The stock market’s rally took a pause in the month of April. Persistently high inflation readings have caused economists to question whether the Federal Reserve can deliver on anticipated interest rate cuts. As if that weren’t enough, geopolitical tensions are rearing their head again, and troubling escalations in the Middle East could lead to higher gas prices or a variety of other economic disruptions.
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All this could make it a great time for investors to dial back risk a bit and add some defensive dividend stocks to their portfolios. Not all dividend stocks are created equally, however. Here are 15 leading dividend stocks to buy now with attractive payouts and strong underlying business fundamentals:
| Stock | Dividend yield |
| National Storage Affiliates Trust (ticker: NSA) | 6.4% |
| Tyson Foods Inc. (TSN) | 3.3% |
| United Micro Electronics (UMC) | 7.7% |
| Banco de Chile (BCH) | 7.4% |
| Vail Resorts Inc. (MTN) | 4.2% |
| First American Financial Corp. (FAF) | 3.8% |
| Pfizer Inc. (PFE) | 6.6% |
| Coca-Cola Co. (KO) | 3.3% |
| Johnson & Johnson (JNJ) | 3.4% |
| Prologis Inc. (PLD) | 3.7% |
| Realty Income Corp. (O) | 5.9% |
| Grupo Aeroportuario del Pacifico SAB de CV (PAC) | 5.5% |
| Ecopetrol SA (EC) | 14.0% |
| Verizon Communications Inc. (VZ) | 6.6% |
| Enbridge Inc. (ENB) | 8.0% |
National Storage Affiliates Trust (NSA)
National Storage Affiliates is a real estate investment trust, or REIT, focused on the self-storage industry. It was founded a decade ago to take advantage of opportunities in fast-growing self-storage markets within the top 100 U.S. metropolitan areas. The company has enjoyed tremendous growth, with revenues going from $383 million in 2019 to $858 million in 2023.
Over the past year, like most REITs, National Storage Affiliates has slumped due to higher interest rates. The macroeconomic environment is not ideal for National Storage Affiliates today. However, it’s worth considering that self-storage historically has held up well during recessions. Counterintuitively, foreclosures or changes in employment circumstances often lead to people renting out new storage units. This makes NSA stock one of the safer picks within the REIT space, with a sustainable high dividend yield of 6.4% today.
Tyson Foods Inc. (TSN)
Tyson Foods is a packaged foods company primarily focused on the commodity meats business. The company also has some other branded, higher-profit products as well, but overall the firm’s outlook is tied to commodity prices. Its earnings have fallen due to high levels of inflation in the price of livestock, grain prices and other such inputs.
Tyson has faced significant margin pressure resulting in shares dramatically underperforming. That said, at least in the agriculture space, inflation has abated a bit as the world has largely replaced grains that used to be sourced from Ukraine and Eastern Europe. As prices normalize, Tyson should enjoy higher profit margins and thus better earnings. This makes today’s share price an attractive entry point for Tyson before the market accounts for the turnaround potential of this discounted dividend stock.
United Micro Electronics (UMC)
United Micro Electronics is a global semiconductor foundry. It is generally around the No. 4 player in the market, trailing Taiwan Semiconductor Manufacturing Co. Ltd. (TSM), Samsung Electronics Co. Ltd. (KRW.005930) and GlobalFoundries Inc. (GFS). There has been a boom in the semiconductor foundry services space. That comes as technology like artificial intelligence and augmented and virtual reality have started to take off. With these new technologies there is the need for vastly more processing power and graphical imaging capabilities, expanding the overall marketplace. That’s especially true as more semiconductor firms wish to outsource parts of production to third-party electronics firms rather than doing their own in-house manufacturing. UMC stock has been under pressure due to a dip in some parts of the chip business (such as the automotive segment), along with concerns around Taiwan’s political situation. These concerns, taken in tandem, create a buying opportunity for investors.
Banco de Chile (BCH)
Banco de Chile is one of Chile’s large publicly traded banks. It operates the usual retail banking businesses that would be associated with an emerging market bank, and it also has investment banking and brokerage operations. The bull case for BCH stock is that Chile is a commodity-producing country, and right now, hard commodities are back in fashion.
The price of gold has reached new all-time highs as quoted in U.S. dollars. Silver has jumped. And copper, a key Chilean export, is also on the rise. These factors should allow Chile to enjoy accelerating economic growth going forward. However, the bank’s shares have not meaningfully rallied yet, despite the improving economic outlook. This gives investors an opportunity, with shares currently trading at just nine times forward earnings. The Chilean central bank is also slashing its interest rates, which should set up an expansionary economic cycle for the Chilean consumer, adding domestic market strength to the country’s leading export businesses.
Vail Resorts Inc. (MTN)
One of the fun things about investing is seeing all the different sorts of businesses that offer their shares to the public. With the recent dip in Vail Resorts’ stock price, it now offers investors the opportunity to earn a 4.2% dividend yield while owning a stake in many of North America’s leading ski resorts. Vail’s properties include Whistler Blackcomb, Beaver Creek, Breckenridge and Park City, among many others.
Vail enjoys attractive unit economics because it is consolidating the industry. It has acquired a number of leading resorts, thus improving the value of its brand and the value of products such as the Epic Pass. With consumers spending more on experiences, this has created a favorable climate for luxury destination resorts such as the world-class properties that Vail operates. While some people complain about the relatively high prices at Vail locations, the upside of this is the firm’s large dividend that it can offer to shareholders thanks to that strong pricing power.
First American Financial Corp. (FAF)
First American Financial is the nation’s second-leading title insurance company. Title insurers offer a vital service because it’s almost impossible to obtain a residential mortgage in the U.S. unless title insurance is purchased concurrently. This insurance protects the lender from any potential defects or liens against a deed. Title insurers make money both on new mortgage underwriting and also refinancing transactions. In addition, First American has a commercial real estate title business.
Understandably, several of these businesses are under pressure right now. Refinancing has virtually dried up due to elevated interest rates. Certain parts of the commercial real estate market are also showing strain. However, because title insurance is a necessary product with only a few national-scale players, profit margins tend to be good. It should be only a matter of time until the industry’s economic conditions improve. Until then, investors get paid a 3.8% dividend yield to sit and wait.
Pfizer Inc. (PFE)
It’s been a tale of two markets within the pharmaceutical stock space. Pharmaceutical companies with exposure to GLP-1 drugs for managing diabetes and weight loss have seen their share prices skyrocket. Much of the rest of this sector has been left totally behind.
For example, Pfizer shares are near multi-year lows as the company can’t catch a break as of late. It’s a fact that COVID-19 vaccine sales have plunged. However, investors have dramatically overreacted, with Pfizer shares now down sharply from where they were prior to the onset of the pandemic. The excess temporary revenues from pandemic-related sales largely went away. But Pfizer is still generating substantially more revenue today than it did in 2019. Profits have hung in there as well, with the stock trading for less than 12 times forward earnings due to investors’ current pessimism about the sector.
Coca-Cola Co. (KO)
Shares of soft drink giant Coca-Cola hit $60 just prior to the onset of the pandemic. Fast forward to April 2024 and shares trade for just shy of that price today. That’s rather intriguing for the following reason: 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. Coca-Cola shares are now going for about 21 times forward earnings and offer a 3.3% dividend yield. With markets getting rockier in recent weeks, it could be a great time for investors to add this recession-proof beverage giant today.
Johnson & Johnson (JNJ)
Like Pfizer, Johnson & Johnson finds itself in a slump. The stock has declined in recent weeks and just hit 52-week lows. Johnson & Johnson relies on pharmaceutical sales and medical devices for most of its revenues. Both of those industries have seen some weakness. Medical devices were bogged down due to the pandemic, which caused some people to delay elective surgeries, and also interfered with the supply chain for some devices.
Valuations on the pharmaceutical side of the business have also retreated throughout much of the industry, including Johnson & Johnson. However, J&J’s first-quarter earnings were largely in line with expectations. The company’s medical technology division returned to solid revenue growth in large part due to the acquisition of heart-pump maker Abiomed. Given J&J’s fortress-like balance sheet, it has plenty more firepower for mergers and acquisitions that can get this blue-chip health care stock’s growth engine revving once again.
Prologis Inc. (PLD)
Prologis has become one of the world’s largest REITs. It has emerged as a dominant force in the North American industrial properties market. This has been a highly attractive area for investment, as categories such as e-commerce have taken off. Demand for industrial warehouses and logistics facilities has blossomed, and the current North American manufacturing and re-shoring boom should accelerate this trend.
Prologis also operates a strategic capital business, which manages tens of billions of dollars in assets under management, making for a more diversified business model than most REITs. Prologis shares have gotten pummeled over the past month as the company reported underwhelming earnings; the business is feeling effects of higher interest rates that have hit so many other REITs. However, Prologis’ unmatched scale should give it stability as it navigates any near-term volatility in the industrial REIT market.
Realty Income Corp. (O)
Realty Income is a real estate investment trust focused on triple-net lease REITs. A triple-net lease is a structure where the property’s tenant, rather than the landlord, pays cost such as taxes and maintenance. And in a rising inflationary environment, this structure has been advantageous for triple-net landlords. Reality Income was also shrewd in divesting its office properties several years ago before the bottom fell out of that market. The company has established a long track record of savvy capital allocation and is one of the few Dividend Aristocrats to be found in the REIT space. As an added benefit, Reality Income pays dividends out monthly, making it a consistent income option for shareholders.
Grupo Aeroportuario del Pacifico SAB de CV (PAC)
Grupo Aeroportuario del Pacifico, or “Pacific Airports” in English, is a Mexican airport operator. The company controls 12 Mexican airports, including its flagship Guadalajara location, along with airports in industrial cities like Tijuana and tourist destinations including Puerto Vallarta and Los Cabos. It also operates two airports in Jamaica. Airports are an incredibly attractive industry thanks to the surge in emerging market aviation demand, along with the high profit margins found on non-aeronautical airport revenues from advertising, concessions, retail, car rentals and so on.
Pacifico has been on a tremendous growth trajectory, with shares roughly quintupling since 2012, but that has come to a pause. Boeing Co.’s (BA) 737 issues have taken capacity out of the industry. And a recent Pratt & Whitney engine recall has grounded dozens of airplanes operated by Mexican airlines. All this has taken the wind out of Pacifico’s sails this year, but shares should be set to rally over the next year as industry conditions normalize.
Ecopetrol SA (EC)
Ecopetrol is Colombia’s state-run oil company. The Colombian government holds 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 and a collection of toll roads and power distribution assets. This month, it also opened a solar power plant that fully powers its Cartagena refinery, making it the first renewable-backed refining asset in South America.
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 six 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%.
Verizon Communications Inc. (VZ)
The telecom industry is shaping up to be a solid comeback story. After years of dismal performance, Verizon has turned the corner. Specifically, 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 analysts have started to take a more constructive view on the industry in recent months.
Verizon reported strong earnings in January, and analysts are encouraged by the firm’s improving subscriber trends. Meanwhile, Verizon’s capital expenditure spree, while painful in the short run, appears to be paying off with better network coverage and value provided to its customers. Verizon is now in position to pay down some debt, all while maintaining its 6.6% 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 U.S. and Mexico. Pipelines might seem like a stodgy business, but they’ve 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. The recent escalation in political hostilities in the Middle East is also serving as a stark reminder of the importance of North American domestic oil and gas infrastructure assets.
These factors, plus the firm’s 8% dividend yield, make it a highly attractive income play today.
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15 Best Dividend Stocks to Buy for 2024 originally appeared on usnews.com
Update 04/19/24: This story was previously published at an earlier date and has been updated with new information.
