Top 12 Dividend Stocks to Invest in 2024

The annual inflation rate has slipped to just 3%, marking the indicator's first outright decline in several years. Inflation continues to decelerate, with credit markets pricing in near certainty around forthcoming cuts by the end of 2024. This has set the stage for a series of Federal Reserve interest rate cuts. Meanwhile, the consumer price index fell on a month-over-month basis in June.

Top 12 Dividend Stocks 2024

Investors tend to prefer more stable, predictable cash-flow-generating companies in times of economic weakness and potential recession. This could set the stage for a major rotation out of growth and momentum stocks and back into more blue-chip stocks paying dividends.

That makes it a great time to snap up these 15 top dividend stocks: Dividend stocks have been out of favor for years now, meaning that they are also, by and large, selling at attractive valuations today compared to the overall market.

Verizon Communications Inc. (VZ)

Main Sector: Telecommunications

Dividend Yield: 6.4%

Verizon Communications is a leading telecommunications company in the United States, known for its industry-leading 5G network. After years of heavy investment in infrastructure, Verizon is now reaping the rewards with improving subscriber numbers and customer satisfaction. The company's best-in-class network has opened up new opportunities, exemplified by a recent 10-year, $2.67 billion contract with the U.S. Navy. Despite recent market rallies, Verizon still offers an attractive dividend yield while trading at a single-digit forward price-earnings ratio, making it an appealing option for value and income investors alike.

Pfizer Inc. (PFE)

Main Sector: Pharmaceuticals

Dividend Yield: 5.7%

Pfizer is a global pharmaceutical giant that gained significant attention for developing a blockbuster COVID-19 vaccine. Despite this achievement, the company's stock has underperformed, dropping from $37 at the start of 2020 to the $30 range now. However, this presents a potential opportunity for investors. Pfizer has wisely reinvested its profits, projecting $61 billion in revenue for 2024, a substantial increase from $41 billion in 2019. The company trades at less than 13 times forward earnings, offering an attractive combination of growth potential and dividend yield in the pharmaceutical sector.

United Parcel Service Inc. (UPS)

Main Sector: Logistics

Dividend Yield: 4.4%

United Parcel Service is the world's largest package delivery company, operating a vast network of over 100,000 vehicles and 500 cargo jets. UPS delivers an average of 22 million parcels daily, making it a crucial component of global logistics and supply chains. The company has faced challenges, including potential competition from Amazon's logistics investments, but these concerns seem to have abated. UPS stock has dropped about 20% over the past year, creating a potential buying opportunity. With shares trading at a reasonable 18 times forward earnings, UPS offers investors exposure to the growing e-commerce sector along with a solid dividend yield.

First American Financial Corp. (FAF)

Main Sector: Insurance

Dividend Yield: 3.6%

First American Financial is the second-largest title insurance company in the United States. Title insurance is a critical component of the real estate market, protecting lenders from potential defects or liens against property deeds. The company's services are essential for most mortgage transactions, both for new purchases and refinancing. First American also has a commercial real estate title business, diversifying its revenue streams. The stock has underperformed recently due to higher interest rates impacting the housing market. However, as the Federal Reserve is expected to cut rates, FAF could benefit from increased housing market activity. The stock currently trades at less than 10 times forward earnings, potentially offering value for patient investors.

BP PLC (BP)

Main Sector: Energy

Dividend Yield: 5.0%

BP is a multinational oil and gas company that has been making significant strides in transitioning towards renewable energy. Despite recent underperformance in the energy sector due to economic concerns and fluctuating oil prices, BP presents an attractive opportunity for dividend investors. The company trades at just eight times forward earnings while offering a 5% dividend yield. BP has been a pioneer among major oil companies in investing in renewable energy, electric vehicle charging, and other future-oriented initiatives. This diversification strategy may help insulate the company from some of the volatility inherent in the traditional oil and gas markets, potentially providing more stable returns for long-term investors.

Enbridge Inc. (ENB)

Main Sector: Energy Infrastructure

Dividend Yield: 7.4%

Enbridge is one of North America's largest midstream energy companies, operating an extensive network of pipelines and energy logistics assets across Canada, the United States, and Mexico. The company's business model is relatively insulated from fluctuations in oil and gas prices, as it typically earns revenue based on the volume of energy products transported rather than their market value. Enbridge's pipeline infrastructure has become increasingly valuable due to the difficulties in obtaining permits for new pipelines. This scarcity factor, combined with growing North American energy production, positions Enbridge well for the future. The company's stable, toll-road-like business model supports its impressive 7.4% dividend yield, making it an attractive option for income-focused investors.

Grupo Aeroportuario del Pacifico SAB de CV (PAC)

Main Sector: Transportation Infrastructure

Dividend Yield: 4.8%

Grupo Aeroportuario del Pacifico, or "Pacific Airports," is a Mexican airport operator controlling 12 airports in Mexico and two in Jamaica. Its portfolio includes major locations like Guadalajara and popular tourist destinations such as Puerto Vallarta and Los Cabos. The company has shown impressive growth, with its stock price roughly quintupling since 2012. Airports are an attractive industry due to the surge in emerging market aviation and high-profit margins from non-aeronautical revenues like advertising, concessions, and car rentals. Despite recent challenges including Boeing's 737 Max issues and a Pratt & Whitney engine recall affecting Mexican airlines, PAC's long-term growth prospects remain strong. The stock currently trades at 18 times forward earnings and offers a nearly 5% dividend yield.

Tyson Foods Inc. (TSN)

Main Sector: Consumer Staples

Dividend Yield: 3.3%

Tyson Foods is a major player in the packaged foods industry, primarily focused on commodity meats with some higher-margin branded food products. The company has faced significant challenges in recent years due to global supply chain disruptions and substantial increases in grain and livestock prices, which have pressured profit margins. However, the situation appears to be improving as agricultural inflation has begun to abate and costs in areas such as packaging materials and labor have stabilized. Analysts forecast a dramatic turnaround for Tyson, with earnings per share expected to nearly double in 2024 compared to last year's trough levels, followed by another 41% growth in 2025. This potential for earnings recovery, combined with its current dividend yield, makes Tyson an interesting prospect for value and income investors.

Realty Income Corp. (O)

Main Sector: Real Estate

Dividend Yield: 5.6%

Realty Income is a prominent triple-net real estate investment trust (REIT) known for its monthly dividend payments. The company's "triple net" lease structure means tenants are responsible for major costs including maintenance and taxes, providing insulation against inflationary pressures. Realty Income has demonstrated impressive capital allocation skills, having wisely spun off its office properties before the recent downturn in that market. The REIT has pivoted towards entertainment-related venues, capitalizing on the current boom in consumer spending. Realty Income's strategic decisions have resulted in an admirable dividend growth track record, earning it Dividend Aristocrat status with 26 consecutive years of dividend increases. The REIT currently offers an attractive 5.6% dividend yield, making it a compelling option for income-focused investors in the real estate sector.

British American Tobacco PLC (BTI)

Main Sector: Consumer Staples

Dividend Yield: 9.3%

British American Tobacco is one of the world's largest tobacco companies, but it's rapidly transforming its business model. The company has been at the forefront of investing in newer, potentially safer nicotine delivery options such as vaping and "heated not burned" products. This pivot has led to some short-term pain, including a massive write-off on the value of its legacy cigarette business. However, the transition to new product categories is ahead of schedule, with growth exceeding prior expectations. Despite recent underperformance, BTI stock has shown signs of recovery following an upbeat earnings report and positive regulatory news. The stock currently trades at just over seven times forward earnings while offering an impressive 9.3% dividend yield, potentially offering significant value for investors comfortable with the tobacco industry.

Stellantis NV (STLA)

Main Sector: Automotive

Dividend Yield: 8.2%

Stellantis is a multinational automobile manufacturing company formed from the merger of Fiat Chrysler Automobiles and the French PSA Group. The company boasts an impressive portfolio of brands including Chrysler, Dodge, Jeep, Maserati, Ram, and Peugeot. Despite its massive size, generating about $200 billion in annualized revenues, Stellantis seems undervalued by the market. The stock trades at just 3.6 times forward earnings, reflecting investor concerns about the cyclical nature of the auto industry, the impact of higher interest rates on demand, and the transition to electric vehicles. However, with its diverse brand portfolio and an exceptional 8.2% dividend yield, Stellantis presents an intriguing value proposition for investors willing to navigate the challenges facing the automotive sector.

Kenvue Inc. (KVUE)

Main Sector: Consumer Health

Dividend Yield: 4.4%

Kenvue is a newly public consumer health care company, spun off from Johnson & Johnson in 2023. The company inherited a portfolio of well-known brands including Tylenol, Motrin, Benadryl, and Nicorette. This lineup of steady, cash-flow-generative products provides Kenvue with a solid foundation in the consumer health sector. Since its spinoff, KVUE shares have traded down from around $26 to less than $19, reflecting a lack of investor enthusiasm for stable, recession-proof consumer products companies in the current bull market. However, this could present an opportunity for investors seeking defensive stocks. Kenvue's portfolio of essential healthcare products could prove resilient in economic downturns, potentially leading to a revaluation of the stock when market sentiment shifts towards safer, more conservative picks.

How to Buy Stocks Step by Steps

To purchase stocks, follow these steps:

1. Open a Brokerage Account: Start by setting up an online brokerage account. This process involves filling out an application and submitting necessary documents like identification and proof of address. Compare different brokers based on fees and services to find the best fit for your needs. Once your account is approved, fund it by transferring money from your bank account. This step establishes the foundation for all your trading activities.

2. Research Stocks: Utilize a stock screener to filter stocks based on criteria such as market capitalization, sector, and financial performance. Review analyst ratings for professional insights on the stock’s potential. Consider your risk tolerance; for example, dividend stocks and bonds typically present lower risk, while small-cap and growth stocks are higher risk but offer potentially higher returns. This research helps you identify stocks that align with your investment strategy.

3. Decide How Many Shares to Buy: Determine the number of shares you want to purchase based on your budget and the stock’s price. Diversify your investments to mitigate risk. If the stock price is too high, consider fractional shares, which allow you to invest in expensive stocks without committing a large amount of capital. This decision should align with your overall financial goals and risk tolerance.

4. Choose an Order Type: Selecting the right order type is critical. A market order buys the stock immediately at the current market price, providing quick execution but not price control. Conversely, a limit order lets you set a specific price at which you’re willing to buy, offering price control but not guaranteed execution. Understanding the pros and cons of each order type helps you make more informed trading decisions.

5. Place Your Order: After deciding on the stock, number of shares, and order type, place your order through your brokerage platform. Double-check all details before confirming the transaction to avoid any mistakes. Once placed, monitor your order status to ensure it is executed as planned. This step finalizes your entry into the stock market.

6. Manage Your Portfolio: Effective portfolio management involves regularly reviewing your investments and making adjustments as needed. Monitor stock performance, review analyst ratings for updates, and stay informed about market trends. Learn when to sell stocks to either take profits or cut losses. Periodically rebalancing your portfolio ensures it remains aligned with your financial goals and risk tolerance.

What to Look for When Choosing Stocks to Buy

When determining which stocks to invest in, it is crucial to take into account the following key factors:

• Strong Financials: Scrutinize the company's balance sheet to assess its financial stability. Take into account its level of debt and overall financial health. Also, examine the company's profit margins over time, as decreased margins may indicate financial difficulties.

• Solid Competitive Position: Analyze the company's competitive standing in the market. Determine if it is gaining or losing ground against its competitors. A strong competitive edge is a strong indication of future success.

• Growth: Study the company's track record in terms of sales and earnings growth. Consistent growth in these areas is a promising sign, while declining sales may restrict future options and limit potential success.

• Valuation: Evaluate the stock's price relative to earnings and cash flow. Understanding its valuation is key to gauging future growth potential. Look for stocks that offer good value in relation to their growth prospects.

• Management: Assess the company's management and their alignment with shareholders. Consider whether management is self-serving or if they are genuinely working towards growth. Transparency and honesty are critical when making informed investment decisions.

• Future Opportunities: Look into the company's potential for future growth. Identify any clear avenues for expansion and development, which can enhance its long-term prospects.

While these factors are crucial when deciding on an investment, it is also important to consider the company's capital allocation strategies, such as stock repurchases and dividend policies, which may impact shareholder value. Thoroughly evaluating these features can help investors make more informed decisions when selecting stocks to buy.