In this article, we discuss 13 best performing dividend stocks to invest in. You can skip our detailed analysis of dividend stocks and their performance over the years, and go directly to read 5 Best Performing Dividend Stocks To Invest In Now.
For investors focused on dividends, there’s an ongoing struggle to find the right balance between dividend growth and dividend yield. While many experts caution against falling into yield traps, historical data suggests that high-yield stocks have performed well. However, combining both dividend growth and high yield can be a powerful strategy to maximize returns. One example is the S&P Sector-Neutral High Yield Dividend Aristocrats (HYDA) index, which aims to blend dividend growth with higher relative yield while maintaining sector weights similar to the S&P Composite 1500. This index is noted for its defensive characteristics. According to a report from S&P Dow Jones Indices, it has historically provided a buffer against market volatility. On average, the index has outperformed the benchmark when the VIX level, a measure of market volatility, was above 20, with the strongest outperformance seen when the VIX level was above 30. The report further noted that from January 31, 2005, to July 31, 2023, the index’s overall return was nearly the same as the benchmark. That said, the S&P Sector-Neutral HYDA showed lower volatility throughout the entire period compared to the benchmark, resulting in better risk-adjusted returns. Moreover, the maximum drawdown experienced during that time frame was reduced by around 5%, indicating a more resilient performance during market downturns.
Given investors’ preference for dividend-paying stocks and their track record of returns, numerous companies are striving to initiate, sustain, and enhance their dividend payouts. In a notable recent development, Meta Platforms, Inc. (NASDAQ:META) has commenced paying a quarterly cash dividend to its shareholders. This move underscores the increasing popularity of dividends in the market. Notably, Morningstar analysts have observed a significant rise in the funds targeting dividend-paying stocks, with the total amount reaching $1 trillion. This figure has been growing at a rate of 10% annually since 2018, indicating a robust and expanding interest in dividend investments.
Dividend stocks have consistently gained traction due to their resilience and strong performance during previous periods of inflation. Over time, dividends have been a significant contributor, comprising approximately 40% of the total return of the S&P 500 since 1930. However, during decades characterized by high inflation rates, such as the 1940s, 1970s, and 1980s, where inflation averaged 5% or more, dividends accounted for an even larger portion, generating 54% of the total return. Naveed Rahman, co-manager of the Fidelity Equity-Income Strategy, highlighted this trend. He also emphasized that while seeking the best-performing dividend stocks today, investors may need to look beyond the traditional industries or sectors that have historically dominated such investments. The report further noted that companies that consistently pay dividends that are both sustainable and increasing have the capability to expand their cash flows over time, thereby enabling them to stay aligned with inflationary pressures.
Walmart Inc. (NYSE:WMT), Johnson & Johnson (NYSE:JNJ), and AbbVie Inc. (NYSE:ABBV) are some of the most prominent dividend stocks as these companies have raised their payouts for decades. However, in this article, we will take a look at some of the best performing dividend stocks to invest in.
Our Methodology:
For this list, we looked at the list of stocks with their 52-week high and focused on dividend-paying stocks that have shown significant growth in their share prices during this period. We began with a pool of fifty companies, narrowed it down by considering their share price increases, and ultimately selected the top 13 dividend stocks with the highest share price gains as of February 26, arranging them in ascending order of performance. We also mentioned hedge fund sentiment data for these stocks using Insider Monkey’s database of Q4 2023. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here).
13. ONEOK, Inc. (NYSE:OKE)
12-Month Returns as of February 26: 8.54%
ONEOK, Inc. (NYSE:OKE) is a diversified energy company primarily operating in the midstream sector of the natural gas industry. On January 17, the company declared a 3.9% hike in its quarterly dividend to $0.99 per share. This was the company’s second consecutive year of dividend growth. The stock’s dividend yield on February 26 came in at 5.35%. With a 12-month return of 8.54%, OKE is one of the best performing stocks on our list.
At the end of Q4 2023, 27 hedge funds tracked by Insider Monkey reported having stakes in ONEOK, Inc. (NYSE:OKE), compared with 36 in the previous quarter. The overall value of these stakes is over $593.2 million. Among these hedge funds, First Eagle Investment Management was the company’s leading stakeholder in Q4.
12. Sun Life Financial Inc. (NYSE:SLF)
12-Month Returns as of February 26: 9.87%
Sun Life Financial Inc. (NYSE:SLF) is a Canadian leading international financial services organization that offers a wide range of insurance products, including life insurance, health insurance, disability insurance, and critical illness insurance. On February 7, the company announced a quarterly dividend of C$0.78 per share, which was in line with its previous dividend. Overall, it has been growing its dividends for the past eight years, which makes SLF one of the best performing stocks on our list. The stock’s dividend yield on February 26 came in at 4.31%.
As of the close of Q4 2023, 13 hedge funds tracked by Insider Monkey reported having stakes in Sun Life Financial Inc. (NYSE:SLF), up from 12 in the previous quarter. The consolidated value of these stakes is over $98.6 million.
11. MPLX LP (NYSE:MPLX)
12-Month Returns as of February 26: 13.01%
MPLX LP (NYSE:MPLX) is a diversified energy infrastructure company primarily engaged in the transportation, storage, and distribution of energy products. With a 12-month return of 13.01%, MLPX is one of the best performing stocks on our list. The company currently offers a quarterly dividend of $0.85 per share and has a dividend yield of 8.62%, as of February 26. It has been growing its dividends consistently for the past 10 years.
At the end of December 2023, 9 hedge funds in Insider Monkey’s database reported having stakes in MPLX LP (NYSE:MPLX), the same as in the previous quarter. The collective value of these stakes is more than $56.8 million. Appaloosa Management LP owned the largest stake in the company in Q4.
10. Energy Transfer LP (NYSE:ET)
12-Month Returns as of February 26: 15.13%
Energy Transfer LP (NYSE:ET) operates a vast network of natural gas pipelines and storage facilities. These pipelines transport natural gas from production areas to market hubs, distribution points, and end-users such as power plants, industrial facilities, and residential consumers. The company has been raising its payouts for nine consecutive quarters and it currently pays a quarterly dividend of $0.315 per share. As of February 26, the stock has a dividend yield of 8.57%.
Energy Transfer LP (NYSE:ET) was a part of 34 hedge fund portfolios at the end of Q4 2023, which remained unchanged from the previous quarter, as per Insider Monkey’s database. The stakes owned by these hedge funds have a collective value of more than $824.3 million.
9. Wells Fargo & Company (NYSE:WFC)
12-Month Returns as of February 26: 16.67%
Wells Fargo & Company (NYSE:WFC) is next on our list of the best performing stocks with a 12-month return of 16.67%. The American diversified financial services company offers a quarterly dividend of $0.35 per share and has a dividend yield of 2.56%, as of February 26.
Insider Monkey’s database of Q4 2023 indicated that 72 hedge funds owned stakes in Wells Fargo & Company (NYSE:WFC), compared with 77 in the previous quarter. The consolidated value of these stakes is over $5.54 billion. With more than 23 million shares, Harris Associates was the company’s leading stakeholder in Q4.
8. Abbott Laboratories (NYSE:ABT)
12-Month Returns as of February 26: 19.08%
Abbott Laboratories (NYSE:ABT) is a global healthcare company that operates in several segments of the healthcare industry. The company pays a quarterly dividend of $0.55 per share, having raised it by 7.8% in December 2023. This marked the company’s 52nd consecutive annual dividend hike. The stock delivered a return of 19.08% in the past 12 months, which makes ABT one of the best performing stocks on our list. The stock has a dividend yield of 1.85%, as of February 26.
According to Insider Monkey’s database of Q4 2023, 64 hedge funds tracked by Insider Monkey reported having stakes in Abbott Laboratories (NYSE:ABT), compared with 69 in the preceding quarter. The total value of these stakes is nearly $2.5 billion.
7. Union Pacific Corporation (NYSE:UNP)
12-Month Returns as of February 26: 20.3%
Union Pacific Corporation (NYSE:UNP) is one of the largest railroad companies in the US, operating an extensive network of railroads primarily in the western part of the country. The company offers a quarterly dividend of $1.30 per share with a dividend yield of 2.05%, as of February 26. With a 12-month return of 20.3%, UNP is one of the best performing stocks on our list that pay dividends.
At the end of the fourth quarter of 2023, 90 hedge funds in Insider Monkey’s database held stakes in Union Pacific Corporation (NYSE:UNP), which remained the same as in the previous quarter. These stakes have a total value of more than $6.66 billion. Among these hedge funds, Soroban Capital Partners was the company’s largest stakeholder in Q4.
6. CSX Corporation (NASDAQ:CSX)
12-Month Returns as of February 26: 23.6%
CSX Corporation (NASDAQ:CSX) ranks sixth on our list of the best performing stocks. The leading transportation and logistics company primarily operates in the railroad industry. It also offers intermodal transportation services, which involve the movement of freight containers and trailers by a combination of rail and truck. On February 14, the company declared a 9.1% hike in its quarterly dividend to $0.12 per share. Through this increase, the company achieved its 19th consecutive annual dividend hike. The stock’s dividend yield of 1.27%, as of February 26.
Insider Monkey’s database of Q4 2023 showed that 61 hedge funds owned stakes in CSX Corporation (NASDAQ:CSX), compared with 62 in the previous quarter. These stakes are worth $3.7 billion.
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Disclosure. None. 13 Best Performing Dividend Stocks To Invest In Now is originally published on Insider Monkey.