In this article, we will analyze the list of the best unstoppable stocks that pay dividends.
It’s undeniable that dividends have played a key role in the market’s returns over the past year. While they hit a rough patch for a bit, these stocks still have plenty of room to grow. Their rising significance is tied to the fact that US companies are boosting their dividend payouts, thanks to strong cash flow. Many US firms, particularly in the tech sector, have substantial cash reserves on their balance sheets. Due to this, several major tech companies have introduced dividend policies this year, sparking renewed interest in dividend stocks.
In addition, with the market shifting away from top-performing stocks and the Federal Reserve likely to reduce interest rates, dividend stocks remain a valuable option for investors seeking solid returns. Dan Lefkovitz, a strategist for Morningstar Indexes, also supported investing in dividend stocks this year. Here are some comments from the analyst:
“Investing in dividend-paying stocks is a good way to participate in equities over the long term. There have been long stretches when the dividend-paying section of the market has outperformed. Eventually, they’ll come back into favor.”
When it comes to dividend stock investing, the attention is often split between high yields and dividend growth. Analysts tend to favor dividend growth, as it offers a more reliable income stream. In contrast, high yields can sometimes be misleading, hinting at potential financial difficulties. A report from RBC Wealth Management highlights that high-yield stocks have been lagging behind those with lower yields this year. By July 2024, stocks yielding less than 1% delivered an average return of 18%, significantly outperforming the 0.9% average return of stocks yielding over 3%. The report also mentioned that the Dividend Aristocrats, companies that have raised their payouts for at least 25 consecutive years, have historically performed well both during and after economic downturns. Their success is built on appealing valuations relative to the broader market and business models that have proven durable in the face of economic uncertainty. Currently, these equities are trading at a trailing twelve-month P/E of 24.95, which indicates confidence in the stability and growth of these companies.
Several reports have highlighted that while dividend growth companies might not deliver instant gratification, they provide significant long-term advantages. Nuveen, an Illinois-based financial planning firm, also expressed a positive view on dividend growth strategies this year, noting their strong historical track record. The report emphasized that companies focused on growing their dividends possess qualities that pave the way for solid performance in the future. Over the long haul, companies that consistently boost or introduce dividends have outpaced other market segments, achieving higher annualized returns with less volatility. While they may not always shine in every market condition, their steady, risk-adjusted returns over time make them a cornerstone for any equity portfolio—truly a case of “slow and steady wins the race.” With that, we will take a look at unstoppable stocks that pay dividends.
Photo by Sharon McCutcheon on Unsplash
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 year-to-date (YTD) gains of at least 30%, as of the close of September 9. The stocks were then arranged in ascending order of their YTD gains.
We also measured hedge fund sentiment around each stock according to Insider Monkey’s database of 912 funds as of Q2 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 Allstate Corporation (NYSE:ALL)
Year-to-Date Return as of September 9: 30.03%
The Allstate Corporation (NYSE:ALL) is an Illinois-based insurance company that offers related services to its consumers. In early August, the company revealed that it had reached an agreement to sell its subsidiaries, which offer employer voluntary benefits, to StanCorp Financial Group (The Standard) for $2 billion in cash. This move comes amid a slowdown in economic demand, leading companies to step away from ventures that don’t align with their core objectives. Investors are particularly excited about the venture as the stock has climbed by over 30% since the start of 2024.
In addition to The Allstate Corporation’s (NYSE:ALL) strategic planning, the company’s recent quarterly earnings are also encouraging for investors. In the second quarter of 2024, the company reported revenue of $15.4 billion, which showed a 12.4% growth from the same period last year. Its operating and financial results for the quarter highlighted its capability to effectively carry out its profit improvement plan while advancing the Transformative Growth strategy. The company’s financial health and capital position remain robust, with an insurance company statutory surplus of $16.0 billion and $3.0 billion in assets held at the holding company.
Ariel Investments also gave a positive outlook on The Allstate Corporation (NYSE:ALL) in its Q2 2024 investor letter. Here is what the firm has to say:
“We added property and casualty insurer, The Allstate Corporation (NYSE:ALL). A challenging macro-environment, inflation and lower reserve development led to significant underwriting losses across key markets, presenting us with an attractive entry point. Looking ahead, we expect the strong pricing environment, coupled with lower inflationary pressure and future premium growth to yield upside for shares. Additionally, management is committed to improving its adjusted expense ratio and recently made upgrades to its claims handling processes to minimize loss development and lower claim severities.”
The Allstate Corporation (NYSE:ALL), one of the best unstoppable stocks, has been growing its dividends consistently for the past 14 years. The company pays a quarterly dividend of $0.92 per share and has a dividend yield of 1.97%, as of September 9.
At the end of Q2 2024, 61 hedge funds tracked by Insider Monkey held stakes in The Allstate Corporation (NYSE:ALL), up from 59 in the previous quarter. These stakes are valued at over $1.6 billion. Among these hedge funds, Diamond Hill Capital was the company’s leading stakeholder in Q2.
9. Costco Wholesale Corporation (NASDAQ:COST)
Year-to-Date Return as of September 9: 36.8%
Costco Wholesale Corporation (NASDAQ:COST) is an American retail company that specializes in a wide range of products for its consumers. The company recently announced a 7.1% increase in monthly net sales, reaching $19.83 billion in August, compared to $18.51 billion in the same month last year. This strong performance is part of a broader trend, as the company has consistently maintained solid fundamentals. One key factor is that the company operates in a sector that tends to withstand economic downturns well, and its growth continues. In 2024, the company plans to open 28 new stores globally, with the majority in the US. As it expands its locations, membership and revenue are expected to grow, supporting long-term sales and earnings growth.
In the past five years, Costco Wholesale Corporation (NASDAQ:COST) returned over 206% to shareholders, outperforming the broader market, which gained over 82% during this period. The company has consistently adapted to emerging trends, which has helped attract investors. It has effectively taken advantage of the growing shift toward online shopping. The retailer expects that its wide selection of competitively priced products will keep attracting customers, whether they shop online or visit its physical stores. ClearBridge Investments highlighted consumer sentiment in its Q2 2024 investor letter. Here is what the firm said about COST:
“Consumer staples holdings were also standouts in the quarter, such as Costco Wholesale Corporation (NASDAQ:COST), which continues to execute well and delivered better than expected earnings, helped by strong traffic driving better expense leverage. Customers also looked to be shifting toward more discretionary purchases.”
On July 10, Costco Wholesale Corporation (NASDAQ:COST) declared a quarterly dividend of $1.16 per share, having raised it by 13.7% in April this year. The company is a strong dividend payer and has raised its payouts for 20 consecutive years. The stock’s dividend yield on September 9 came in at 0.52%. With a year-to-date return of nearly 37%, COST is one of the best unstoppable stocks that pay dividends.
The number of hedge funds tracked by Insider Monkey owning stakes in Costco Wholesale Corporation (NASDAQ:COST) jumped to 71 in Q2 2024, from 65 in the previous quarter. These stakes have a collective value of nearly $6 billion.
8. Garmin Ltd. (NYSE:GRMN)
Year-to-Date Return as of September 9: 44.6%
Garmin Ltd. (NYSE:GRMN) is a multinational tech company that mainly specializes in GPS technology. The company stands out among its competitors due to its advanced technologies and the integration of artificial intelligence (AI) for personalized training plans and workouts. It has also gained from the continuous expansion of its product offerings. Since the start of 2024, the stock has gained nearly 45% and in the past 12 months, it returned over 73%. It is among the best unstoppable stocks that pay dividends.
As a dividend payer, Garmin Ltd. (NYSE:GRMN) reported a strong cash position in the second quarter of 2024. The company’s operating cash flow for the quarter came in at $255 million and its free cash flow amounted to $218 million. Its revenue was $1.5 billion, which showed a 14% growth from the same period last year. The revenue growth was driven by its innovative product range and robust, diversified business model. The company expressed satisfaction with its 2024 performance to date, which has surpassed expectations, leading to an upward revision of its full-year revenue and EPS guidance.
Diamond Hill Capital mentioned Garmin Ltd. (NYSE:GRMN) in its Q4 2023 investor letter. Here is what the firm has to say:
“Other bottom contributors included our short positions in Garmin Ltd. (NYSE:GRMN) and International Business Machines (IBM), as well as our long position in Chevron. Outdoor fitness and adventure equipment maker Garmin benefited from strong growth in its fitness and auto original equipment manufacturer segments. Over the long term, we believe the company’s high-end wearables products will face significant competition from competitors like Apple and Samsung.”
Garmin Ltd. (NYSE:GRMN) currently offers a quarterly dividend of $0.75 per share. It has always remained committed to its shareholder obligation as the company paid $144 million to investors through dividends in the most recent quarter. The stock supports a dividend yield of 1.64%, as of September 9.
Garmin Ltd. (NYSE:GRMN) was popular among elite funds in Q2 2024 as hedge fund positions in the company grew to 31 during the quarter, from 24 in the previous quarter, as per Insider Monkey’s database. The stakes owned by these funds have a collective value of over $801.2 million. With over 2 million shares, Select Equity Group was the company’s largest stakeholder in Q2.
7. Walmart Inc. (NYSE:WMT)
Year-to-Date Return as of September 9: 45.3%
Walmart Inc. (NYSE:WMT) ranks seventh on our list of the best unstoppable stocks that pay dividends. The American retail corporation operates a chain of hypermarkets, discount stores, and grocery stores across the country. The company’s business has remained resilient regardless of the economic climate, largely due to the fact that over half of its revenue comes from groceries, which people continue to purchase no matter the cost. The stock has outperformed the broader market this year, delivering more than a 45% return to shareholders. This success is driven by an increasing number of customers shopping both in-store and online. In its fiscal Q2 2025 earnings, Walmart reported a rise in e-commerce activity across all segments, with global online sales growing 21% year-over-year. The company’s consolidated revenue for the quarter reached $168 billion, marking a 4.8% increase from the same period last year.
Walmart Inc. (NYSE:WMT) declared a quarterly dividend of $0.2075 per share on August 15, which was in line with its previous dividend. It is one of the best unstoppable dividend stocks as the company has raised its dividends for 51 years in a row. The stock has a dividend yield of 1.07%, as of September 9.
Walmart Inc. (NYSE:WMT) maintains a solid balance sheet, ensuring its ability to sustain future dividend payments and support potential dividend increases. In the most recent quarter, the company had $8.8 billion available in cash and cash equivalents. Its operating cash flow for the quarter came in at $16.4 billion and its free cash flow was $5.9 billion. In the first six months of the year, the company repurchased 33.4 million shares, worth $2.1 billion.
As of the close of Q2 2024, 95 hedge funds tracked by Insider Monkey held stakes in Walmart Inc. (NYSE:WMT), up from 88 in the previous quarter. These stakes have a total value of roughly $9.2 billion.
6. Constellation Energy Corporation (NASDAQ:CEG)
Year-to-Date Return as of September 9: 48.5%
Constellation Energy Corporation (NASDAQ:CEG) is a Maryland-based energy company that offers electric power, natural gas, and energy management services. The stock has gained nearly 49% since the start of 2024 due to its solid financial prospects and increasing expectations that tech firms will turn to nuclear energy to power their AI data centers.
Constellation Energy Corporation (NASDAQ:CEG)’s carbon-free nuclear fleet has continued to perform at top industry levels. Alongside the rest of its generation fleet, it is contributing to keeping American families and businesses cool, maintaining a strong US economy, and supporting thriving communities. In the second quarter of 2024, the company reported revenue of $$5.48 billion, up 0.5% from the same period last year.
As the top nuclear power producer in the country, Constellation Energy Corporation (NASDAQ:CEG) stands to gain significantly from the expected increase in electricity demand driven by AI data centers. This boost could further improve the company’s already positive earnings growth outlook. Consequently, the company has raised its full-year 2024 guidance, now projecting adjusted (non-GAAP) operating earnings to range from $7.60 to $8.40 per share.
ClearBridge Investments also mentioned this in its Q1 2024 investor letter. Here is what the firm said about Constellation Energy Corporation (NASDAQ:CEG):
“On a regional basis, the U.S. and Canada was the top contributor for quarter, with U.S. electric utility Constellation Energy Corporation (NASDAQ:CEG) and U.S. rail operator CSX the lead performers. Constellation Energy is primarily a nuclear generation company and is the largest producer of carbon-free electricity in the U.S., serving states including New York, Illinois, Maryland, Pennsylvania and New Jersey. The company’s combined generation capacity is more than 32 GW and 90% of annual output is carbon free. Constellation has been a beneficiary of AI and subsequent power demand as its 24/7 base load nuclear generation can get premium contracts.”
Constellation Energy Corporation (NASDAQ:CEG), one of the best unstoppable dividend stocks, currently offers a quarterly dividend of $0.3525 per share. The company started paying dividends in 2022 and has raised its payouts twice since then. The stock has a dividend yield of 0.81%, as of September 9.
Constellation Energy Corporation (NASDAQ:CEG) also attracted the attention of elite money managers with 71 hedge funds investing in the company at the end of Q2 2024, up from 54 a quarter earlier, according to Insider Monkey’s database. The stakes held by these hedge funds have a total value of over $3.7 billion.
5. Eli Lilly and Company (NYSE:LLY)
Year-to-Date Return as of September 9: 52.3%
Eli Lilly and Company (NYSE:LLY) is an American pharmaceutical company, based in Indiana. The company manufactures and develops a wide range of medicines for serious ailments. The recent surge in optimism about the stock is mainly attributed to strong sales of three key products: Mounjaro, Zepbound, and Verzenio. Sales for the popular breast cancer medication Verzenio soared 44% in the second quarter of 2024. However, investors were even more enthusiastic about the performance of Mounjaro and Zepbound, which are used for diabetes treatment and weight loss. Since the start of 2024, the stock has gained over 52%, becoming one of the best unstoppable stocks that pay dividends.
In Q2 2024, Eli Lilly and Company (NYSE:LLY) reported revenue of $11.3 billion, which saw a 36% growth from the same period last year. The company increased its revenue forecast for the full year 2024 by $3 billion, now projecting a range between $45.4 billion and $46.6 billion. This upward revision was largely credited to the impressive performance of Mounjaro and Zepbound.
Baron Funds also appreciated the stock’s outperformance this year and highlighted this in its Q2 2024 investor letter. Here is what the firm said:
“Shares of global pharmaceutical company Eli Lilly and Company (NYSE:LLY) increased on continued investor enthusiasm around GLP-1 drugs for diabetes and obesity. We remain shareholders. Lilly’s Mounjaro/Zepbound not only offers superb blood sugar control for diabetics but can drive 20%-plus weight loss and likely improve cardiovascular outcomes in both diabetic and non-diabetic obese patients. Lilly is developing next generation drugs, including retatrutide, which drives approximately 25% weight loss, and orforglipron, a daily pill that produces approximately 15% weight loss. In the U.S. alone, there are 32 million Type 2 diabetics and an additional 105 million obese patients who we estimate would qualify for GLP-1 drugs. Although supply and access are limited near term, we think GLP-1 drugs will become standard of care for both diabetes and obesity and will become a $150 billion-plus category. We see Lilly setting a high efficacy bar and capturing significant long-term market share. We think the adoption of GLP-1s will drive Lilly to triple total revenue by 2030.”
Eli Lilly and Company (NYSE:LLY) is also a strong dividend company, having raised its dividends for 10 years consistently. Moreover, in the past five years, the company has raised its payouts by over 15%. It currently pays a quarterly dividend of $1.30 per share and has a dividend yield of 0.57%, as of September 9.
Eli Lilly and Company (NYSE:LLY) was a part of 100 hedge fund portfolios at the end of Q2 2024, down from 109 in the previous quarter, as per Insider Monkey’s database. The stakes held by these hedge funds have a total value of over $16 billion. Fisher Asset Management owned the largest stake in the company, worth over $4.4 billion.
4. Vertiv Holdings Co (NYSE:VRT)
Year-to-Date Return as of September 9: 61.4%
Vertiv Holdings Co (NYSE:VRT) ranks fourth on our list of the best unstoppable stocks that pay dividends. The Ohio-based company provides critical digital infrastructure and continuity solutions. It is reaping the rewards from the swift growth of data centers specifically designed for artificial intelligence. The stock has surged by over 61% in 2024 so far.
Vertiv Holdings Co (NYSE:VRT) continues to witness the growing expansion of AI deployment and has the necessary capacity to capitalize on this crucial opportunity while maintaining its focus on future investments. The company acts as the link between IT and facilities in data centers and is only starting to unlock the vast potential of its unique industry position. By utilizing the most comprehensive portfolio of critical digital infrastructure solutions across the entire range of thermal and power technologies, and backed by a global team of over 3,750 field service engineers, it is well-positioned to assist customers in navigating this increasingly complex landscape.
This was also mentioned by Baron Funds in its Q2 2024 investor letter. Here is what the firm has to say:
“Vertiv Holdings Co (NYSE:VRT) a leading provider of critical digital infrastructure for data centers, contributed during the quarter. As an industry leader in data center cooling and power management, Vertiv is poised to benefit from AI-driven growth in data center spend. The NVIDIA partner network, strong industry relationships, and broad product portfolio that Vertiv maintains enables its participation in the creation of the technology roadmap for the future of the data center. In addition, Vertiv is investing in its capacity to serve this growing end market more effectively. The company also has an extensive global service network to aid customers as they grow. We believe the company has durable competitive advantages and a flexible balance sheet to benefit from the expected significant capital investment in data centers for years to come. Vertiv reported very strong results for the March quarter, with orders up 60%, which highlighted the strong demand it is seeing for its products. We sold some of our position into strength after the runup from the positive report, but still hold a major position in the Fund as we see considerable upside in the shares over time.”
In the second quarter of 2024, Vertiv Holdings Co (NYSE:VRT) reported revenue of $1.9 billion, up 13% from the same period last year. The company’s cash position was also strong as it generated $378 million in operating cash flow during the quarter, showing an increase of $125 million from the same period last year. Its adjusted free cash flow was $333 million, an increase of $106 million from Q2 2023. The cash flow was the result of increased adjusted operating profit and better management of working capital.
Vertiv Holdings Co (NYSE:VRT) started paying dividends in 2020 and has paid regular dividends since then. The company currently offers a quarterly dividend of $0.025 per share and has a dividend yield of 0.13%, as of September 9.
According to Insider Monkey’s database of Q2 2024, 92 hedge funds owned stakes in Vertiv Holdings Co (NYSE:VRT), growing from 85 in the previous quarter. These stakes have a total value of over $3 billion. Among these hedge funds, Coatue Management was the company’s leading stakeholder in Q2.
3. GE Aerospace (NYSE:GE)
Year-to-Date Return as of September 9: 62.6%
GE Aerospace (NYSE:GE) is an American aircraft engine supplier that offers products and services in aviation and defense engineering. The stock began the year under the name General Electric but has since been renamed GE Aerospace. This name change followed the spin-off of GE Vernova in early April. This successful spin-off attracted investors’ attention and as a result, the stock surged by nearly 63% since the start of 2024.
Artisan Partners appreciated the company’s performance this year and highlighted this in its Q1 2024 investor letter:
“Our holdings in industrials, now our largest sector weighting, added to the portfolio’s outperformance as well. In particular, GE Aerospace (NYSE:GE) stood out as the largest contributor to relative performance this quarter. The storied American company and leader in aerospace, health care, renewable energy and power generation will split into three separate companies next quarter. We are most interested in its aerospace assets, given its growing pricing power in that industry. GE said it expects to increase deliveries of its popular LEAP airline engines by 20% to 25% this year given the escalating demand for air travel. The engine is manufactured by CFM International, a 50/50 joint venture between GE and Safran. Together, they make about 50% of the world’s commercial airline engines. In addition to strong fundamentals and pricing power in aerospace, we are attracted to GE’s clean hydrogen and decarbonization technologies in its alternative energy business, assets that are used to generate 30% of the world’s electricity.The unit benefits from the $435 billion in clean energy funding provided by the Inflation Reduction Act and Infrastructure Investment and Jobs Act.”
GE Aerospace (NYSE:GE)’s business remains robust following the spin-off. It is accelerating efforts and utilizing FLIGHT DECK to address supply constraints and fully meet customer demand. The leadership is confident that by advancing its strategic priorities for the present and future, the company will successfully meet customer needs and deliver significant value to shareholders. In the second quarter of 2024, the company reported revenue of $8.2 billion, which showed a 4% growth from the same period last year. Its total orders were worth $11.2 billion, which saw an 18% YoY growth.
GE Aerospace (NYSE:GE) had its cash well-positioned during Q2 2024. The company reported an operating cash flow of $1 billion and a free cash flow of $1.1 billion, up 27% and 17% on a YoY basis, respectively. The company initiated its quarterly dividends in April, offering a per-share dividend of $0.28. The stock supports a dividend yield of 0.67%, as of September 9.
Insider Monkey’s database of Q2 2024 indicated that 86 hedge funds held stakes in GE Aerospace (NYSE:GE), compared with 95 in the previous quarter. These stakes have a consolidated value of over $12 billion. With over 48 million shares, TCI Fund Management was the company’s largest stakeholder in Q2.
2. Targa Resources Corp. (NYSE:TRGP)
Year-to-Date Return as of September 9: 67.8%
Targa Resources Corp. (NYSE:TRGP) is a Texas-based midstream energy infrastructure company that mainly delivers natural gas and natural gas liquids in the US. The company saw gains from increased NGL supplies, both from its gathering and processing systems and from third-party sources. Additionally, the recent expansion of its LPG system and better market conditions contributed to its performance. The stock has delivered a 67.8% return to shareholders year-to-date.
Targa Resources Corp. (NYSE:TRGP) expects a substantial increase in free cash flow for 2025, driven by the completion of upcoming expansion projects. As a result, the pipeline stock may have the momentum to sustain its upward trend. In the second quarter of 2024, the company posted an operating cash flow of $808.5 million, up from $622 million in the prior year period.
Targa Resources Corp. (NYSE:TRGP) has consistently maintained its dividend performance. The company has raised its dividend significantly in the past years. In the most recent quarter, it returned $164 million to investors through dividends. The company pays a quarterly dividend of $0.75 per share and has a dividend yield of 2.09%, as of September 9. Its dividend is likely to keep increasing rapidly in the years ahead. The company’s free cash flow is expected to receive a significant boost in 2025, as multiple expansion projects currently underway start operating and capital expenditures decrease.
At the end of June 2024, 39 hedge funds tracked by Insider Monkey owned stakes in Targa Resources Corp. (NYSE:TRGP), up from 38 in the previous quarter. These stakes have a total value of $702 million.
1. Vistra Corp. (NYSE:VST)
Year-to-Date Return as of September 9: 92.3%
Vistra Corp. (NYSE:VST) is an American electricity and power generation company that focuses on related markets. The company could benefit from the rising use of generative AI, as increased AI activity will drive up energy demand. With the company investing in alternative energy sources, it is well-positioned to address these growing needs and become a more diversified energy stock. In March, Vistra Corp. (NYSE:VST) expanded its presence in nuclear energy by completing the acquisition of Energy Harbor. With a year-to-date return of over 92%, VST tops our list of the best unstoppable stocks that pay dividends.
Vistra Corp. (NYSE:VST) reported robust earnings for the latest quarter. Construction has begun on two new solar facilities: a 200 MW site supported by Amazon in Texas and a 405 MW site backed by Microsoft in Illinois. Additionally, pending the successful implementation of market reforms, appropriate market signals, and other conditions, the company plans to develop up to 2,000 MW of gas-fueled electric capacity in its home state to improve grid reliability for its customers. It reported revenues of $3.8 billion in Q2 2024, up from 20.5% from the same period last year.
Legacy Ridge Capital Management, LLC mentioned Vistra Corp. (NYSE:VST) in its Q2 2024 investor letter. Here is what the firm has to say:
“One of the sectors we know well which had been out of favor for several years has quickly come into favor: Independent Power Producers (IPPs). We’ve written consistently about NRG and Vistra Corp. (NYSE:VST) since the 2019 letter, have owned each, or both, since 2018, and invested a meaningful amount of our assets in VST specifically the past few years. Nate and I intend on spending more time in the year-end letter on our updated views on the IPPs and our learnings from the on-going investment, but we were a bit surprised how quickly the narrative around these companies changed. Our Blue Sky 2030 estimates of intrinsic value converged with the share price 6-years before we thought probable. In the 2019 letter, with respect to VST, we wrote:
“Over the next decade management should have close to $15 Billion to deploy to share repurchases. If you assume they have to pay an average price for the stock that’s higher than the current one, and they can only repurchase 60% of shares outstanding instead of the 100% the math implies, FCF per share in 2030 would be $14. That’s a $70 stock at today’s valuation, but a $140 stock at a more reasonable FCF yield of 10%.” And… “The IPPs are un-investable for most money managers, so there we are. When they become investable we’ll probably be long gone.”
We’re not exactly long gone, but sentiment has certainly surpassed investable. After 5+ years of VST trading between $17 – $26 a share—and $26 exactly a year ago—it hit a high of $107 in May on the heels of the Artificial Intelligence (AI) narrative and the implications for electricity demand. While we agree with the prevailing consensus view that more Data Centers will be built, Data Centers require base load energy, and that the US will probably be short base load energy, predicting the rate of any technological advancement is not our area of expertise, and we feel the margin of safety has dissipated. Therefore, what had been our largest position entering 2023 and 2024, and has been our greatest contributor to performance, is now one of the smaller positions in the fund.”
On July 31, Vistra Corp. (NYSE:VST) declared a quarterly dividend of $0.2195 per share, hiking it by 0.9% from the previous quarter. This was the company’s 11th consecutive quarter of dividend growth. As of September 9, the stock has a dividend yield of 1.13%.
The number of hedge funds tracked by Insider Monkey owning stakes in Vistra Corp. (NYSE:VST) jumped significantly from 79 in the previous quarter, to 92 in Q2 2024. The total value of these stakes is more than $4 billion.
Overall, Vistra Corp. (NYSE:VST) ranks first on our list. While we acknowledge the potential for VST to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
