13 Best S&P 500 Dividend Stocks To Buy

Published on December 7, 2023 at 9:16 am by Vardah Gill in Dividend Stocks, Hedge Funds, News

In this article, we discuss 13 best S&P 500 dividend stocks to buy. You can skip our detailed analysis of dividend stocks and their performance over the years, and go directly to read 5 Best S&P 500 Dividend Stocks To Buy.

In the market conditions of 2022, when the S&P 500 Index dropped by over 18%, stocks that paid dividends showed they could give investors some protection on the downside. For instance, among the stocks in the S&P 500, those paying dividends in 2022 decreased by 11.1%, whereas the ones that didn’t pay dividends experienced a larger loss of 38.7%. There was a shift in this pattern in 2023, with dividend stocks falling behind the broader market performance.

Also read: 12 Best Performing S&P 500 Stocks in the Last 10 Years

That said, looking at the track record of dividend stocks, it’s evident that regardless of market conditions, dividends have consistently offered a secure place for investors. To begin with, dividends have been a crucial factor in total market returns over the last 50 years. Looking back to 1960, approximately 69% of the overall return of the S&P 500 Index can be traced back to dividends that were reinvested, harnessing the strength of compounding. As mentioned above, dividend growers are more popular among investors because of their ability to provide regular and growing cash. According to a report by Hartford Funds, companies that either started paying dividends or increased their dividends have seen the most substantial returns compared to other stocks since 1973. Importantly, these stocks have shown considerably less fluctuation and volatility in their performance. The report highlighted that dividend growers and initiators delivered a 10.24% return from 1973 to 2022, compared with a 3.95% return for non-dividend payers.

Analysts often view inflationary periods as a crucial test of stocks’ ability to maintain stability in their performance. During times of inflation, the value of money decreases, leading to rising prices for goods and services. In such periods, stocks that can sustain their performance despite these economic challenges are considered more stable. Fortunately, dividend stocks have demonstrated robust performance in past periods marked by inflation. The S&P U.S. Dividend Growers Index and S&P Global ex-U.S. Dividend Growers Index include companies that have raised dividends for 10 and 7 years respectively. According to a report by S&P Dow Jones Indices, these indices outperformed their usual benchmarks when the annual inflation rate stayed above 3% for six months straight. They also performed exceptionally well during the most severe inflationary times since 2006.

International Business Machines Corporation (NYSE:IBM), The Procter & Gamble Company (NYSE:PG), and Colgate-Palmolive Company (NYSE:CL) are some of the best dividend stocks to consider because of their long dividend growth streaks. In this article, we will further take a look at some of the most prominent S&P 500 dividend stocks.

Our Methodology:

To create this list, we first examined the S&P 500 stocks based on their weight in the index and picked the top 25 stocks that consistently distribute dividends to their shareholders. Among these, we chose 13 stocks that garnered the most attention from hedge fund investors by the conclusion of Q3 2023, using data from Insider Monkey’s database. The stocks are ranked in ascending order of the number of hedge funds having stakes in them.

13. The Procter & Gamble Company (NYSE:PG)

Number of Hedge Fund Holders: 75

The Procter & Gamble Company (NYSE:PG) is a multinational consumer goods corporation known for a wide range of household and personal care products. In the third quarter of 2023, the company reported a strong cash flow as its operating cash flow came in at $4.9 billion. Moreover, it also distributed $2.3 billion to shareholders through dividends.

The Procter & Gamble Company (NYSE:PG) currently pays a quarterly dividend of $0.9407 per share and has a dividend yield of 2.58%, as of December 6. PG is one of the best dividend stocks on our list as the company has been growing its dividends for the past 67 years.

At the end of Q3 2023, 75 hedge funds in Insider Monkey’s database reported having stakes in The Procter & Gamble Company (NYSE:PG), up from 74 in the previous quarter. The collective value of these stakes is over $5.7 billion. With nearly 10 million shares, Fisher Asset Management was the company’s leading stakeholder in Q3.

12. The Home Depot, Inc. (NYSE:HD)

Number of Hedge Fund Holders: 76

The Home Depot, Inc. (NYSE:HD) is the largest home improvement retailer in the US, specializing in selling a wide range of home improvement and construction products, tools, and services. The company declared a quarterly dividend of $2.09 per share on November 16, which was consistent with its previous dividend. Its dividend growth streak currently stands at 13 years, which makes HD one of the best dividend stocks on our list. As of December 6, the stock has a dividend yield of 2.56%.

The number of hedge funds tracked by Insider Monkey owning stakes in The Home Depot, Inc. (NYSE:HD) grew to 76 in Q3 2023, from 68 in the previous quarter. These stakes have a total value of roughly $5.2 billion.

11. Merck & Co., Inc. (NYSE:MRK)

Number of Hedge Fund Holders: 85

Merck & Co., Inc. (NYSE:MRK) is a New Jersey-based pharmaceutical company engaged in the development, manufacturing, and distribution of pharmaceuticals and other related products. The company has been rewarding shareholders with growing dividends for the past 12 years and it currently pays a quarterly dividend of $0.77 per share. The stock has a dividend yield of 2.91%, as of December 6.

Insider Monkey’s database of Q3 2023 showed that 85 hedge funds owned stakes in Merck & Co., Inc. (NYSE:MRK), up from 78 in the preceding quarter. These stakes are collectively valued at over $5.06 billion. Fisher Asset Management was the largest stakeholder of the company in Q3.

10. Broadcom Inc. (NASDAQ:AVGO)

Number of Hedge Fund Holders: 87

Broadcom Inc. (NASDAQ:AVGO) is an American semiconductor manufacturing company that also specializes in other related products. The company generated nearly $4.6 billion in free cash flow during the third quarter of 2023 and its operating cash flow came in at over $4.7 billion. During the quarter, it returned roughly $2 billion to shareholders through dividends.

Broadcom Inc. (NASDAQ:AVGO) has raised its payouts for 12 consecutive years and it offers a per-share dividend of $4.60 every quarter. As of December 6, the stock has a dividend yield of 2.03%.

Of the 910 hedge funds in Insider Monkey’s database in the third quarter of 2023, 87 funds owned stakes in Broadcom Inc. (NASDAQ:AVGO), jumping from 78 in the previous quarter. The total value of these stakes is nearly $6.2 billion.

9. Bank of America Corporation (NYSE:BAC)

Number of Hedge Fund Holders: 88

Bank of America Corporation (NYSE:BAC) is an American financial services company that offers a wide range of financial products and services. The company has a 24-year run of paying regular dividends to shareholders, which makes BAC one of the best dividend stocks on our list. It currently pays a quarterly dividend of $0.24 per share and has a dividend yield of 3.09%, as of December 6.

As of the end of Q3 2023, 88 hedge funds in Insider Monkey’s database owned stakes in Bank of America Corporation (NYSE:BAC), down slightly from 99 in the preceding quarter. These stakes have a total value of over $31.3 billion. With over 1 billion shares, Berkshire Hathaway was the company’s leading stakeholder in Q3.

8. Eli Lilly and Company (NYSE:LLY)

Number of Hedge Fund Holders: 102

Eli Lilly and Company (NYSE:LLY) is an Indiana-based multinational pharmaceutical company. It holds one of the longest records of paying dividends to shareholders, spanning over 138 years. The company currently offers a quarterly dividend of $1.13 per share and has a dividend yield of 0.77%, as of December 6.

Insider Monkey’s database of Q3 2023 indicated that 102 hedge funds owned stakes in Eli Lilly and Company (NYSE:LLY), up significantly from 87 in the previous quarter. These stakes have a consolidated value of more than $9 billion.

7. UnitedHealth Group Incorporated (NYSE:UNH)

Number of Hedge Fund Holders: 104

UnitedHealth Group Incorporated (NYSE:UNH) is next on our list of the best dividend stocks from the S&P 500. The diversified healthcare company has raised its dividends for 13 consecutive years and it currently pays a per-share dividend of $1.88 every quarter. The stock’s dividend yield on December 6 came in at 1.37%.

As of the end of September 2023, 104 hedge funds owned stakes in UnitedHealth Group Incorporated (NYSE:UNH), compared with 111 a quarter earlier. These stakes have a total value of nearly $11 billion. Among these hedge funds, Rajiv Jain’s GQG Partners was the company’s leading stakeholder in Q3.

6. Thermo Fisher Scientific Inc. (NYSE:TMO)

Number of Hedge Fund Holders: 109

Thermo Fisher Scientific Inc. (NYSE:TMO) is an American multinational biotech company that offers a wide range of products and services supporting various stages of life sciences research and development. The company offers a quarterly dividend of $0.35 per share for a dividend yield of 0.28%, as recorded on December 6. It is one of the best dividend stocks on our list as the company has been growing its dividends for six consecutive years.

The number of hedge funds tracked by Insider Monkey owning stakes in Thermo Fisher Scientific Inc. (NYSE:TMO) grew to 109 at the end of Q3 2023, from 103 in the previous quarter. The consolidated value of these stakes is roughly $9 billion.

Click to continue reading and see 5 Best S&P 500 Dividend Stocks To Buy.

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Published on October 30, 2024 at by Inan Dogan, PhD

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A New Dawn is Coming to U.S. Stocks

Published on November 16, 2024 at by Insider Monkey Staff

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Click to continue reading…

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