We recently analyzed the best dividend stocks of 2024.
Though Carlisle Companies Incorporated (NYSE:CSL) ranks seventh on our list of the 10 Best Dividend Stocks of 2024, we have analyzed the stock in detail.
We are nearly halfway through the year, and the stock market is showing consistent signs of improvement. Even though the Dow Jones Industrial Average (DJIA) rose only 3.7% so far this year, its broader partner has surged by 11.1% this year so far, with its 12-month return coming in at nearly 26%, as of the close of May 23. However, dividend stocks are still not keeping up with the broader market, with the Dividend Aristocrats Index returning just 3.85% since the start of 2024. Last year also didn’t go well for these equities as tech stocks rose to fame. That said, the tech stocks that drove the market rally, have decided to enhance their shareholder return by initiating dividend policies this year. This could have an impact on the performance of dividend stocks and the overall market. David Harrell, an editor of the Morningstar Dividend Investor newsletter, made the following comment in this regard:
“The inclusion of the big names [Meta, Alphabet] in any sort of dividend indexes or dividend growth indexes is very likely to increase their correlation with the broad market.”
While dividend stocks lagged behind the market last year, their long-term performance suggests otherwise. Dividend equities represented an average of 34% of the market’s overall return from 1940 to 2023. Not only this, these stocks showed resilience and demonstrated strong performance in comparison to other asset classes during periods of high inflation. In our article titled 25 Things Every Dividend Investor Should Know, we cited data from Hartford Funds and mentioned that during eight inflationary periods between 1970 and 2022, dividend stocks outperformed their non-dividend counterparts. Specifically, during the 1970s, a decade marked by high inflation, dividends accounted for nearly 73% of the S&P 500’s total return.
In addition to this, the dividend growth rate has also surpassed inflation over the years. According to data from Yale University’s Robert Shiller, dividends per share have grown 1.6 percentage points faster annually than inflation since 1871. This growth advantage has increased in recent decades as over the past 50 years, dividends have surpassed inflation by 2.5 percentage points annually, and in the last two decades, by 4.6 annualized percentage points. This ability of dividends to outpace inflation makes them a more attractive investment for long-term investors. Therefore, analysts suggest that investors should not be concerned about dividend stocks underperforming the broader market in the short term.
Another factor attracting investors to dividend stocks is the increasing amount of dividends US companies have paid over the years. According to recent data, the S&P 500 companies paid $151.6 billion in dividends in the first quarter of 2024, up from $146.8 billion during the same period last year. The report also mentioned that 796 companies announced dividend hikes during the quarter, amounting to $22.7 billion, growing from $19.7 billion in the prior-year period. This indicates that dividend payments are on the right track this year. Analysts have also given a positive outlook for dividend stocks in 2024.
Veteran dividend investor Warren Buffett’s portfolio can be a good start for our readers to understand dividend investing. Read Warren Buffett’s 8 Best Dividend Stock Picks.
Carlisle Companies Incorporated (NYSE:CSL)
Year-to-Date Returns as of May 20: 35.4%
Carlisle Companies Incorporated (NYSE:CSL) is an Arizona-based construction company that deals in products belonging to various industries. It is one of the best dividend stocks on our list as it returned 35.4% since the start of the year. The company currently offers a quarterly dividend of $0.85 per share and has a dividend yield of 0.81%, as of May 21. The company is just three years away from becoming a Dividend King, holding a 47-year streak of consistent dividend growth. The stock is trading at a trailing twelve-month P/E ratio of 26.3, which shows that it relatively undervalued than its peers.
At the end of December 2023, 35 hedge funds tracked by Insider Monkey held stakes in Carlisle Companies Incorporated (NYSE:CSL), compared with 37 in the previous quarter. These stakes are collectively valued at over $765.4 million. Generation Investment Management owned the largest stake in the company in Q4.
TimesSquare Capital Management mentioned Carlisle Companies Incorporated (NYSE:CSL) in its Q1 2024 investor letter. Here is what the firm has to say:
“In the Industrials sector we gravitate toward business service companies, those focused on automation & efficiency improvements, and essential infrastructure services. Carlisle Companies Incorporated (NYSE:CSL), a manufacturer of engineered products including roofing materials, rose 21%. While third quarter sales declined somewhat, operating margins improved. Management believes the destocking activity which persisted through the past few quarters is complete.”
Carlisle Companies Incorporated (NYSE:CSL) ranks seventh on our list of the best dividend stocks. Click to read other 10 Best Dividend Stocks of 2024.
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Disclosure: None. This article is originally published at Insider Monkey.
