hedge funds tracked by Insider Monkey owning stakes in The Goldman Sachs Group, Inc. (NYSE:GS) grew to 72 in Q3 2024, from 68 in the previous quarter. These stakes have a total value of over $5.6 billion. With over 6 million shares, Fisher Asset Management was the company’s leading stakeholder in Q3.
8. Motorola Solutions, Inc. (NYSE:MSI)
Year-to-Date Return as of December 25: 51.6%
Motorola Solutions, Inc. (NYSE:MSI) is an Illinois-based technology, communications, and security company that plays a pivotal role in the communications industry, focusing on mission-critical communications and analytics. In the third quarter of 2024, the company reported strong earnings, with revenue climbing to $2.79 billion, reflecting a year-over-year increase of over 9.15%. The Products and Systems Integration segment experienced an 11% boost in sales, while the Software and Services segment grew by 7%. Notably, when excluding sales to the UK Home Office, growth in the Software and Services segment rose to 13%.
Motorola Solutions, Inc. (NYSE:MSI) also maintained a solid cash position during the quarter, with operating cash flow rising to $759 million, up from $714 million in the same period last year. Free cash flow also improved, reaching $702 million compared to $649 million a year ago. The company distributed $164 million to shareholders in the form of dividends, marking 13 consecutive years of increasing payouts thanks to its strong financial performance. Its quarterly dividend comes in at $1.09 per share for a dividend yield of 0.92%, as of December 25.
Wedgewood Partners made the following comment about MSI in its Q3 2024 investor letter:
“Motorola Solutions, Inc. (NYSE:MSI) was another top contributor to performance as the Company continued its steady execution with +9% year-over-year sales growth and +22% adjusted earnings per share growth. While Motorola’s backlog for products declined, much of it was due to accelerated revenue recognition on strong deliveries for its Land Mobile Radio” (LMR) business – a critical long-term solution for emergency services around the globe. The technology behind LMR is quite simple; however, it is an extremely robust implementation that needs to withstand regular and even mega catastrophes (e.g., hurricanes) in order to guarantee uptime for the emergency services that depend on it for communications. The Company has superlative, unmatched competitive positioning in this core business and should be able to continue to expand value-added service offerings to LMR and drive attractive long-term growth.” (Click here to read the full text)
Motorola Solutions, Inc. (NYSE:MSI) is grabbing investors’ attention as the company offers integrated technologies and services across various areas, including LMR, Video Security and Access Control, and Command Center software. The company focuses on creating unified ecosystems that improve safety and security by seamlessly combining these solutions. Furthermore, its continued investment in research and development underscores its commitment to enhancing product interoperability and introducing innovations tailored to the needs of both government and commercial clients. The stock surged by nearly 52% YTD, which makes it one of the best performing stocks on our list.
As of the third quarter of 2024, 48 hedge funds, up from 42 in the previous quarter, held stakes in Motorola Solutions, Inc. (NYSE:MSI), according to Insider Monkey’s database. These stakes are worth over $1.3 billion in total.