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.
6. NIKE, Inc. (NYSE:NKE)
Number of Hedge Fund Holders: 75
NIKE, Inc. (NYSE:NKE) ranks sixth on our list of the best dividend stocks. The multinational footwear and apparel company offers products for men, women, and children. The company has raised its payouts for 23 years in a row. Currently, it offers a quarterly dividend of $0.40 per share and has a dividend yield of 2.07%, as of December 10.
While NIKE, Inc. (NYSE:NKE) has built strong investor trust over time, the company has encountered challenges in recent years. To address these issues, it is implementing new strategies, including appointing a new CEO. This leadership change marks the return of Elliott Hill, a seasoned company veteran who retired in 2020 after serving as president of global commercial and marketing operations. With Hill’s extensive experience and track record of success, the company aims to revitalize its approach and navigate its path forward.
Mar Vista Investment Partners, LLC also highlighted NIKE, Inc. (NYSE:NKE)’s strength in its Q3 2024 investor letter. Here is what the firm has to say:
“We exited our NIKE, Inc. (NYSE:NKE) investment following an 18% stock price recovery from recent lows. This decision was prompted by Nike’s revised fiscal year 2025 forecast, which projects negative mid-single-digit revenue growth. The company faces a significant slowdown in lifestyle product sales, expected to persist for at least another year. Our analysis indicates sales and earnings will likely fall 15-20% below management’s previous conservative estimates. This downward revision stems from insufficient product innovation, wholesale channel shifts, and intentional supply reduction in lifestyle franchises. While reduced guidance and new leadership might provide a catalyst for the stock’s performance, the path to fundamental improvement is still unclear.
Despite maintaining its position as the global sportswear leader, Nike’s intrinsic value has stagnated. The company’s efforts to reinvigorate innovation and re-engage with wholesale channels may eventually yield growth, but our skepticism regarding management’s execution has increased. We believe Nike needs to reset investors’ expectations on margins and profits while revitalizing its top-line prospects. A short-term profit sacrifice, though painful, could provide the necessary reset to achieve financial expectations in future years. We will continue monitoring Nike’s turnaround and reassess the investment if fundamentals and management execution improve.”
In fiscal Q1 2025, NIKE, Inc. (NYSE:NKE) reported revenue of $11.6 billion, which fell by 10% from the same period last year. The company experienced an 8% year-over-year decline in wholesale revenue, totaling $6.4 billion. Despite this, its cash position remained strong, with cash and cash equivalents increasing to $8.5 billion from $6.2 billion in the same period last year. Over the trailing twelve months, the company generated $7.9 billion in operating cash flow.
NIKE, Inc. (NYSE:NKE) was a popular buy among elite funds at the end of Q3 2024, as hedge fund positions in the company grew to 75, from 66 in the previous quarter. The stakes owned by these hedge funds have a collective value of over $5 billion. With over 16.2 million shares, Pershing Square was the company’s leading stakeholder in Q3.
5. Starbucks Corporation (NASDAQ:SBUX)
Number of Hedge Fund Holders: 76
Starbucks Corporation (NASDAQ:SBUX) is a Washington-based multinational chain of coffeehouses that specializes in a wide range of coffee beverages. The economy, and especially consumer spending, has shown resilience over the past year despite ongoing uncertainty. However, Starbucks has not experienced similar success. The highly competitive and fragmented nature of the retail coffee market poses challenges for the company. In the US, the top five coffee chains collectively hold less than half the market, leaving customers with plenty of alternatives to large chains. With no switching costs, customers can easily choose other options, leaving Starbucks little margin for error—an issue that seems to be affecting its performance. In the past year, the stock has shown a modest return of just 0.18%.
Starbucks Corporation (NASDAQ:SBUX) showed mixed earnings in fiscal Q4 2024. The company posted revenue of $9.07 billion, which fell by 3.2% from the same period last year. That said, the cash position remained stable, generating $6 billion in operating cash flow. During the quarter, the company added 722 net new stores, increasing its total locations to 40,199. Of these, 52% are company-operated, while 48% operate under licensing agreements.
ClearBridge Investments appreciated Starbucks Corporation (NASDAQ:SBUX) on its strong business model in its Q3 2024 investor letter. Here is what the firm said:
“Similarly, we took advantage of a business reset at Starbucks Corporation (NASDAQ:SBUX) in the third quarter to initiate a position in the global coffee retailer. A confluence of factors, including degraded store-level operations and long consumer wait times, consumer fatigue with high prices and weakening engagement among occasional Starbucks customers has led to declining U.S. same-store sales growth. While the path ahead will likely require reinvestment back into the business, there are many merits to Starbucks’ business including its strong brand name and category leading market position. In response to recent challenges, Starbucks has appointed change-agent CEO Brian Niccol, who we know from the Strategy’s ownership of Chipotle Mexican Grill during its turnaround. Niccol has a successful track record of investing in product innovation and fixing execution issues, which we believe are the primary challenges facing Starbucks today. Starbucks represents the kind of successful playbook we have executed on historically – focusing on high-quality businesses and brands while being disciplined around the entry point into investments with attractive risk-reward opportunities.”
Starbucks Corporation (NASDAQ:SBUX), one of the best dividend stocks, has been growing its dividends consistently for the past 14 years. The company’s quarterly dividend currently comes in at $0.61 per share for a dividend yield of 2.48%, as of December 10.
As of the close of Q3 2024, 76 hedge funds held stakes in Starbucks Corporation (NASDAQ:SBUX), growing from 70 in the previous quarter. These stakes have a consolidated value of more than $3.25 billion.
4. Pfizer Inc. (NYSE:PFE)
Number of Hedge Fund Holders: 80
Pfizer Inc. (NYSE:PFE) is an American multinational pharmaceutical and biotech company. Its recent success, driven by its COVID-19 vaccine and treatment pill, has left some investors viewing it as a stock past its prime. With demand for the vaccine declining sharply, concerns have emerged about possible shifts in vaccine policy under the incoming Trump administration, adding to investor apprehensions. Since the start of 2024, the stock has fallen by over 13%.
That said, Pfizer Inc. (NYSE:PFE) reported strong earnings in the most recent quarter. The company posted revenue of $17.7 billion, which showed a significant 32% growth from the same period last year. It sustained remarkable growth in its Oncology portfolio, with significant revenue contributions from products such as Padcev, Xtandi, Lorbrena, and Braftovi/Mektovi. Additionally, it successfully met increased demand for Paxlovid during the recent surge in COVID-19 cases.
In the first nine months of 2024, Pfizer Inc. (NYSE:PFE) returned $7.1 billion to shareholders through dividends. The company’s quarterly dividend comes in at $0.42 per share and has an attractive dividend yield of 6.51%, as of December 10. It is one of the best dividend stocks on our list as the company has been growing its payouts for 14 consecutive years.
Parnassus Investments highlighted Pfizer Inc. (NYSE:PFE) in its Q1 2024 investor letter. Here is what the firm has to say:
“During the quarter, we added new positions in Pfizer Inc. (NYSE:PFE), NICE and Charter Communications. We purchased Pfizer to capture the potential upside from any turnaround following the COVID-induced boom-bust cycle of the last few years. Pfizer’s stock price sank by more than 40% in 2023 as COVID-19 vaccine revenues rolled off, providing an attractive entry point for us. The company completed its acquisition of Seagen, which should strengthen Pfizer’s pipeline in antibody-drug conjugates (ADC). Pfizer also offers an attractive dividend yield.”
As per Insider Monkey’s database of Q3 2024, 80 hedge funds held stakes in Pfizer Inc. (NYSE:PFE), compared with 84 in the previous quarter. The total value of these stakes is more than $3 billion. Among these hedge funds, Two Sigma Advisors was the company’s leading stakeholder in Q3.
3. The Home Depot, Inc. (NYSE:HD)
Number of Hedge Fund Holders: 82
The Home Depot, Inc. (NYSE:HD) is an American multinational home improvement retail company that sells appliances, tools, construction equipment, and related products. The company faced challenges this year due to increasing macroeconomic uncertainty, which dampened overall consumer demand and led to reduced spending on home improvement projects. In its latest quarter, it reported a 1.3% decline in same-store sales compared to the previous year—an unfavorable outcome for any retail-focused business. Management anticipates this downward trend will persist for the remainder of the fiscal year. That said, the stock has surged by over 22.4% since the start of 2024.
This was also highlighted by Carillon Tower Advisers in its Q3 2024 investor letter. Here is what the firm has to say:
“While Home Depot, Inc.’s (NYSE:HD) recent reported earnings were somewhat tepid, the market seems to be pricing in an inversion of the company’s sales, driven by lower interest rates. Home Depot reported its seventh consecutive quarter of same-store sales declines, giving back substantial gains that it enjoyed during the pandemic. High mortgage rates have also put a damper on existing home sales. People typically spend the most on home repairs and improvements in years when they buy or sell houses, often conducting both transactions in the same year.”
In the third quarter of 2024, The Home Depot, Inc. (NYSE:HD) reported revenue of $40.22 billion, which showed a 6.6% growth from the same period last year. The company’s operating income came in at $5.4 billion and its operating margin was 13.5%. It experienced improved customer interest in seasonal products and various outdoor projects, along with additional sales driven by demand related to hurricane activity.
In the first nine months of the year, The Home Depot, Inc. (NYSE:HD) generated over $15 billion in operating cash flow. The company’s strong cash position makes it a generous dividend payer. The company currently pays a quarterly dividend of $2.25 per share and has a dividend yield of 2.13%, as of December 10. It is one of the best dividend stocks on our list as the company has raised its payouts for 14 consecutive years.
According to Insider Monkey’s database of Q3 2024, 82 hedge funds owned stakes in The Home Depot, Inc. (NYSE:HD), down from 86 in the preceding quarter. These stakes are worth nearly $7.6 billion in total. Ken Fisher’s Fisher Asset Management owned the largest stake in the company.
2. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 86
Exxon Mobil Corporation (NYSE:XOM) ranks second on our list of the best dividend stocks. On November 1, the American energy company announced a 4% hike in its quarterly dividend to $0.99 per share. This marked the company’s 42nd consecutive year of dividend growth. The stock supports a dividend yield of 3.50%, as of December 10.
Exxon Mobil Corporation (NYSE:XOM) is grabbing investors’ attention this year, surging by nearly 11% since the start of 2024. The company boasts a robust collection of high-quality assets. Its comprehensive operations, spanning exploration, production, refining, marketing, and specialty chemicals, offer a significant advantage by reducing risks and leveraging its global network to maximize cash flow efficiency.
In the third quarter of 2024, Exxon Mobil Corporation (NYSE:XOM) delivered strong results, posting $90.02 billion in revenue and exceeding analysts’ projections by $1.66 billion. The company leads in carbon capture and storage efforts, recently signing a new agreement that increased its annual CO2 offtake commitments to 6.7 million metric tons—more than any other competitor in the field. It also maintains a robust financial position. During the quarter, it reported $17.6 billion in operating cash flow and $11.3 billion in free cash flow. Additionally, it returned $9.8 billion to shareholders through dividends and stock buybacks.
Exxon Mobil Corporation (NYSE:XOM) was included in 86 hedge fund portfolios at the end of Q3 2024, compared with 92 in the preceding quarter, as per Insider Monkey’s database. The stakes held by these funds have a collective value of nearly $7 billion. Ken Fisher, Rajiv Jain, and Ken Griffin were the company’s leading stakeholders in Q3.
1. Merck & Co., Inc. (NYSE:MRK)
Number of Hedge Fund Holders: 86
Merck & Co., Inc. (NYSE:MRK) is a New Jersey-based pharmaceutical company that provides innovative health solutions to its consumers. The company’s flagship cancer drug, Keytruda has been approved for numerous indications. Recently, the company reported that a Phase 3 trial evaluating Keytruda for a specific type of ovarian cancer achieved its primary goal of improving progression-free survival but fell short of meeting the secondary goal of extending overall survival. Currently, Keytruda is approved in the US for 40 different oncology indications. Merck is actively working to secure similar approvals for the drug in key international markets, including the European Union and Japan, where these indications are not yet authorized.
In the third quarter of 2024, Keytruda sales grew by 17% from the same period last year, reaching $7.4 billion. This was also highlighted by GreensKeeper Asset Management in its Q3 2024 investor letter. Here is what the firm said:
“Merck & Co., Inc. (NYSE:MRK) was our second-largest detractor this quarter, declining -8.3%. MRK’s leading HPV vaccine, GARDASIL 9, faced challenges internationally due to inventory buildup within its Chinese distributor, which is expected to reduce shipments for the remainder of 2024. Despite this short-term impact, the long-term outlook for GARDASIL 9 remains promising. Meanwhile, the company’s $27 billion Keytruda cancer juggernaut continues to grow at a healthy clip, powering earnings growth.”
Overall, Merck & Co., Inc. (NYSE:MRK) reported revenue of $16.66 billion, which showed a 4.3% growth from the same period last year. The company’s pipeline continues to progress and grow, reflecting its ability to establish a sustainable innovation framework and positioning it with a more diversified portfolio to support future growth.
On November 19, Merck & Co., Inc. (NYSE:MRK) declared a 5.2% hike in its quarterly dividend to $0.81 per share. Through this increase, the company stretched its dividend growth to 14 years, which makes it one of the best dividend stocks on our list. The stock supports a dividend yield of 3.21%, as of December 10.
Insider Monkey’s database of Q3 2024 showed that 86 hedge funds owned stakes in Merck & Co., Inc. (NYSE:MRK), down from 96 a quarter earlier. These stakes have a collective value of more than $7.1 billion. Among these hedge funds, Fisher Asset Management was the company’s leading stakeholder in Q3.
Overall, Merck & Co., Inc. (NYSE:MRK) ranks first on our list of the best dividend kings. While we acknowledge the potential for MRK 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 time frame. If you are looking for an AI stock that is more promising than MRK but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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