In this article, we will discuss some of the best American dividend stocks.
The US economy expanded by 2.8% in the third quarter of 2024, as reported in the Advance GDP release from the U.S. Bureau of Economic Analysis. This marked the ninth straight quarter of growth in real GDP. While the third-quarter increase was robust, it slightly lagged behind the 3% growth recorded in the second quarter of 2024. Economists polled by Dow Jones had anticipated a 3.1% rise.
Regardless of market conditions, investors frequently seek to minimize risk in their portfolios, and investing in dividend stocks is a reliable approach to achieve this. A report by S&P Dow Jones Indices highlighted the growing significance of dividends as a source of personal income. Over time, dividend income has steadily risen, increasing from 2.68% in the fourth quarter of 1980 to 7.88% in the second quarter of 2024. In contrast, interest income has seen a decline, dropping from 14.58% to 7.61% during the same period.
Also read: 8 Best Dividend Kings To Invest In For Safe Dividend Growth
The Dividend Aristocrat Index, which tracks the performance of companies with 25 consecutive years of dividend growth, has surged by over 10% since the start of 2024, underperforming the market. Although dividend stocks may not have been hitting it out of the park this year, US companies have remained dedicated to rewarding shareholders by consistently paying dividends. According to a report by S&P Dow Jones, for the 12-month period ending in September 2024, US common dividend increases totaled $74.7 billion, marking a 16.9% rise from the $63.9 billion recorded in the same period a year earlier, ending in September 2023. The report also mentioned that in the third quarter of 2024, there were 480 dividend increases reported, marking a 7.1% rise compared to the 448 increases in the same period in 2023. The total value of these dividend hikes amounted to $14.1 billion for the quarter.
WisdomTree offers an interesting perspective on global dividends in its report. According to their findings, the global equity market currently distributes around $1.6 trillion in dividends, an increase from approximately $1.5 trillion last year. Notably, 55% of these dividends come from outside the US, which is about 15% more than the non-US share in market cap-weighted indexes. On the other hand, US companies account for 44% of global dividends, which is considerably less than their 63% share of global market capitalization. This suggests that non-US markets are more heavily weighted in dividend-focused indexes, while US exposure is relatively lower. For instance, European countries make up about a quarter of global dividend payments, which is 10% more than their share of the global market cap.
That said, the start of dividend payments by several major US tech companies contributed an additional 1.1 percentage points to the global growth rate in Q2, as reported by Janus Henderson’s Global Dividend Index report. The report also mentioned that the contribution from these new dividend payers will persist throughout the remainder of the year, ensuring that US payout growth remains ahead of the global average. In view of this, let’s take a look at some of the best American dividend stocks.
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Our Methodology:
We created this list by scanning Insider Monkey’s Q3 2024 database for US companies that have consistently increased their dividends for at least 10 years and are traded on American stock exchanges. Then, we chose stocks with dividend yields above 2% as of December 10. Finally, we selected the top 8 companies with the most hedge fund investors in Q3 2024 from the refined dataset.
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).
8. Comcast Corporation (NASDAQ:CMCSA)
Number of Hedge Fund Holders: 72
Comcast Corporation (NASDAQ:CMCSA) is an American multinational telecommunications company that offers a wide range of related services and products to its consumers. The stock is down by over 11% since the start of 2024. The company’s performance has been lackluster, as investors have found little motivation to invest in it this year. Despite reporting solid earnings in the latest quarter, the results failed to captivate investors, as they were viewed as merely a temporary improvement rather than a long-term growth indicator.
In the third quarter of 2024, Comcast Corporation (NASDAQ:CMCSA) reported revenue of $32.07 billion, which grew by 7% from the same period last year. The company’s performance highlighted its strength, with broadband ARPU rising by 3.6%. Its connectivity business also grew by 5%. Adjusted EBITDA margins for Connectivity & Platforms reached 40.9%. Additionally, the company successfully delivered the Paris Summer Olympics, driving double-digit growth in Peacock revenue and paid subscribers, while also securing NBC’s position as the top network for the 2023-2024 season.
From a dividend point of view, Comcast Corporation (NASDAQ:CMCSA) held a steady cash position. In the most recent quarter, the company generated over $7 billion in operating cash flow and its free cash flow came in at more than $3.4 billion. In addition, it returned $1.2 billion to shareholders through dividends, which makes CMCSA one of the best dividend stocks on our list.
Comcast Corporation (NASDAQ:CMCSA) currently pays a quarterly dividend of $0.31 per share and has a dividend yield of 3.20%, as of December 10. The company has been rewarding shareholders with growing dividends for the past 16 years.
The number of hedge funds tracked by Insider Monkey owning stakes in Comcast Corporation (NASDAQ:CMCSA) jumped to 72 in Q3 2024, from 61 in the previous quarter. These stakes have a collective value of more than $5.44 billion. With over 31.8 million shares, First Eagle Investment Management was the company’s leading stakeholder in Q3.
7. QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 74
QUALCOMM Incorporated (NASDAQ:QCOM) is an American semiconductor company, based in California. The company’s earnings came in strong in fiscal Q4 2024, with revenues of $10.24 billion, up 18% from the same period last year. Its net income also jumped by 33% on a YoY basis at $3.5 billion. The company reported an annual EPS growth exceeding 30% compared to the previous year in fiscal 2024.
Madison Investments highlighted QCOM in its Q3 2024 investor letter. Here is what the firm has to say:
“Alphabet Inc., Eli Lilly and Company, QUALCOMM Incorporated (NASDAQ:QCOM), Microsoft Corporation, and Apple Inc. were the largest detractors. Qualcomm has given back some of its first half gains after the CFO commented at a conference that its entrance into the AI PC business would take time to ramp. We continue to see Qualcomm as well positioned with growth from AI moving into the mobile phone, from new opportunities in the Internet of Things (IoT), and within the Auto industry but will also look to future growth as they enter the PC market.”
QUALCOMM Incorporated (NASDAQ:QCOM) maintains a strong foothold in the smartphone chip industry and is poised to benefit from the fast-growing generative AI smartphone segment. According to IDC, this market is expected to expand at an annual rate of 78% through 2028, with yearly shipments projected to reach 912 million units by the end of the forecast period. Furthermore, the company holds the position of the second-largest player in the smartphone application processor market, with a 31% market share, based on data from Counterpoint Research. The stock is up by nearly 13.5% since the start of 2024.
QUALCOMM Incorporated (NASDAQ:QCOM) has ample cash on its balance sheet to support its dividends. The company ended the quarter with $8 billion available in cash and cash equivalents. Moreover, its operating cash flow of $12.2 billion grew from $11.3 billion in the prior-year period. The company paid $2.2 billion to shareholders through dividends and share repurchases. It offers a per-share dividend of $0.85 every quarter and supports a dividend yield of 2.14%, as of December 10. It is one of the best dividend stocks on our list as the company maintains a 20-year streak of consistent dividend growth.
Of the 900 hedge funds tracked by Insider Monkey at the end of Q3 2024, 74 funds owned stakes in QUALCOMM Incorporated (NASDAQ:QCOM). These stakes are collectively valued at over $3.23 billion.