In this article, we discuss top 12 dividend stocks to buy now according to analysts. You can skip our detailed analysis of dividend stocks and their previous performance, and go directly to read Top 5 Dividend Stocks To Buy Now According To Analysts.
After having a bad year in 2023, dividend stocks are coming back into fashion this year. The S&P 500 Dividend Aristocrats Index, which tracks the performance of companies with at least 25 consecutive years of dividend growth, has surged by 6.1% this year so far, with its 12-month gains coming in at 11.2%.
For dividend investors, the underperformance of dividend stocks in the short term is not really a matter of concern. Contrary to popular belief, investors tend to stick with their dividend investments even when these equities lag. When the market’s focus was on the tech rally last year, investors held on to their dividend investments. This sentiment was also affirmed by David Harrell, who serves as the editor of Morningstar DividendInvestor. Here are some of his comments:
“And when you have a more growth-oriented environment as we’ve had recently, certainly in 2023, dividend stocks are going to lag. But at the same time, dividend investors aren’t necessarily focusing on this horse race on a monthly or an annual basis like, well, are dividend stocks lagging the broad market or outperforming the broad market? Most of those investors, I believe, are focused on getting that yield from the portfolio. So, they’re getting the yield and generally hopefully getting some capital appreciation as well. So, as long as those yields are remaining strong for their portfolios, I don’t think it’s necessarily a concern.”
This optimistic outlook from analysts comes from the previous performance of dividend stocks. Over the years, dividend stocks have outperformed their non-dividend counterparts, particularly in certain market conditions. In our article titled 25 Things Every Dividend Investor Should Know, we referred to data from Hartford Funds, highlighting the returns of dividend stocks relative to non-dividend stocks. The report revealed that from 1973 to 2023, dividend-paying companies delivered an annual average return of 9.17%, compared with 4.27% gains of companies that do not pay dividends. The report also mentioned that during this period, the companies that maintained their dividend payments also surpassed non-dividend companies, delivering a 6.74% return. This shows that dividend income has been an important aspect of overall returns in the past.
Dividend investing primarily focuses on seeking out stocks with high yields and strong dividend growth streaks. Johnson & Johnson (NYSE:JNJ), The Procter & Gamble Company (NYSE:PG), and AbbVie Inc (NYSE:ABBV) are some of the strong dividend growers in the market, having raised their payouts for decades. Companies that keep on increasing their payouts have shown stellar performance in the past, especially during market downturns. From May 2005 to December 2023, the Dividend Aristocrat Index returned 11.5% in periods of high interest rates, outperforming high dividend yield stocks, which gained 10.46%.
In view of these arguments, we will discuss some of the best dividend stocks to buy according to analysts.
Image by Sergei Tokmakov Terms.Law from Pixabay
Our Methodology:
To compile this article, we first scanned Insider Monkey’s database of 933 hedge funds, as of Q4 2023 and picked stocks known for their consistent dividend track records and sustained shareholder payouts over an extended period. This group reflects stability and long-term performance in dividend payouts. From this list, we further refined our selection criteria by identifying stocks with a projected upside potential of over 10% based on analyst price targets. The stocks are ranked according to their upside potential, as of March 31. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
12. NextEra Energy, Inc. (NYSE:NEE)
Upside Potential as of March 31: 10.3%
NextEra Energy, Inc. (NYSE:NEE) is an American leading energy company that is also a producer of renewable energy and focuses on energy storage, electricity transmission, and other energy-related services. The company currently offers a quarterly dividend of $0.515 per share, having raised it by 10.2% In February this year. This marked the company’s 28th consecutive year of dividend growth, which makes NEE one of the best dividend stocks according to analysts. The stock has a dividend yield of 3.22%, as of March 31.
The number of hedge funds tracked by Insider Monkey holding stakes in NextEra Energy, Inc. (NYSE:NEE) grew to 65 in Q4 2023, from 58 in the previous quarter. The overall value of these stakes is roughly $1 billion.
11. PepsiCo, Inc. (NASDAQ:PEP)
Upside Potential as of March 31: 10.9%
PepsiCo, Inc. (NASDAQ:PEP) is an American multinational food and beverage company, operating in various segments of the consumer goods industry. The company raised its dividend for the 52nd consecutive year in February, which makes it one of the best dividend stocks on our list. Its annual dividend now amounts to $5.42 per share and has a dividend yield of 2.89%, as of March 31.
At the end of Q4 2023, 64 hedge funds in Insider Monkey’s database reported having stakes in PepsiCo, Inc. (NASDAQ:PEP), compared with 65 in the previous quarter. These stakes have a total value of over $4.5 billion. With over 6.6 million shares, Fundsmith LLP was the company’s leading stakeholder in Q4.
10. Microsoft Corporation (NASDAQ:MSFT)
Upside Potential as of March 31: 15.4%
An American multinational tech giant, Microsoft Corporation (NASDAQ:MSFT) is next on our list of the best dividend stocks according to analysts. The company remained committed to its shareholder return in the second quarter of FY24 as it returned over $8.4 billion to investors through dividends. Moreover, it has been growing its dividends for the past 11 consecutive years and offers a quarterly dividend of $0.75 per share. As of March 31, the stock has a dividend yield of 0.71%.
As of the close of Q4 2023, 302 hedge funds tracked by Insider Monkey reported having stakes in Microsoft Corporation (NASDAQ:MSFT), down slightly from 306 in the preceding quarter. The consolidated value of these stakes is over $87.3 billion.
9. S&P Global Inc. (NYSE:SPGI)
Upside Potential as of March 31: 15.8%
S&P Global Inc. (NYSE:SPGI) is a multinational financial services company that offers essential intelligence and analytics for capital markets and businesses. The company offers a quarterly dividend of $0.91 per share for a dividend yield of 0.86%, as of March 31. It holds a 51-year streak of consistent dividend growth. With an upside potential of 15.8%, SPGI is one of the best dividend stocks on our list.
S&P Global Inc. (NYSE:SPGI) was a part of 82 hedge fund portfolios at the end of Q4 2023, up from 78 in the previous quarter, as per Insider Monkey’s database. The stakes owned by these hedge funds have a total value of more than $8.8 billion. Among these hedge funds, TCI Fund Management was the company’s leading stakeholder in Q4.
8. American Tower Corporation (NYSE:AMT)
Upside Potential as of March 31: 16.3%
American Tower Corporation (NYSE:AMT) is a real estate investment trust company that specializes in owning, operating, and leasing wireless and broadcast communications infrastructure. In the fourth quarter of 2023, the company reported an operating cash flow of over $1.14 billion and its free cash flow for the period came in at $611 million. It currently offers a quarterly dividend of $1.62 per share and has a dividend yield of 3.28%, as of March 31.
At the end of December 2023, 56 hedge funds held stakes in American Tower Corporation (NYSE:AMT), compared with 60 in the previous quarter, as per Insider Monkey’s database. These stakes are worth over $3.2 billion in total.
7. Honeywell International Inc. (NASDAQ:HON)
Upside Potential as of March 31: 16.9%
Honeywell International Inc. (NASDAQ:HON) is a multinational company that operates in various sectors, primarily focusing on aerospace, building technologies, performance materials, and safety solutions. The company offers a quarterly dividend of $1.08 per share and has a dividend yield of 2.10%, as of March 31. The company has raised its dividends 14 times in the past 13 years, which places it as one of the best dividend stocks on our list.
Insider Monkey’s database of Q4 2023 indicated that 55 hedge funds held stakes in Honeywell International Inc. (NASDAQ:HON), compared with 60 in the preceding quarter. The collective value of these stakes is over $1.6 billion. With more than 1.4 million shares, Adage Capital Management was the company’s leading stakeholder in Q4.
6. Starbucks Corporation (NASDAQ:SBUX)
Upside Potential as of March 31: 17.4%
Starbucks Corporation (NASDAQ:SBUX) ranks sixth on our list of the best dividend stocks according to analysts. The global coffeehouse chain declared a quarterly dividend of $0.57 per share on March 20, which was in line with its previous dividend. Overall, it has been growing its dividends for the past 13 years. The stock’s dividend yield on March 31 came in at 2.49%.
According to Insider Monkey’s database of Q4 2023, 59 hedge funds held stakes in Starbucks Corporation (NASDAQ:SBUX), compared with 60 in the previous quarter. These stakes are collectively valued at roughly $3.3 billion.
Click to continue reading and see Top 5 Dividend Stocks To Buy Now According To Analysts.
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Disclosure. None. Top 12 Dividend Stocks To Buy Now According To Analysts is originally published on Insider Monkey.