Interest rates have been the overarching factor for dividend investors over the past year. The Federal Reserve’s rapid interest rate-hiking campaign led to a dramatic sell-off in many traditional safe-harbor sectors such as consumer staples, utilities and telecom. As inflation has started to subside, however, the Fed has appeared to pivot toward rate cuts.
With economic data coming in stronger than expected to start 2024, these projected rate cuts have come into question. There is also a presidential election coming up this year, and geopolitical tensions are boiling over in several parts of the world. While this could create a lot of volatility for the stock market overall, high-quality dividend stocks should fare well regardless of how these macroeconomic factors play out.
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Here are 15 of the top dividend stocks to buy now:
| Stock | Dividend yield |
| Coca-Cola Co. (ticker: KO) | 3.2% |
| JD.com Inc. (JD) | 2.8% |
| CK Hutchinson Holdings Ltd. (OTC: CKHUY) | 7.0% |
| Bank of Nova Scotia (BNS) | 6.3% |
| Essential Utilities Inc. (WTRG) | 3.4% |
| Northwest Natural Holding Co. (NWN) | 5.4% |
| Hormel Foods Corp. (HRL) | 3.4% |
| Verizon Communications Inc. (VZ) | 6.7% |
| Mid-America Apartment Communities Inc. (MAA) | 4.5% |
| Grupo Aeroportuario del Pacifico SAB de CV (PAC) | 5.7% |
| United Micro Electronics (UMC) | 7.0% |
| Enbridge Inc. (ENB) | 7.6% |
| Ecopetrol SA (EC) | 14.6% |
| United Parcel Service Inc. (UPS) | 4.2% |
| OneMain Holdings Inc. (OMF) | 8.3% |
Coca-Cola Co. (KO)
Shares of soft drink giant Coca-Cola hit $60 just prior to the onset of the pandemic. Fast forward to today and the stock trades for $60 once again. That said, since the end of 2019, Coca-Cola has grown its earnings from $2.07 per share then to $2.69 for full-year 2023. Analysts see that figure surging to $2.81 per share for 2024.
This shows that while KO stock has lost its fizz over the past few years, the actual business is humming along. The company was able to raise prices significantly during the recent inflationary wave, and that should lead to higher profit margins as supply chains and labor costs are now normalizing. All this is to say that Coca-Cola is larger and more profitable than ever, but the share price hasn’t caught up to the firm’s improved outlook just yet. At 21 times forward earnings, Coca-Cola is at a fine entry point for dividend investors looking for a perfect buy and hold recession-proof stock.
JD.com Inc. (JD)
It’s been a brutal stretch for Chinese stocks. For one example, Hong Kong’s Hang Seng Index is down about 40% over the past five years. The Chinese economy has struggled to bounce back from the pandemic-related shutdowns and supply chain disruptions. And, increasingly, investors fear potential deflation in China as manufacturing jobs and trade are moving toward North American alternatives in the reshoring boom.
The bear case for China practically writes itself. However, sentiment has now gone too far. Consider Chinese e-commerce leader JD.com. The company just reported its fourth-quarter earnings, and they came in much stronger than expected. JD grew revenues year over year, and earnings per share soared 10% despite the economic slump in China. This leaves JD shares at less than nine times forward earnings even as the company is reporting record profits. The company also announced an increase to its dividend, with the new 76-cent annual payout amounting to a 2.8% dividend yield.
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 price 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.
Typically, investors turned to CK Hutchinson for its shipping connections. Given the boom in Asian trade throughout the 2000s, CK Hutchinson was a perfect vehicle for cashing in. The reversal in trade flows, however, has caused CKHUY stock to plunge from a peak of more than $20 per share in 2015 to just above $5 now. This stunning decline is far in excess of any fundamental deterioration in the business, leaving shares at 5.4 times trailing earnings and a 7% dividend yield today.
Bank of Nova Scotia (BNS)
Bank of Nova Scotia is one of the five large Canadian money center banks. In addition to retail and investment banking in Canada, Bank of Nova Scotia has extensive operations in Latin America, and it also has extensive wealth management services. Bank of Nova Scotia has dramatically underperformed in recent years, with shares trading down overall since 2019.
There are a couple of headwinds at play. One, Bank of Nova Scotia’s Latin American and Caribbean banking operations have struggled amid mixed economic conditions in those markets. And investors are afraid that Canada’s housing market could be set for a major pullback after years of dramatic gains. However, these fears seem overblown. Latin America’s economies have picked up steam recently. And Bank of Nova Scotia’s Canada risk is less than it may seem, given that country’s robust mortgage insurance program, which limits the risk that banks face in the housing market. Bank of Nova Scotia trades at 11 times earnings and offers a 6.3% dividend yield.
Essential Utilities Inc. (WTRG)
Essential Utilities is primarily a water utility. It also purchased a Pittsburgh-based natural gas utility in 2020, but water remains the major source of its revenues. Historically, water utilities tend to trade at high price-to-earnings multiples. Investors prize water utilities for being extremely predictable businesses. It’s hard to imagine a technological disruption to water consumption. People and businesses must buy water regardless of economic conditions, and pricing tends to be steady as well. And, unlike electricity, there are fewer external threats to the business; water utilities don’t have to worry about excessive carbon emissions, forest fires or other such hazards which have tripped up power utilities.
However, thanks to rising interest rates and the general sell-off across defensive recession-resistant stocks, utilities such as Essential have fallen toward multiyear lows. WTRG stock is down about 15% over the past year and merely flat over the past five years, though earnings have risen over that span. This leaves shares of this sleep-well-at-night income pick at 18 times forward earnings with a rock-solid 3.4% dividend yield.
Northwest Natural Holding Co. (NWN)
Northwest Natural is a natural gas utility and a so-called dividend king — defined as a company that has increased its dividend payout for at least 50 consecutive years. Dividend kings are a great area to focus on for income investors, as these companies have a track record of consistent growth that has held up through many business cycles and economic downturns.
Regardless of the firm’s tremendous track record, shares are in a deep slump now. NWN stock is down more than 20% over the past year and has fallen more than 40% over the past five years. Utilities have seen valuations tumble thanks to higher interest rates and increasing regulatory concerns in the sector. However, Northwest Natural is continuing to grow nicely; revenues are up from $746 million in 2019 to $1.2 billion last year. Earnings have increased as well, and the company is now at a forward P/E of 14.3 while paying out a greater than 5% dividend yield. That’s a bargain.
Hormel Foods Corp. (HRL)
Hormel Foods is a packaged foods company focused on meat and other assorted protein-rich food items. The rise of the GLP-1 weight loss drugs sent a scare through most food and beverage stocks, including Hormel, in 2023. However, 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 in the wake of the weight loss drug phenomenon.
Hormel shares plummeted in 2023 not just due to GLP-1 drug concerns but also broader macroeconomic concerns. Rising interest rates were a negative for consumer staples stocks. And Hormel’s profit margins fell amid high commodity price inflation and labor shortages. However, Hormel has its momentum back. Shares recently spiked 16% higher in a single day following a fourth-quarter earnings report that came in way ahead of expectations. With Hormel returning to growth, shares should have considerable upside in the months ahead.
[READ: 8 Best Consumer Staples Stocks to Buy Now]
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 worries that the cable industry was going to start a competitive race-to-the-bottom pricing cycle in telecom as well, but these fears have started to abate in recent months.
Verizon reported stronger-than-expected earnings in January. The company’s focus on network strength and economies of scale is paying off. With the worst of this capital spending cycle behind it, Verizon is now turning toward paying down debt. A stronger balance sheet will improve profitability and help insulate Verizon from cyclical tides in the industry. While Verizon shares have rallied over the past few months, the stock still pays out an attractive 6.7% dividend yield.
Mid-America Apartment Communities Inc. (MAA)
Mid-America Apartment Communities is a large real estate investment trust focused on the multi-family housing market. Mid-America controls 102,662 apartment units across 16 states and the District of Columbia. It has concentrated its ownership in fast-growing Sunbelt states such as Texas. This has been a good decision, given the high rates of population growth and economic expansion in these states in recent years.
While the overall stock market has rallied sharply over the past year, many REITs have been left behind. MAA stock, for example, is down about 14% over the past 12 months. This comes primarily due to higher interest rates, which raise interest costs on the outstanding debt that funds the firm’s apartment properties. On top of that, analysts expected that apartment rents would stall out following the rapid increases over the past few years. But with few signs of the housing market actually rolling over, Mid-America Apartment should be set for favorable operating conditions and further dividend increases in the years to come.
Grupo Aeroportuario del Pacifico SAB de CV (PAC)
Grupo Aeroportuario del Pacifco, or “Pacific Airports” in English, is a Mexican airport operator. The company controls 12 Mexican airports including its flagship Guadalajara location, along with industrial cities like Tijuana and tourist destinations including Puerto Vallarta and Los Cabos. It also operates two airports in Jamaica. The core bull thesis is that the air travel industry grows much more quickly than the overall economy, and that’s especially true in emerging markets like Mexico, where rising incomes allow the transportation market to expand at a rapid pace.
Pacifico has enjoyed tremendous growth over the years, and shares are up more than 400% since their initial public offering. The growth has paused this year, however. The Pratt & Whitney engine recall has grounded dozens of aircraft which would normally serve the Mexican market. Boeing Co.’s (BA) 737 issues are also taking capacity out of the picture. This has led to Pacifico anticipating modest declines in revenue and earnings per share in 2024. But growth should return in 2025; meanwhile shares are at 13 times earnings and offer a 5.7% dividend due to the current disruptions.
United Micro Electronics (UMC)
UMC is the world’s third-largest semiconductor foundry, trailing only Taiwan Semiconductor Manufacturing Co. Ltd. (TSM) and GlobalFoundries Inc. (GFS). Foundries exist to provide third-party manufacturing services to chip companies that don’t wish to run their own chip factories.
Foundries are a booming industry right now. Given the surge in chip demand for goods such as artificial intelligence applications, smart cars, the Internet of Things and so on, the semiconductor supply chain is having to rapidly expand to keep up with demand. This leads to a favorable pricing environment and rapid growth for foundry operators. Despite the positives, UMC stock has been roughly flat over the past year. This leaves the stock at just 14 times forward earnings while offering a 7% 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 might seem like a stodgy business. However, pipelines have taken on increasing importance in recent years. That’s thanks to the shale and fracking boom, which has created a growing supply of oil and natural gas to transport around North America. Meanwhile, thanks to environmental and political restrictions, it is increasingly difficult to build new pipelines. This, in turn, constricts supply and creates scarcity value for the existing pipes. Enbridge shares have underperformed the market dramatically over the past two years as investors fret about rising interest rates and Enbridge’s debt load. With the dividend yield now at 7.6%, Enbridge is generously compensating its shareholders.
Ecopetrol SA (EC)
Ecopetrol is the nation of Colombia’s state-run oil company. The Colombian government retains 88% ownership of the firm, with the other 12% held by private investors. This alignment has served investors well; the government — as the majority shareholder — has an incentive for Ecopetrol to pay as high of a dividend as possible to fund the government’s fiscal needs. And Ecopetrol has a great collection of assets; not only is it Colombia’s dominant oil producer, it also controls 100% of the nation’s refining capacity, a large renewable energy business, and a collection of toll roads and power distribution assets.
Ecopetrol was trading around three times earnings and paid a jaw-dropping 26% dividend yield in 2023. This year, profits are down a fair bit following a decline in the price of oil. Regardless, Ecopetrol is still going for about 5.6 times forward earnings. The company just proposed an annual dividend of $1.59 per American depositary receipt for this year, which amounts to an expected dividend yield of 14.6%.
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. Shares peaked in 2022 at the height of the online shopping boom, but are down sharply since then.
UPS has been hit by much higher labor costs at the same time that e-commerce growth has slowed. While 2023 was a challenging year for UPS, the firm anticipates returning to revenue growth this year, and earnings per share should start rebounding in the back half of 2024 as well. In the longer-term, e-commerce logistics should be a growing field, and UPS has a strong competitive position in a favorable market. With the pullback, UPS stock now yields more than 4%.
OneMain Holdings Inc. (OMF)
OneMain is a specialty consumer finance company that makes personal loans which 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 moderately favorable credit ratings. OneMain has a long operating history; it was part of Citigroup Inc. (C) before becoming a publicly traded company in 2013. OneMain’s long operating history within a banking giant gave it a huge amount of consumer credit data along with the experience of navigating the 2008 financial crisis.
All this should give investors confidence that OneMain will be able to steer through the next recession, whenever it may hit. For the time being, consumers are still in fine shape, and OneMain’s credit metrics are performing well. OneMain shares are going for less than eight times forward earnings and offer an 8.3% dividend yield.
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15 Best Dividend Stocks to Buy for 2024 originally appeared on usnews.com
Update 03/15/24: This story was previously published at an earlier date and has been updated with new information.
