The most pressing question facing the markets today is the path of interest rates. Recently, it seemed like a foregone conclusion that the Federal Reserve would be set to slash interest rates in 2024. However, hotter-than-expected economic data has shaken this conviction and led to some market volatility.
It’s understandable why investors are fretting about this interest rate uncertainty. The good news, however, is that dividend stock investors have nothing to worry about. There are tons of companies out there today offering solid dividend payouts while still selling at attractive valuations. In fact, there have been a number of significant stock sell-offs across the dividend space to start the year, leading to an enticing basket of income opportunities for February 2024 and beyond.
Here are 15 of the top dividend stocks to own today:
| Stock | Dividend yield |
| JD.com Inc. (ticker: JD) | 2.7% |
| CK Hutchinson Holdings Ltd. (OTC: CKHUY) | 6.9% |
| OneMain Holdings Inc. (OMF) | 8.6% |
| Duke Energy Corp. (DUK) | 4.5% |
| Southern Co. (SO) | 4.1% |
| Newmont Corp. (NEM) | 5% |
| British American Tobacco PLC (BTI) | 9.8% |
| Mosaic Co. (MOS) | 2.8% |
| APA Corp. (APA) | 3.4% |
| Toronto Dominion Bank (TD) | 5.2% |
| Air Products & Chemicals Inc. (APD) | 3.2% |
| Gilead Sciences Inc. (GILD) | 4.2% |
| Verizon Communications Inc. (VZ) | 6.6% |
| National Storage Affiliates Trust (NSA) | 6.2% |
| Realty Income Corp. (O) | 6% |
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JD.com Inc. (JD)
It’s been a brutal stretch for Chinese stocks — and not just the popular tech stocks, either. For example, Hong Kong’s Hang Seng Index is down 43% over the past five years. Investors have headed for the hills amid a series of unsettling economic and geopolitical developments, including a looming risk of deflation in China. There are real macroeconomic risks to the companies which do business in China.
But at some price, almost everything becomes a real value. For Chinese e-commerce leader JD.com, it is now in the deep value bucket. With the most recent dip, shares are nearing an 80% peak-to-trough decline since 2021. That’d be understandable if JD’s business had collapsed as well. Instead, JD continues to grow. The company isn’t expected to announce its fourth-quarter results until March 14. However, analysts are projecting that its full-year 2023 earnings will rise 15% in total, and will rise once again in 2024. As the gulf between earnings and sentiment widens, JD shares have slumped to just seven times forward earnings and are offering a 2.7% dividend yield to boot.
CK Hutchinson Holdings Ltd. (OTC: CKHUY)
JD isn’t the only stock under fire due to the sputtering Chinese economy. Hong Kong-based investment company CK Hutchinson Holdings has also seen its share prices take on water. CK Hutchinson invests in retail, telecommunications, infrastructure and seaports. The seaport business is particularly interesting, with CK controlling 293 berths in 51 ports spanning 25 countries. It also earns money from other sea logistics, such as cruise ship terminals, river trade and ship repair facilities.
Investors used to appreciate CK Hutchinson for its exposure to Asia’s booming trade and commercial markets. However, as the world economy has shifted since the pandemic, Chinese trade has lost its luster and CKHUY stock has collapsed; shares are down from a peak of more than $20 per share in 2015 to just $5 and some change now. This plunge has pulled shares down to 5.5 times trailing earnings and shares offer a nearly 7% dividend yield.
OneMain Holdings Inc. (OMF)
OneMain is a specialty consumer finance company that makes personal loans to consumers. These are either unsecured or backed by collateral such as automobiles. While people may label companies like OneMain as subprime lenders, the company’s risk pool gravitates more toward people with at least reasonably decent credit ratings.
OneMain has a long history of operations; it was a longtime piece of Citigroup Inc. (C) before becoming a publicly traded company in 2013. OneMain’s long operating history within a banking giant gave it access to a treasure trove of historical credit data, and the company operated successfully through prior downturns such as the 2008 financial crisis.
OMF stock has rallied since late 2023 as the company continues to report strong earnings. Also, the economy has failed to roll over, and credit metrics remain acceptable. At this price, OneMain is going for around seven times forward earnings and offers a fat 8.6% dividend yield. There is risk here if the economy really tanks, but otherwise there is a large margin of safety at this price.
Duke Energy Corp. (DUK)
Nuclear power is white-hot once again. After the Fukushima accident, but it seemed like nuclear was on the way out. But the hunt for affordable and reliable zero-carbon energy has led to a renewed interest in nuclear energy. Uranium stocks have soared over the past year, and the industry is buzzing. DUK stock is one option for how dividend investors can cash in on the uranium trend.
Duke Energy is a leading power utility focused on the Southern region of the U.S. It operates 11 nuclear units at six sites in North Carolina and South Carolina with a combined capacity of 10.7 gigawatts. This makes up about half of Duke’s total electricity for its customers in the Carolinas. This massive and cheap nuclear power generation is an increasingly valuable asset. Duke shares recently fell after the company missed earnings due to higher interest expenses. However, the company offered an upbeat outlook for 2024 and increased its investment plans for the year. In other words, this dip is a solid buying opportunity.
Southern Co. (SO)
It appeared that utility stocks were going to have a strong 2024 as investors rushed to get ahead of the Federal Reserve’s planned rate cuts. Instead, hotter-than-expected economic data has caused economists to question whether rate cuts are necessary at this time. As such, rate-sensitive stocks like Southern are underperforming the market. In fact, Southern is quite like Duke as it faces short-term macroeconomic headwinds but has a bright long-term future thanks to nuclear power.
Southern is a power utility focused on states including Tennessee and Georgia. It has pivoted from more than 80% coal-powered generation several decades ago to less than 20% today. The company is investing more than $40 billion to further modernize its fleet and reduce its emissions. The company’s leading position in nuclear power generation is likely to be a durable competitive advantage in the industry. With the recent drop in the stock, Southern’s dividend yield has ticked back up over 4%.
Newmont Corp. (NEM)
Newmont Corp. is one of the world’s largest gold mining operations, with annual revenues of more than $10 billion. Investors were excited about gold miners last year; they appeared to be promising inflation hedges. The price of gold reached new all-time highs, and it seemed that the leading mining firms like Newmont would be set to profit.
Instead, the sector has slumped. As attention has turned from inflation to potential interest rate cuts, investors have thrown in the towel on a lot of inflation hedges. Meanwhile, some uneven profitability out of Newmont’s mines over the past year has put a damper on investor enthusiasm for the company in particular. However, with its diversified roster of precious metals mines, Newmont has sticking power in a historically volatile industry. Analysts expect a big rebound in Newmont’s earnings this year. Meanwhile, shares yield about 5%.
British American Tobacco PLC (BTI)
British American Tobacco is one of the world’s largest tobacco companies. Historically, British American has been one of the world’s prominent cigarette vendors. For understandable reasons, many investors are not comfortable with that business model. But the company’s future lies elsewhere; it is letting its cigarette business slowly shrink while promoting newer nicotine delivery platforms including vaping and “heated not burned” options.
Shares of BTI plummeted in late 2023 when the company took a huge non-cash expense to write down the value of its cigarette brands. While this amounted to a large reported loss, investors should not be surprised that the company put a more conservative valuation on its remaining cigarette operations. Rather, the company’s focus is on growing its less harmful nicotine options. In a world where governments are rapidly increasing access to recreational cannabis, it seems unlikely that regulators would phase out nicotine entirely. As such, BTI stock seems like a steal at an estimated 6.6 times next year’s earnings. Shares yield nearly 10% today.
Mosaic Co. (MOS)
Mosaic is a basic materials company focused on agricultural inputs such as potash and phosphate. The firm enjoyed a boom in profitability as agricultural prices soared following Russia’s invasion of Ukraine. However, grain prices cooled off in 2023, and the agricultural sector sold off. 2024 has fared little better so far; in fact, Mosaic shares have slumped to new 52-week lows in February. While profits are down, Mosaic has a strong balance sheet and should be poised for a swift recovery when agriculture recovers. In addition, phosphate should benefit from rising demand as it is an input for electric vehicle batteries.
Morningstar’s Seth Goldstein agrees that MOS stock is a bargain at this price. He sees fair value at $40 per share, which implies roughly 35% upside from the Feb. 14 closing price of $29.55. Goldstein believes the firm’s new K3 mine will lower its average potash production price and make it more competitive against rivals.
[SEE: 7 of the Best High-Dividend ETFs.]
APA Corp. (APA)
APA Corp., formerly known as Apache, is an oil and gas operator with operations in the U.S., Egypt, the North Sea and offshore Suriname. The company’s oil operations in the United States have had uneven success over the past decade, leading to a relatively disappointing share price performance compared to other energy peers. And while APA stock has rallied over the past few years, shares are caught in another tailspin now with the stock hitting new 52-week lows in February.
Geopolitical tensions are partly to blame for that. Egypt is undergoing some economic and political uncertainty in the wake of the violence occurring in neighboring countries. Additionally, APA has invested heavily in what appears to be a great project in offshore Suriname. Exxon Mobil Corp. (XOM) has had massive success in neighboring Guyana recently, and that bodes well for Suriname. However, some folks are on edge given Venezuela’s recent saber-rattling about possibly trying to annex nearby oilfields. These events, along with weakness in the energy markets, have sent APA stock down sharply, pushing shares to just five times forward earnings.
Toronto Dominion Bank (TD)
Toronto Dominion Bank is one of Canada’s five money center banks. Canadian banks have delivered superior returns compared to financial industry peers due to the structure of the industry. The relatively low number of players keeps competition at a more manageable level. In addition, the Canadian government offers a mortgage insurance program, which has insulated that market from the same sort of housing market woes which sank so many U.S. banks in 2008.
Regardless of the positives, Canada’s banks are currently on a downswing, with TD stock sitting near 52-week lows. Investors are nervous about a slowing Canadian economy, which is understandable. However, TD’s huge size and strong operating track record should give investors confidence in its outlook. TD also owns a significant position in brokerage firm Charles Schwab Corp. (SCHW), which should work to its benefit as Schwab recovers from last year’s panic sell-off. Overall, thanks to the recent correction, TD stock is going for 10 times forward earnings and yields just over 5%.
Air Products & Chemicals Inc. (APD)
Air Products & Chemicals is one of the three main companies globally that produce and distribute industrial gases. APD sells gases such as hydrogen, helium, oxygen and nitrogen to a wide variety of sectors, including health care, manufacturing facilities, chemical plants and electronics. But perhaps the most exciting use case is in green energy. In fact, Air Products & Chemicals is putting $30 billion to work in coming years to build out several large projects in fields such as green hydrogen and carbon capture. Given the rush for more sustainable energy sources, this should be a major growth market for the company going forward.
APD shares recently plunged to new 52-week lows following a disappointing earnings report. It was a noisy one, as revenues fell even as product volumes went up. In the bigger picture, however, the company offered reasonably upbeat guidance for full-year 2024 and its longer-term investment plans are on track. The recent correction makes for an attractive entry point on this “dividend aristocrat.”
Gilead Sciences Inc. (GILD)
Gilead Sciences is a large and highly profitable biotechnology company. The firm rose to prominence thanks to its lineup of HIV treatments. It then saw its shares skyrocket thanks to the launch of its product that cures the hepatitis C virus (HCV). Given that it works as a cure rather than ongoing treatment, revenues from the HCV product portfolio have dropped sharply after their initial blockbuster figures. Gilead stock has been stuck in a tailspin for years as it seeks another big launch to replace the HCV business.
Shares sold off once again following an underwhelming fourth-quarter earnings report earlier this month. However, that should be offset by the company’s announcement of the acquisition of CymaBay Therapeutics Inc. (CBAY), which will add to Gilead’s presence in the liver therapeutics category. Morningstar’s Karen Andersen believes Gilead shares are worth $97 each, which would mark substantial upside from the current price around $73. The dividend yield is also more than 4%.
Verizon Communications Inc. (VZ)
The telecom industry is shaping up to be one of 2024’s pleasant surprises. After years of underperformance, there is finally light at the end of the tunnel. Verizon has completed a large chunk of its spending for 5G rollouts and will see lower capital expenditures in 2024 and beyond. There had been a great deal of talk about incoming competition from the cable industry. However, cable companies have seen their share prices plunge recently amid unfavorable earnings trends, which should lessen the competitive pressure against Verizon.
Verizon released a mixed earnings report of its own in January, as it had strong operating results but took a write-down on the wireline and wireless equipment unit within its Verizon Business division. Regardless, sentiment is improving. Morgan Stanley, for example, just pegged Verizon shares as a “fresh money” buy earlier this month. While Verizon shares have rallied sharply off the lows, the stock is still going for less than nine times forward earnings while offering a 6.6% dividend yield.
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 about a decade ago, it is one of the newest large self-storage REITs out there. Just since 2018, it has grown annual revenue from $329 million to an estimated $832 million expected for 2024. Investors have shared in that wealth, as National Storage Affiliates pays a large dividend of more than 6%.
NSA stock fell dramatically when interest rates soared. Higher rates are a double whammy for REITs, as their shares become less attractive compared to fixed-income yields while also having to pay more to service the debts on their properties. However, REITs such as National Storage will start to enjoy a far more favorable macroeconomic outlook in 2024. It seems that with inflation largely in check, interest rates should drift down. In addition, a slowing economy could lead to an uptake in storage demand, as negative life events like foreclosures and layoffs lead to folks changing their housing situation and needing storage units in the interim.
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 gave Realty Income a major advantage during the period of surging inflation, as it was able to avoid operating cost inflation, which hurt other types of landlords. While inflation is no longer the leading concern, Realty Income has other bullish tailwinds.
For one thing, Realty Income smartly spun off its office properties into a separate publicly traded REIT several years ago. As the latest crisis in the regional banking sector has shown, office real estate is a troubled asset class, and Realty Income wisely sidestepped that mess. By contrast, Realty Income’s focus on owning all-weather retail properties, such as pharmacies and dollar stores, makes it more resilient amid shifting economic winds.
Realty Income has also cleverly trademarked and marketed itself as “The Monthly Dividend Company.” Not only does it pay that monthly dividend, it has increased the dividend for 26 years in a row, making it one of the rare dividend aristocrats within the real estate sector.
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15 Best Dividend Stocks to Buy for 2024 originally appeared on usnews.com
Update 02/15/24: This story was previously published at an earlier date and has been updated with new information.
