In this article, we will take a look at the 15 best quality dividend stocks to buy according to Reddit.
Dividend stocks are gaining traction among seasoned as well as retail investors this year. The addition of some of the biggest tech names, such as Meta Platforms, Inc. (NASDAQ:META), Salesforce, Inc. (NYSE:CRM), and Alphabet Inc. (NASDAQ:GOOG) into the dividend club has made financial experts excited about the future of dividend investing. The same applies to retail investors, as they consistently seek sources of income. Retail trading peaked in 2023, representing about 23% of the total trading volume during a week early in the year, as reported by Forbes. The report also cited data from the Federal Reserve System and mentioned that direct stock ownership has grown from 15% in 2019 to 21% in 2022. Given that retail investors have previously driven market rallies, their interest in dividend equities could spark a similar rise in these stocks, which underperformed in 2023.
When investing in dividend stocks, investors prefer quality stocks—those that have a reliable track record of consistently increasing their dividends. Various experts have analyzed that the S&P 500 Dividend Aristocrats index, which tracks the performance of companies with at least 25 consecutive years of dividend growth, has outperformed the S&P 500 over the years. In a blog post published in 2019, “Dividend Growth Strategies and Downside Protection,” S&P’s Phillip Brzenk, global head of multi-asset indexes, highlighted the performance of dividend growth strategies in detail. Here are some comments from the analyst:
“Since year-end 1989, there have been six calendar years of negative performance for the S&P 500—and in all six years, the S&P 500 Dividend Aristocrats outperformed the equity benchmark by an average of 13.28%. In fact, the S&P 500 Dividend Aristocrats produced a positive total return in three of those years.”
He further mentioned that dividend aristocrats provided better protection during market downturns. In declining markets, they outperformed over 70% of the time, averaging 1.13% better returns. Overall, on a monthly basis, the dividend aristocrats index outperformed the broader market 53% of the time, with an average outperformance of 0.16%.
Despite showing poor performance in 2023, companies around the world distributed record dividends to shareholders. According to a report by Janus Henderson, global dividends jumped to $1.66 trillion in 2023, from $1.57 trillion in 2022. The growing dividend payments indicate that corporate balance sheets are strong despite global economic challenges and increased debt-servicing costs. The report also mentioned that this resilience also highlights the advantages higher interest rates bring to the banking sector. nearly half of last year’s dividend growth was driven by banks, which rewarded shareholders after experiencing a significant rise in profits from lending.
Our research shows that Johnson & Johnson (NYSE:JNJ), The Procter & Gamble Company (NYSE:PG), and The Coca-Cola Company (NYSE:KO) are some of the best quality dividend stocks to buy according to Reddit. These companies have strong dividend growth streaks and solid financial health. In this article, we will further take a look at some other best quality dividend stocks according to Reddit. You can also check out 12 Undervalued Stocks That Just Raised Their Dividends for dividend stocks with upside potential.
Image by Sergei Tokmakov Terms.Law from Pixabay
Our Methodology:
For this list, we carefully examined popular Reddit trading forums such as r/dividends, r/WallStreetBets, r/stocks, and r/trading, where everyday investors discuss and exchange investment ideas. After conducting comprehensive research and analysis, we selected 20 dividend stocks that were getting a lot of attention on Reddit as of May 2024. From this group, we chose 15 stocks that had the most hedge fund investors, as tracked by Insider Monkey, during the fourth quarter of 2023.
15. Realty Income Corporation (NYSE:O)
Number of Hedge Fund Holders: 27
Realty Income Corporation (NYSE:O) is an American real estate investment trust company that mainly invests in single-tenant commercial properties. The company offers a monthly dividend of $0.257 per share and has a dividend yield of 5.59%, as of May 18. The stock is favored by retail investors as the company pays dividends to shareholders every month. Moreover, the company has been growing its dividends regularly since its IPO in 1994, which makes it one of the best quality dividend stocks to buy according to Reddit.
The number of hedge funds tracked by Insider Monkey owning stakes in Realty Income Corporation (NYSE:O) grew to 27 in Q4 2023, from 23 in the previous quarter. These stakes have a total value of over $332.5 million. Among these hedge funds, Millennium Management was the company’s leading stakeholder in Q4.
14. Altria Group, Inc. (NYSE:MO)
Number of Hedge Fund Holders: 42
Altria Group, Inc. (NYSE:MO) is a Virginia-based tobacco company that also specializes in a wide range of other nicotine products. Retail investors favor MO because of the company’s strong cash flow. In the first quarter of 2024, the company returned $1.7 billion to shareholders in dividends. Moreover, it is a Dividend King with 54 consecutive years of dividend growth. On May 16, it declared a quarterly dividend of $0.98 per share, which was in line with its previous dividend. The stock supports an impressive dividend yield of 8.51%, as of May 18.
At the end of Q4 2023, 42 hedge funds in Insider Monkey’s database owned stakes in Altria Group, Inc. (NYSE:MO), up from 40 in the preceding quarter. The consolidated value of these stakes is more than $1 billion.
13. United Parcel Service, Inc. (NYSE:UPS)
Number of Hedge Fund Holders: 46
United Parcel Service, Inc. (NYSE:UPS) is a global logistics and package delivery company that offers various related services to its consumers. The stock is popular among the Reddit community because of its above-average dividend yield and its dividend growth over the years. The company has been rewarding shareholders with growing dividends for the past 22 years and currently pays a quarterly dividend of $1.63 per share. Over the past five years, it has raised its dividends at an annual average rate of nearly 12%. With a dividend yield of 4.37% as of May 18, UPS is one of the best quality dividend stocks to buy according to Reddit.
As of the end of Q4 2023, 46 hedge funds tracked by Insider Monkey held stakes in United Parcel Service, Inc. (NYSE:UPS), growing from 42 in the previous quarter. These stakes have a total value of over $2 billion. With over 8 million shares, Viking Global was the company’s leading stakeholder in Q4.
12. Caterpillar Inc. (NYSE:CAT)
Number of Hedge Fund Holders: 48
Caterpillar Inc. (NYSE:CAT) is next on our list of the best quality dividend stocks according to Reddit. The multinational manufacturing company currently offers a quarterly dividend of $1.30 per share and has a dividend yield of 1.46%, as of May 18. The company has been growing its dividends for the past 29 years. The stock is popular among retail investors because of the company’s diverse businesses and its revenue growth over the years.
Caterpillar Inc. (NYSE:CAT) was a part of 48 hedge fund portfolios at the end of Q4 2023, compared with 50 in the previous quarter, as per Insider Monkey’s database. The stakes owned by these hedge funds have a collective value of over $5.46 billion.
11. Medtronic plc (NYSE:MDT)
Number of Hedge Fund Holders: 56
Medtronic plc (NYSE:MDT) is a medical device company that also offers other solutions, products, and services to its consumers. It is one of the best quality dividend stocks to buy according to Reddit as the company has been increasing its dividends consistently for the past 46 years. The stock is also popular among the Reddit community considering the company’s solid financials and its smooth operations during the pandemic of 2020. The stock is up by 3.72% this year so far, as of the close of May 17. It currently pays a quarterly dividend of $0.69 per share and has a dividend yield of 3.21%, as recorded on May 18.
Insider Monkey’s database of Q4 2023 indicated that 56 hedge funds held stakes in Medtronic plc (NYSE:MDT), compared with 59 in the preceding quarter. These stakes have a total value of over $2.68 billion. Among these hedge funds, First Eagle Investment Management was the company’s leading stakeholder in Q4.
10. Target Corporation (NYSE:TGT)
Number of Hedge Fund Holders: 58
An American retail corporation, Target Corporation (NYSE:TGT) has grabbed the attention of retail investors because of its stellar dividend growth. Over the past five years, the company has raised its payouts at an annual average rate of 11.4%. Moreover, its dividend growth streak currently spans over 52 years. In the first quarter of 2024, the company returned $508 million to shareholders through dividends, compared with $497 million during the same period last year. The company offers a quarterly dividend of $1.10 per share for a dividend yield of 2.75%, as of May 18.
According to Insider Monkey’s database of Q4 2023, 58 hedge funds held stakes in Target Corporation (NYSE:TGT), the same as in the previous quarter. These stakes are worth over $1.5 billion in total.
9. Verizon Communications Inc. (NYSE:VZ)
Number of Hedge Fund Holders: 63
Up next on our list of the best quality dividend stocks according to Reddit is Verizon Communications Inc. (NYSE:VZ). The multinational tech company is popular among Redditors because of its network infrastructure and the stock’s defensive nature. Moreover, the company has been rewarding shareholders with growing dividends for the past 17 consecutive years. The company’s quarterly dividend currently comes in at $0.665 per share for a dividend yield of 6.64%, as of May 18.
At the end of December 2023, 63 hedge funds in Insider Monkey’s database owned stakes in Verizon Communications Inc. (NYSE:VZ), up from 61 in the previous quarter. These stakes have a consolidated value of over $2.6 billion. With over 4.7 million shares, AQR Capital Management was the company’s leading stakeholder in Q4.
8. PepsiCo, Inc. (NASDAQ:PEP)
Number of Hedge Fund Holders: 64
PepsiCo, Inc. (NASDAQ:PEP) is an American multinational food, beverage, and snack company. The stock is grabbing attention from retail investors because of the company’s business model. People will consistently want to consume snacks and the company has a broad portfolio of popular brands including a wide range of snacks. It currently pays a quarterly dividend of $1.355 per share, having raised it by 7% in April this year. Through this increase, the company stretched its dividend growth streak to 52 years, which makes PEP one of the best quality dividend stocks to buy according to Reddit. The stock has a dividend yield of 2.97%, as of May 18.
As per Insider Monkey’s database of Q4 2023, 64 hedge funds held stakes in PepsiCo, Inc. (NASDAQ:PEP), down from 65 in the previous quarter. These stakes have a collective value of more than $4.55 billion.
7. The Home Depot, Inc. (NYSE:HD)
Number of Hedge Fund Holders: 70
The Home Depot, Inc. (NYSE:HD) is a Georgia-based home improvement company that offers a wide range of related tools and services to its consumers. The company currently pays a quarterly dividend of $2.25 per share and has a dividend yield of 2.61%, as of May 18. It is one of the best quality dividend stocks according to Reddit because the company has been growing its dividends for the past 14 consecutive years. In addition to this, income investors are also inclined toward the stock because it has maintained its payouts for 149 quarters.
As of the end of the fourth quarter of 2023, 70 hedge funds owned stakes in The Home Depot, Inc. (NYSE:HD), compared with 76 in the previous quarter. These stakes are collectively valued at roughly $6 billion.
6. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 71
An American multinational consumer goods manufacturing company, The Procter & Gamble Company (NYSE:PG) is next on our list of the best quality dividend stocks according to Reddit. The company has caught the attention of Redditors because of its strong balance sheet, solid fundamentals, multiple revenue streams, and sufficient cash generation. This holds true as the company managed to raise its dividends for 68 consecutive years. It currently pays a quarterly dividend of $1.0065 per share and has a dividend yield of 2.40%, as recorded on May 18.
The Procter & Gamble Company (NYSE:PG) was included in 71 hedge fund portfolios at the end of Q4 2023, compared with 75 in the previous quarter, as per Insider Monkey’s database. The stakes owned by these hedge funds have a total value of nearly $6 billion. Among these hedge funds, Fisher Asset Management was the company’s leading stakeholder in Q4.