The Dow Jones Industrial Average recently hit 40,000 for the first time, and the S&P 500 is already well on the way to hitting the 6,000 level. The tech-heavy Nasdaq composite is going up at an even faster clip. The market is in full-on boom mode right now, and the Federal Reserve seems intent on adding to the party with upcoming interest rate cuts. For momentum investors, it’s been an incredible run.
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But others are nervous about the market. Valuations are growing increasingly stretched, while both political and economic risks are mounting. This makes it a good time for investors to lock in more conservative, income-paying securities. When the next market correction or bear market inevitably hits, these 15 top dividend stocks will help people ride out the storm and earn an above-average income stream along the way:
| Stock | Dividend yield |
| Exxon Mobil Corp. (ticker: XOM) | 3.5% |
| International Business Machines Corp. (IBM) | 3.9% |
| Kenvue Inc. (KVUE) | 4.3% |
| Stellantis NV (STLA) | 8.2% |
| JD.com Inc. (JD) | 2.6% |
| CK Hutchinson Holdings Ltd. (OTC: CKHUY) | 6.9% |
| First Hawaiian Inc. (FHB) | 5.2% |
| Bancolombia SA (CIB) | 10.3% |
| British American Tobacco PLC (BTI) | 9.6% |
| Realty Income Corp. (O) | 5.9% |
| National Storage Affiliates Trust (NSA) | 5.3% |
| American Tower Corp. (AMT) | 3.4% |
| Pfizer Inc. (PFE) | 6.1% |
| Verizon Communications Inc. (VZ) | 6.6% |
| Southern Co. (SO) | 3.7% |
Exxon Mobil Corp. (XOM)
After several years of strong performance, energy stocks have cooled off in 2024. The price of natural gas has plummeted, and crude oil has also stalled out in the $70s and low $80s, coming up well short of what energy bulls had been hoping for. While commodity investors are disappointed, the setback has created a second chance for income seekers.
Exxon Mobil is arguably the gold standard of income investments within the energy sector. The company has thrived for decades throughout all sorts of geopolitical and economic environments. Management played its cards well once again, investing heavily in Guyana in the late 2010s while most peers were selling off assets and going into hibernation mode. Exxon Mobil’s Guyana offshore field has become one of the world’s most important new energy sources in years. And Exxon pairs its strong upstream oil business with some of the world’s finest refining and chemical operations. With the recent pullback, XOM stock is paying out a solid 3.5% yield.
International Business Machines Corp. (IBM)
IBM was the textbook definition of “dead money” over the past decade. Shares have been flat since 2014, with the only return along that stretch coming from the company’s dividend. That said, things are changing for the better at IBM. The company’s massive Red Hat acquisition has paid off, giving IBM inroads in the rapidly growing cloud market.
IBM’s long-running investment in artificial intelligence is finally being rewarded as well. IBM was one of the first companies to make major investments in AI; its Watson system is one of the pioneers in applying AI to real-world problems. Now that the market is enthused about the category, IBM stock has started to heat up with shares finally enjoying a considerable rally over the past year. Even so, this tech giant is still at a reasonable 17 times forward earnings while delivering a 3.9% dividend yield.
Kenvue Inc. (KVUE)
Kenvue is a new publicly traded consumer health care company. It came about when Johnson & Johnson (JNJ) spun off its personal wellness division in 2023. Kenvue’s debut failed to inspire, with shares quickly sliding from $26 to less than $19 today. Kenvue offers well-known products such as Tylenol, Motrin, Benadryl and Nicorette. These mainstay brands offer stable sales and cash flows but modest growth prospects.
It’s understandable why investors have given Kenvue the cold shoulder given the booming stock market. But this sort of defensive, recession-proof business should pay off once the economy slows down. The firm’s generous 4.3% dividend yield will also look more appealing as the Fed starts to cut interest rates once again.
Stellantis NV (STLA)
Stellantis is a multinational car manufacturing company that offers brands such as Chrysler, Dodge, Jeep, Maserati, Ram and Peugeot. Stellantis is a massive company, generating about $200 billion in annualized revenues. This has given Stellantis sticking power to ride out recent changes in the automotive industry, such as the rise of electric vehicles. While investors initially feared that disruptors such as Tesla Inc. (TSLA) and Rivian Automotive Inc. (RIVN) could outfox the legacy automakers, the traditional powerhouses have started to regain the initiative over the past year.
Stellantis is a value investor’s dream, as the stock trades at a shocking 3.7 times forward earnings. To be sure, there are risks. Stellantis is sensitive to economic conditions, and consumer access to financing for car purchases is a key revenue driver. Automobiles are a cyclical industry with higher economic volatility. That said, at this starting valuation, STLA stock should make its shareholders happy. The 8.2% dividend yield is another compelling reason to own the stock.
JD.com Inc. (JD)
After a brief bounce this spring, the Chinese stock market has resumed its slump. Chinese equities have dramatically underperformed other global markets as investors have sworn off exposure to that market. That’s understandable given the unfavorable economic and geopolitical developments in that region over the past four years.
At some point, however, price can become its own opportunity. E-commerce giant JD.com is one such example. The company’s shares have declined about 75% since their 2021 peak. Normally, that sort of decline would be associated with a collapse in the underlying business. However, JD is doing better than ever despite the brutal Chinese macroeconomic backdrop. The company generated record revenues and earnings per share in 2023, and analysts expect mid-to-high single-digit growth on both metrics for 2024 as well. JD stock now sells for less than nine times forward earnings and is one of the few e-commerce companies with a meaningful dividend; JD stock yields 2.6% today.
CK Hutchinson Holdings Ltd. (OTC: CKHUY)
The Chinese market slump isn’t limited to mainland tech stocks. Hong Kong shares are also under fire, with the Hang Seng Index slumping 35% over the past five years. Leading infrastructure company CK Hutchinson has gotten caught up in the undertow. It invests in retail, telecom, 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.
Back when Asia was booming, CK Hutchinson enjoyed a high valuation as investors favored its exposure to international trade. Since the pandemic, however, trade patterns have shifted and CKHUY stock has gotten pummeled. Shares are now in deep value territory after falling more than 75% since 2020. The stock is currently trading at six times trailing earnings while offering a 6.9% dividend yield.
First Hawaiian Inc. (FHB)
First Hawaiian is the largest and oldest bank in Hawaii, with more than $19 billion in assets. It also serves the islands of Guam and Saipan. Hawaii is a unique banking market, as the largest four players combined make up more than 90% of the total deposit base. Given its relatively small size and geographical isolation, the major U.S. banks choose not to compete in Hawaii, giving the local players a great deal of market power. This allows First Hawaiian to earn higher returns on its assets and equities than the average American regional bank.
Like most regional banks, First Hawaiian stock has underperformed in recent years amid industry jitters and the worries around the inverted yield curve. However, upcoming Fed rate cuts should improve First Hawaiian’s outlook. The stock yields 5.2% to boot.
[See: 10 Best Health Care Stocks to Buy for 2024]
Bancolombia SA (CIB)
Colombia’s largest bank represents another great dividend opportunity. Bancolombia has more than 20% market share in Colombian retail banking, an investment banking business, and the country’s dominant mobile wallet and payments platform, Nequi. Colombian stocks have dramatically underperformed since 2014, as that country is heavily tied to oil exports, so the downturn in that market hit the economy hard. Oil has fared better since 2021, however, leading to a substantial recovery in the Colombian economy. In fact, Bancolombia reported record profits in 2023, yet shares still trade about 50% below where they did a decade ago.
This discrepancy is unlikely to last forever. In the meantime, shares trade for six times forward earnings and a discount to book value, all while offering a tremendous 10.3% dividend yield.
British American Tobacco PLC (BTI)
British American Tobacco is one of the world’s largest tobacco companies. For most people, tobacco is synonymous with cigarettes. For completely understandable reasons, many investors are uncomfortable with the idea of investing in this industry. But don’t write off British American Tobacco prematurely. That’s because it has been the fastest player within the industry to invest in newer and safer nicotine delivery options such as vaping and “heated not burned” products.
BTI stock has underperformed recently, in large part because the company took a massive write-down on its legacy cigarette business. However, management has already noted that cigarettes are slowly winding down, and the company’s future is in its other nicotine products. These newer options are growing quickly and are ahead of management’s long-term growth projections. That is leading to an overall inflection point for the company, with analysts projecting that British American Tobacco will return to positive earnings and revenue growth in 2025. Shares trade for less than seven times forward earnings and pay a 9.6% dividend yield.
Realty Income Corp. (O)
Realty Income is a triple-net real estate investment trust, or REIT. The phrase “triple net” refers to a type of real estate contract where the tenant, rather than the landlord, is responsible for major costs including maintenance and taxes. This insulates the landlord from higher inflationary periods like the past few years.
Realty Income combines that trait with its superior capital allocation decisions. The REIT shrewdly spun off its office properties several years ago before the bottom fell out of that market. While shifting out of offices, Realty Income has moved into entertainment-related venues that are benefiting from the current boom in consumer spending. Realty Income has turned this into an admirable dividend growth track record; it is now a Dividend Aristocrat that has increased its payout for 26 consecutive years. The REIT currently pays a 5.9% dividend yield.
National Storage Affiliates Trust (NSA)
National Storage Affiliates is a fast-growing REIT focused on the self-storage market. The company has come about through a series of mergers and acquisitions and has enjoyed tremendous growth. Since 2018, it has grown annual revenue from $329 million to $858 million in 2023. Up until recently, that has translated into dramatic dividend growth as well, with the quarterly payout rising from 20 cents per share in 2016 to 56 cents per share today.
However, the REIT’s momentum has dramatically slowed due to higher interest rates. This makes it more challenging for the company to finance new storage buildings or acquisitions. In addition, the REIT’s dividend looks less attractive compared to fixed-income alternatives. That said, these negatives should flip to positives once the Fed moves toward easier monetary policy. NSA stock has rallied recently as investors consider this more favorable outlook. Regardless, shares still yield a generous 5.3%.
American Tower Corp. (AMT)
American Tower is the world’s largest telecom and communications assets-focused REIT. It owns and operates more than 224,000 communication sites globally. While the company was founded with a focus on the North American market, nowadays, it has grown its business tremendously in emerging markets such as India and Latin America. American Tower has also been one of the all-time great performers in the REIT space. Its stock rallied from a low of $2 around the turn of the century to nearly $200 per share now.
However, the stock has been down over the past five years. High interest rates and slowing growth rates in the communications market have weighed on American Tower and other communications-focused REITs. But American Tower’s diversifying move into the data center space should unlock more growth opportunities, and it will also benefit as interest rates start to decline once again. AMT pays a 3.4% dividend yield.
Pfizer Inc. (PFE)
Right now, the pharmaceutical industry is caught between boom and bust. For companies that have a leading GLP-1 drug for managing diabetes and weight loss, the sky is the limit. In fact, Eli Lilly and Co. (LLY) appears set to enter the trillion-dollar market cap club based on the success of its Mounjaro and Zepbound drugs that treat these conditions. For pharma companies without GLP-1 drugs, however, things are looking grim.
Pfizer is the quintessential example. Despite developing a blockbuster COVID-19 vaccine, Pfizer stock has tanked. Shares now trade for around 30% less than they did before the pandemic. The company’s COVID-19 vaccine revenues have largely dried up, but Pfizer remains significantly larger and more profitable than it was prior to the pandemic. The current pessimism has led to PFE stock trading at just 12 times forward earnings while offering a 6.1% dividend yield.
Verizon Communications Inc. (VZ)
Investors have long prized the telecom sector for its stability and high dividends. That reputation came into question over the past few years as profits slipped and some companies reduced their dividends. However, Verizon held the line and is now turning into a solid comeback story.
Verizon spent heavily to deploy its market-leading 5G network. With that network now in place, Verizon is reaping the rewards as its subscriber numbers are picking up and customer satisfaction improves. Verizon’s best-in-class infrastructure gives it other opportunities as well, such as a recent 10-year, $2.67 billion contract that it won with the U.S. Navy. Analysts are growing more upbeat about Verizon’s outlook, and shares have rallied recently. Even so, the stock is still trading at a single-digit P/E ratio while giving out a 6.6% dividend yield.
Southern Co. (SO)
Utility stocks are starting to heat up again. For years, utilities were out of favor due to high interest rates. Elevated rates made it more expensive to service debt loads while also reducing the appeal of utility stocks’ dividends to shareholders. But rate-sensitive stocks should come back in favor with the Fed set to cut interest rates soon.
What makes Southern a particularly attractive utility company in mid-2024? The company has a leading position in the nuclear power market. This should be a considerable competitive advantage given the need for low-cost, environmentally sustainable power generation. In addition, the rise of AI-enabled data centers is driving a rapid increase in electricity demand; Southern, with its operations in fast-growing, business-friendly states, should benefit significantly from this trend. SO stock has started to rally in recent months, but it remains under 20 times forward earnings while offering a dependable 3.7% dividend yield.
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15 Best Dividend Stocks to Buy for 2024 originally appeared on usnews.com
Update 06/20/24: This story was previously published at an earlier date and has been updated with new information.
