2023 was a forgettable year for most dividend stocks. While growth and technology investments soared, many income investments were left in the dust. Indeed, numerous blue-chip companies have seen their worst share price declines in years thanks to an unprecedented combination of economic events. A surge in inflation and unusually high interest rates have forced investors to reassess their portfolios. And, increasingly, many people have sold off dividend stocks to instead invest in cash and fixed-income alternatives.
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Is it time to give up on dividend stocks? Not at all. In fact, with the economic risks on the horizon, it could be a great time to buy these 15 leading dividend stocks. They are solid bargains today and offer the prospect of both steady income and rising share prices going forward. Here are 15 of the best dividend stocks to buy for 2024:
| Stock | Dividend yield |
| Verizon Communications Inc. (ticker: VZ) | 7.2% |
| Hormel Foods Corp. (HRL) | 3.5% |
| Diageo PLC (DEO) | 2.7% |
| Unum Group (UNM) | 3.3% |
| FMC Corp. (FMC) | 4% |
| Fidelity National Information Services Inc. (FIS) | 3.5% |
| Exxon Mobil Corp. (XOM) | 3.8% |
| Enbridge Inc. (ENB) | 7.6% |
| Goldman Sachs Group Inc. (GS) | 3% |
| National Storage Affiliates Trust (NSA) | 5.9% |
| Realty Income Corp. (O) | 5.4% |
| British American Tobacco PLC (BTI) | 9.5% |
| United Parcel Service Inc. (UPS) | 4.1% |
| United Microelectronics Corp. (UMC) | 7.3% |
| Mid-America Apartment Communities Inc. (MAA) | 4.4% |
Verizon Communications Inc. (VZ)
It looks like the worst is finally over for the telecom industry. Verizon has rebounded from a low of $30 to roughly $38 today amid a brightening future for the telecommunications firm. Verizon was caught in a huge spending cycle as it invested heavily in 5G networks. These investments have been slower to pay off than expected. Throw in rising interest rates, and investors have fretted about the firm’s large debt load.
Now, though, the recent dip in Treasury yields should start to alleviate those fears. And competition appears to be stabilizing; Verizon’s management has indicated that it has passed the peak of this spending cycle and that cash flows will be more robust heading into 2024. Even after the recent rebound, Verizon is still a deep value; shares go for 8 times forward earnings and offer a 7.2% dividend yield.
Hormel Foods Corp. (HRL)
Hormel Foods is a packaged foods company focused on meat and protein products. The rise of the GLP-1 weight loss drugs has sent a scare through most food and beverage stocks, including Hormel. However, Hormel is better positioned than most to deal with current conditions. Hormel’s focus on protein- and nutrient-rich foods such as nuts, beans and fresh and prepared meats should allow the company to maintain its sales even if snack and junk foods do decline due to changing trends as they pertain to weight loss.
Hormel stock has gotten shredded this year, with shares sliding to multiyear lows recently. This has pushed the stock’s dividend yield up to 3.5% while shares sell for just 21 times forward earnings. As inflation has moderated and livestock prices stabilize, Hormel should enjoy rising profit margins and a favorable profit outlook in 2024.
Diageo PLC (DEO)
Diageo is one of the world’s largest alcohol companies. Based in the United Kingdom, it produces spirits brands such as Smirnoff, Don Julio, Johnnie Walker, Baileys and many more, along with Guinness beer. While the modern-day Diageo was formed in 1997, the original Guinness brewery was established way back in 1759. Alcohol companies such as Diageo have such a long operating track record thanks to the industry’s stability. Alcohol demand tends to be level regardless of economic conditions, and Diageo’s wide assortment of brands insulates it from demand swings within individual categories of spirits.
However, like with the food companies, Diageo and other spirits companies have recently slumped. Weight loss drug fears have hit the sector, and Diageo added to the negativity with a sales warning related to its Latin American and Caribbean markets. However, Diageo shares have fallen to nearly their lowest price-to-earnings ratio since the 2008 financial crisis, making for a tremendous buying opportunity.
Unum Group (UNM)
Unum is a life insurance company, and it also offers adjacent types of policies such as disability and accident insurance. UNM stock fell sharply following its weaker-than-expected third-quarter earnings report. However, at this price, Unum is going for less than six times forward earnings and sells at a discount to book value.
Plus, the profit outlook for Unum has improved. Higher interest rates allow the company to earn more returns on the fixed-income portion of its investment portfolio. And the GLP-1 drugs might help on the cost side if those drugs end up making a big positive impact on health outcomes in diabetes and other related chronic illnesses. Unum is cheap, pays a 3.3% yield, and has major potential upside if America starts to bring its diabetes problem under control. All this sets up a favorable outlook for UNM stock in 2024.
FMC Corp. (FMC)
FMC is one of the world’s largest patented crop chemical companies. It has devised its own unique formulations to improve yields on various crops, and it also acquires other firms in its industry to offer a broader product portfolio and give farmers a wide range of chemical solutions. Like many companies tied to commodity prices, FMC enjoyed a bumper crop of profitability in 2022. The invasion of Ukraine caused disruptions in many agricultural markets, thus leading to higher prices and bigger margins for companies such as FMC.
But grain prices have largely slumped in 2023 as other markets such as South America planted heavily to pick up the slack from Eastern Europe. Falling demand and sinking margins have caused a collapse in FMC’s stock price. In fact, shares have fallen more than 50% over the past year. That has pushed the stock down to just 13 times forward earnings, and that’s with earnings at a temporarily depressed level as well. With the decline in the share price, the dividend yield is up to 4% as well.
Fidelity National Information Services Inc. (FIS)
Fidelity National Information Services is a technology company that serves the financial industry. It provides software for mobile and online banking services, fraud detection, risk management, electronic fund management, retirement and wealth management solutions, and various others.
FIS stock has lost nearly two-thirds of its value since its 2021 peak. This comes amid a brutal sell-off across the payments industry. As e-commerce momentum has dramatically slowed down, investors have thrown in the towel on the payments industry. Inflation and a potential recession loom as other potential headwinds. However, the selling has gotten far too extreme in the case of Fidelity National Information Services. And operations are faring alright; analysts see the company returning to growth on both the top and bottom lines in 2024. Famed value investor Seth Klarman seemingly agrees with the favorable outlook, as he has taken a sizable position in FIS stock.
Exxon Mobil Corp. (XOM)
It’s time to take another look at oil stocks. After a mixed 2023, the prices of oil, natural gas and other related products have slumped heading into 2024. Investors are worried that a slowing economy — particularly in emerging markets such as China — will limit oil’s upside. And that’s a reasonable concern. However, that’s already reflected in Exxon’s stock price, with shares down more than 15% from its recent highs. It’s important to remember that oil is still around $70 a barrel; Exxon and the other major integrated energy producers make plenty of money at $70 oil. That’s especially true for Exxon Mobil thanks to its highly profitable chemicals and refining business. Exxon shares trade around 10 times earnings and offer a 3.8% dividend yield.
Enbridge Inc. (ENB)
Enbridge is one of North America’s largest midstream energy companies. It controls a vast array of pipelines and other energy logistics assets across Canada, the United States and Mexico. Pipelines are a desirable asset class: They are long-life assets which generate stable inflation-protected cash flows. And because politicians and environmentalists have placed more obstacles in the path toward building new pipelines or expansions to existing ones, it has created scarcity around the currently operational pipelines. Higher interest rates have concerned investors, given Enbridge’s sizable debt load. However, the stable utility-like nature of Enbridge’s business should ensure that it continues to thrive in the years to come. Shares currently yield 7.6%.
[READ: 8 Best Income ETFs for 2024]
Goldman Sachs Group Inc. (GS)
Goldman Sachs is one of America’s largest and most successful investment banks, and it also has a retail banking division. The bank is known for its trading prowess; Goldman Sachs has deftly navigated previous crises such as the 2008 housing bust. The firm is about much more than proprietary trading, though. Its capital markets division is a dominant force within the underwriting space for initial public offerings
(IPOs), secondary offerings, bond underwriting, and mergers and acquisitions advising. As capital markets have rebounded in 2023, Goldman Sachs should see more action in its IPO and other underwriting businesses. Goldman Sachs stock has been essentially flat since 2021. With the improving economic outlook, shares should move toward new highs in 2024.
National Storage Affiliates Trust (NSA)
National Storage Affiliates is a fast-growing real estate investment trust, or REIT, focused on the self-storage market. Founded a decade ago, it is one of the newest large self-storage REITs out there. Just since 2018, it has grown annual revenues from $329 million to more than $800 million. It has rewarded investors with strong dividend growth as the business has prospered.
But 2023 was less kind to National Storage. Higher interest rates make it more expensive to build or acquire new storage units, along with rising interest costs when refinancing existing debt. Additionally, investors demand higher dividend yields from their REITs when the rates available on fixed-income products increase. Now that yields have backed off their recent highs, however, the outlook for storage REITs such as National Storage Affiliates should be better. Shares currently yield 5.9%.
Realty Income Corp. (O)
Realty Income is a triple-net REIT. The phrase “triple net” refers to real estate contracts where the tenant, rather than the landlord, is responsible for several major costs including maintenance and taxes. This structure has proven more favorable recently as rising inflation has led to mounting operating costs for commercial real estate.
Realty Income’s management team also wisely spun off its office properties into a separate publicly traded REIT several years ago before the bottom fell out of the office market. Realty Income is also widely known for being one of the first prominent firms to offer a monthly rather than a quarterly dividend. Realty Income normally raises its dividend several times every year. And it has a strong track record, having made it through the 2008 and 2020 downturns without lasting harm. With this year’s decline in its stock price, O stock is up to a 5.4% dividend yield.
British American Tobacco PLC (BTI)
British American Tobacco is one of the world’s leading tobacco companies. It has historically been one of the world’s largest cigarette vendors. More recently, the firm has invested heavily in vaping, heated not burned products, and other alternative nicotine delivery platforms. BTI stock recently plunged to multiyear lows following a large write-down of its legacy cigarette business. While write-downs are never encouraging, investors should focus on the future, not the past. British American Tobacco’s future is in reduced risk products, not cigarettes. And sales of those reduced risk products are rising nicely and the segment is on pace to become profitable several years before management had originally expected. Shares go for six times forward earnings and offer a 9.5% dividend yield. This is too low of a price, particularly as the company is expected to post positive revenue and earnings growth in 2024.
United Parcel Service Inc. (UPS)
United Parcel Service is a leading package delivery company, offering extensive logistics services both in the United States and internationally. UPS shares took flight in 2020 as the surge in e-commerce led to record demand for parcel delivery. The good times kept on rolling in 2021 and 2022 as consumer spending reached record highs.
However, the good times have now ended for UPS. Costs such as labor expenses are trending higher as workers demand big wage increases in the inflationary landscape. However, UPS is unlikely to be able to pass those higher costs on to customers given the slowdown in retail demand. A weaker economy could be a real obstacle to UPS in 2024. But the longer-term trend toward e-commerce growth should be a tailwind throughout the 2020s, and investors can currently establish a position at a discounted price.
United Microelectronics Corp. (UMC)
UMC is the world’s third-largest semiconductor foundry, trailing only Taiwan Semiconductor Manufacturing Company Ltd. (TSM) and GlobalFoundries Inc. (GFS). Semiconductor companies that don’t own their own foundries outsource their chip production to companies like TSM or United Microelectronics. Given the rise of AI applications, the Internet of Things, connected cars and other such computing use cases, the overall demand for semiconductors is expected to boom throughout the 2020s. The foundry operators, like UMC, will naturally benefit as the total addressable market expands. United Microelectronics shares have been held down by uneven operating results this year along with concerns around Taiwan’s political situation. However, that is all reflected in UMC’s relatively low stock price and generous 7.3% dividend yield.
Mid-America Apartment Communities Inc. (MAA)
Mid-America Apartment Communities is a large REIT focused on the multifamily housing market. Mid-America controls 101,987 apartment units across 16 states and the District of Columbia. It has concentrated its ownership in fast-growing Sunbelt states such as Texas. High population and income growth have allowed rent prices to jump considerably, which in turn leads to higher returns on investment for Mid-America Apartments. The past few years were particularly fruitful for Mid-America as many people relocated to the Sunbelt states during the pandemic. MAA stock has gone on sale this year thanks to rising interest rates, which harm the valuation of most categories of REITs, including apartments. Shares are down about 15% over the past year, which has pushed MAA stock down to just 15 times funds from operations while offering a 4.4% dividend yield.
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15 Best Dividend Stocks to Buy for 2024 originally appeared on usnews.com
Update 12/14/23: This story was previously published at an earlier date and has been updated with new information.
