Farran Powell
Farran Powell
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Updated 9:02 a.m. UTC May 24, 2024
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Dividends account for a huge portion of the stock market’s long-term returns. A whopping 85% of the index’s total return between 1960 and 2023 came from reinvested dividends and the power of compounding, according to a 2023 Hartford Funds report.
But a dividend is only as good as the company paying it.
Our team screened thousands of stocks to find the best dividend stocks of 2024. We based our selection on the following factors: an attractive valuation, a consensus among Wall Street analysts of hold, buy or better, a dividend yield of at least 1.5%, and a forward price-to-earnings ratio of less than 15.
Why trust our investing experts
Experienced stock analysts select our best stock selections based on screening for several must-have metrics. These metrics often include but are not limited to forward price-to-earnings, risk, earning stability and Wall Street “buy” consensus. Among all of our 70-plus stock selections, the average return beats the S&P 500. But investors should note that before purchasing any stocks, it’s important to do plenty of research and ensure their selections align with their financial goals and risk tolerance. You can read more about our methodology below.
- 400+ S&P 500 companies screened.
- 3 levels of fact checking.
- 3-step editorial review.
- Altimeter stock grade of B or higher.
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Best dividend stocks
- Comcast Corp. (CMCSA)
- Bristol-Myers Squibb Co. (BMY)
- Altria Group Inc. (MO)
- Marathon Petroleum Corp. (MPC)
- Diamondback Energy (FANG)
- VICI Properties (VICI)
Comcast Corp. (CMCSA)
Market cap
YTD performance
Why it made our list
The communications giant has raised its dividend steadily since 2008.
Comcast is a diversified media conglomerate and the largest U.S. cable provider. The company has more than 32 million domestic broadband subscribers. Its subsidiaries include NBCUniversal, the Peaco*ck video streaming service, Universal Pictures and several theme parks.
In 2023, Comcast was the top studio in worldwide box office sales for the first time since 2015. Year-end Peaco*ck paid subscribers were up nearly 50% to 31 million.
The company’s theme parks also reported record EBITDA in 2023. EBITDA, or earnings before interest, taxes, depreciation and amortization, is an alternative metric to net income for measuring profitability. This helped fund Comcast’s $16 billion in capital returns.
Pros and cons
Pros
- Highly recurring revenue and cash flow create significant financial visibility.
- Diversified business model limits the risks associated with the legacy media business.
- Strong growth in Peaco*ck streaming service.
Cons
- The legacy TV business is likely in decline.
- Poor reputation for customer service.
- Over $90 billion in long-term debt may limit investment and growth opportunities.
More details
Bristol-Myers Squibb Co. (BMY)
Market cap
YTD performance
Why it made our list
Bristol-Myers Squibb is a global biopharmaceutical company specializing in oncology, immunology and cardiovascular therapeutics. Its top-selling drugs include cancer therapies Revlimid and Opdivo and anticoagulant Eliquis.
Global sales of Eliquis were up 3% to $12.2 billion in 2023. Opdivo revenue also grew 10% year over year, excluding foreign exchange impacts. The 10 drugs in the company’s new products portfolio generated $3.5 billion in revenue for the year.
In 2023, Bristol-Myers shares underperformed and revenue was down 2% overall. But the company has guided for a return to revenue growth in 2024. BMY also raised its dividend by 5.3% recently.
Pros and cons
Pros
- Forward earnings multiple of 7.2 suggests an extremely attractive valuation.
- An appealing 4.8% dividend yield.
- BMY’s late-stage cancer drug pipeline should generate strong pricing power.
Cons
- Leading cancer drug Revlimid faces significant generic competition.
- Opdivo and Eliquis will likely face heavy generic drug competition beyond 2028.
- The company has guided for only modest revenue growth in 2024.
More details
Altria Group Inc. (MO)
Market cap
YTD performance
Why it made our list
Altria is one of the largest U.S. tobacco companies. The company produces cigarettes, cigars, smokeless tobacco products and beer. Its subsidiaries include Philip Morris USA, John Middleton Co. and Sherman Group Holdings.
Altria has maintained an impressive five-year adjusted diluted earnings per share growth rate of 4.4%.
But the combination of a sluggish tobacco market and the industry’s long-term regulatory risk might be difficult to swallow. Altria has sweetened the pot by paying a quarterly dividend of 98 cents per share, or a yield of 9.3%. MO is also developing cigarette substitutes, including heated tobacco products, to mitigate the decline in cigarettes.
Pros and cons
Pros
- Extremely profitable, reporting $8.1 billion in net income in 2023.
- Room to raise U.S. cigarette prices to offset declining volumes.
- Diversification outside cigarettes into other tobacco products reduces regulatory risk.
Cons
- U.S. cigarette consumption may be in decline.
- Less exposure to high-growth emerging markets than competitors.
- U.S. regulatory risks include a possible ban on menthol cigarettes.
More details
Marathon Petroleum Corp. (MPC)
Market cap
YTD performance
Why it made our list
MPC is a petroleum refiner focused on the Midwest, West Coast and Gulf Coast regions. Refiners profit from the crack spread, which is the difference in price between crude oil and refined petroleum products.
Marathon also owns the general partner and majority limited partner interest in MPLX LP (MPLX). MPLX is a midstream oil and gas company that operates gathering, processing, transportation and other logistics assets and infrastructure.
MPC generated an impressive $9.7 billion in adjusted net income in 2023. The refiner also returned $12.8 billion in capital to shareholders via dividends and buybacks. The company’s diversified geographical footprint allows it to minimize feedstock prices and optimize its cost structure.
Pros and cons
Pros
- Diversified Gulf Coast complex refining facilities provide flexibility.
- Investments in renewable diesel facilities position Marathon well for the future.
- High European natural gas prices may benefit U.S. refiners in the global market.
Cons
- MPLX is highly exposed to fluctuations in oil and gas prices.
- West Coast facilities have higher costs, and demand is threatened by electric vehicles.
- Global regulatory risks tied to carbon reduction initiatives.
More details
Diamondback Energy (FANG)
Market cap
YTD performance
Why it made our list
Diamondback Energy is a U.S. oil and gas exploration and production company. FANG primarily targets the Permian Basin in West Texas and New Mexico. The company specializes in unconventional onshore oil and gas reserves.
In February 2024, Diamondback announced a $26 billion merger with Endeavor Energy Resources. The combined company will be one of the most attractive Permian Basin investment options. Diamondback will control an estimated 838,000 net acres of property and 816,000 barrels of oil equivalent per day of net production when the deal is complete. The deal unlocks an estimated $550 million in annual cost synergies.
FANG announced a 7% base dividend increase at the same time as the Endeavor deal. The dividend hike demonstrates the company’s financial health.
Pros and cons
Pros
- One of the lowest-cost oil and gas producers in the U.S.
- The company has pledged to return at least 50% of free cash flow to shareholders.
- Cutting-edge oilfield technology gives FANG a competitive advantage.
Cons
- The company’s break-even crude oil price may rise over time.
- Permian Basin production could outgrow transportation infrastructure.
- Merger and acquisition strategy creates execution risks.
More details
VICI Properties (VICI)
Market cap
YTD performance
Why it made our list
This real estate investment trust offers an attractive valuation, a top-tier portfolio of gaming properties, and a highly recurring revenue base generated from world-class casino and resort operators.
VICI owns gaming destinations, championship golf courses and other experiential properties in the U.S. and Canada. Its properties include MGM Grand, Caesars Palace and The Venetian in Las Vegas.
Revenue growth last year was solid at 38.9%. Adjusted funds from operations per share was up 11.8% in 2023. This is among the highest growth rates among S&P 500 REITs. VICI also announced and originated $1.8 billion in acquisitions for the year. To top it off, VICI is taking a financially responsible approach to expanding its property portfolio.
Pros and cons
Pros
- Highly recurring rental revenues provide extensive financial visibility.
- $3.5 billion in liquidity provides financial flexibility in 2024.
- Extremely attractive 5.7% dividend yield.
Cons
- Doesn’t benefit directly from casino operations.
- Elevated interest rates increase the cost of debt used for property acquisitions.
- A net leverage ratio of 5.5 times net debt to EBITDA.
More details
Compare the best dividend stocks
Methodology
The dividend stocks included above all trade on a major U.S. stock exchange and meet the following criteria:
- Member of the S&P 500 index. The famed benchmark is often used as a broad view of the U.S.’s economic health. It includes many large-cap companies, which tend to be less volatile.
- Consensus analyst recommendation of hold, buy or better. A strong number of analyst ratings of hold, buy or better indicates an expectation the stock will perform well.
- An Altimeter overall grade of B or higher. The overall grade considers profitability, earning stability, valuation and earning expectations. Stocks with grades of B or higher are ranked in the top quarter of nearly 5,000 stocks in Altimeter’s database. This indicates that these companies have strong valuations and can improve returns.
- Forward earnings multiple of less than 15. Stocks with low forward earnings multiples are considered attractively valued based on analysts’ projected future earnings. According to Yardeni Research, the S&P 500’s median forward P/E ratio is above 20.
- Dividend yield of at least 1.5%. The S&P 500’s overall dividend yield is about 1.4%. So all the stocks included have significantly higher yields than the S&P 500 average.
Why other stocks didn’t make the cut
Our list contains stocks with both sizable dividend yields and attractive underlying businesses.
Just because a stock pays a high dividend yield doesn’t mean it’s a good investment. A stock could pay a 4% dividend yield and drop in value by 40% in a year. In that case, it would generate a negative total return.
Companies also routinely cut their dividend payouts in response to poor financial performance.
Final verdict
Dividends are one factor you should use to determine which stocks to buy. But remember that a dividend is only as good as the company paying it.
An extremely high dividend yield might indicate the company’s fundamentals are in trouble. It could be a way to lure investors to the table. So while a high yield is appealing, you should consider other factors when deciding whether to invest in a stock. These include fundamental valuation metrics such as P/E ratio, price-to-sales ratio and price-to-free-cash-flow ratio.
The energy sector has one of the highest average dividend yields within the S&P 500. Analysts say leading energy companies can continue to generate plenty of free cash flow to maintain and raise their dividends.
What are dividend stocks?
Dividend stocks are public companies that distribute a portion of their profits to shareholders via cash or stock distributions. Companies typically pay dividends quarterly. But some make special dividend payments at irregular intervals.
Dividend stocks are typically shares of more mature, profitable companies. A company can use dividend payments to incentivize investors to buy shares of stock once its revenue or earnings growth has slowed.
What is considered a good dividend yield?
What constitutes a good dividend yield is subjective and depends on your investment goals and risk tolerance. It can vary based on the sector and market conditions too.
Evaluate other factors such as the company's financial health, payout ratio and dividend growth history. This can help you make informed decisions about your investment portfolio and achieve your long-term investment objectives.
Choosing the best dividend stocks
Look for stocks with high dividend yields. Dividend yield is calculated by dividing a stock's annual per-share dividend payment by its share price. A higher dividend yield is generally better. But an extremely high dividend yield might be a red flag. It could indicate that a stock's share price has crashed and a dividend cut is imminent.
To avoid stocks that may be at risk of cutting their dividends, find those with low payout ratios. The lower a stock's payout ratio, the less financial strain its dividend payments have on the company.
Frequently Asked Questions (FAQs)
Dividends can be a reliable source of income in an uncertain environment. According to Hartford Funds, reinvested dividends have accounted for 85% of the S&P 500’s total return since 1960.
The safest dividend stocks have strong underlying business fundamentals and relatively low payout ratios. This gives them the financial flexibility to maintain their dividends even during cyclical economic downturns.
To earn $1,000 per month in dividends, you must have a portfolio with an average dividend yield that produces $12,000 per year in dividends. For example, a $400,000 portfolio of stocks with an average dividend yield of 3% would generate $1,000 per month in dividends.
Retiring on dividend stocks is a common strategy for generating passive income. But assessing your investment goals, risk tolerance and financial situation is essential. That’s because dividend stocks have risks such as market volatility and lower returns than other investments.
Diversification is crucial for minimizing your reliance on any one investment. Carefully evaluate your investment portfolio and risk tolerance to make informed decisions and achieve your retirement goals.
Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.
Blueprint has an advertiser disclosure policy. The opinions, analyses, reviews or recommendations expressed in this article are those of the Blueprint editorial staff alone. Blueprint adheres to strict editorial integrity standards. The information is accurate as of the publish date, but always check the provider’s website for the most current information.
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Wayne Duggan is a regular contributor for Forbes Advisor and U.S. News and World Report and has been a staff writer for Benzinga since 2014. He is an expert in the psychological challenges of investing and frequently reports on breaking market news and analyst commentary related to popular stocks. Some of his prior work includes contributing news and analysis to Seeking Alpha, InvestorPlace.com, Motley Fool, and the Lightspeed Active Trading blog. He’s the author of the book "Beating Wall Street With Common Sense," which focuses on practical investing strategies to outperform the stock market. He resides in Biloxi, Mississippi
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Farran Powell is the lead editor of investing at USA TODAY Blueprint. She was previously the assistant managing editor of investing at U.S. News and World Report. Her work has appeared in numerous publications including TheStreet, Mansion Global, CNN, CNN Money, DNAInfo, Yahoo! Finance, MSN Money and the New York Daily News. She holds a BSc from the London School of Economics and an MA from the University of Texas at Austin. You can follow her on Twitter at @farranpowell.
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