Best dividend stocks to buy in July 2024
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BLUEPRINT
Updated 9:01 a.m. UTC July 25, 2024
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Dividends account for a huge portion of the stock market’s long-term returns. A whopping 85% of the S&P 500 index’s total return between 1960 and 2023 came from reinvested dividends and the power of compounding, according to a 2023 Hartford Funds report.
But a dividend is only as good as the company paying it.
Our team screened thousands of stocks to find the best dividend stocks of 2024. We based our selection on the following factors: an attractive valuation, a consensus among Wall Street analysts of hold, buy or better, a dividend yield of at least 1.5%, and a forward price-to-earnings ratio of less than 15.
Why trust our investing experts
Experienced stock analysts select our best stock selections based on screening for several must-have metrics. These metrics often include but are not limited to forward price-to-earnings, risk, earning stability and Wall Street “buy” consensus. Among all of our 70-plus stock selections, the average return beats the S&P 500. But investors should note that before purchasing any stocks, it’s important to do plenty of research and ensure their selections align with their financial goals and risk tolerance. You can read more about our methodology below.
- 400+ S&P 500 companies screened.
- 3 levels of fact checking.
- 3-step editorial review.
- Altimeter stock grade of B or higher.
Robinhood
Best dividend stocks
- Comcast Corp. (CMCSA)
- Bristol-Myers Squibb Co. (BMY)
- Altria Group Inc. (MO)
- Marathon Petroleum Corp. (MPC)
- Diamondback Energy (FANG)
- VICI Properties (VICI)
Comcast Corp. (CMCSA)
Bristol-Myers Squibb Co. (BMY)
Altria Group Inc. (MO)
Marathon Petroleum Corp. (MPC)
Diamondback Energy (FANG)
VICI Properties (VICI)
Compare the best dividend stocks
Methodology
The dividend stocks included above all trade on a major U.S. stock exchange and meet the following criteria:
- Member of the S&P 500 index. The famed benchmark is often used as a broad view of the U.S.’s economic health. It includes many large-cap companies, which tend to be less volatile.
- Consensus analyst recommendation of hold, buy or better. A strong number of analyst ratings of hold, buy or better indicates an expectation the stock will perform well.
- An Altimeter overall grade of B or higher. The overall grade considers profitability, earning stability, valuation and earning expectations. Stocks with grades of B or higher are ranked in the top quarter of nearly 5,000 stocks in Altimeter’s database. This indicates that these companies have strong valuations and can improve returns.
- Forward earnings multiple of less than 15. Stocks with low forward earnings multiples are considered attractively valued based on analysts’ projected future earnings. According to Yardeni Research, the S&P 500’s median forward P/E ratio is above 20.
- Dividend yield of at least 1.5%. The S&P 500’s overall dividend yield is about 1.4%. So all the stocks included have significantly higher yields than the S&P 500 average.
Why other stocks didn’t make the cut
Our list contains stocks with both sizable dividend yields and attractive underlying businesses.
Just because a stock pays a high dividend yield doesn’t mean it’s a good investment. A stock could pay a 4% dividend yield and drop in value by 40% in a year. In that case, it would generate a negative total return.
Companies also routinely cut their dividend payouts in response to poor financial performance.
Final verdict
Dividends are one factor you should use to determine which stocks to buy. But remember that a dividend is only as good as the company paying it.
An extremely high dividend yield might indicate the company’s fundamentals are in trouble. It could be a way to lure investors to the table. So while a high yield is appealing, you should consider other factors when deciding whether to invest in a stock. These include fundamental valuation metrics such as P/E ratio, price-to-sales ratio and price-to-free-cash-flow ratio.
The energy sector has one of the highest average dividend yields within the S&P 500. Analysts say leading energy companies can continue to generate plenty of free cash flow to maintain and raise their dividends.
What are dividend stocks?
Dividend stocks are public companies that distribute a portion of their profits to shareholders via cash or stock distributions. Companies typically pay dividends quarterly. But some make special dividend payments at irregular intervals.
Dividend stocks are typically shares of more mature, profitable companies. A company can use dividend payments to incentivize investors to buy shares of stock once its revenue or earnings growth has slowed.
What is considered a good dividend yield?
What constitutes a good dividend yield is subjective and depends on your investment goals and risk tolerance. It can vary based on the sector and market conditions too.
Evaluate other factors such as the company's financial health, payout ratio and dividend growth history. This can help you make informed decisions about your investment portfolio and achieve your long-term investment objectives.
Choosing the best dividend stocks
Look for stocks with high dividend yields. Dividend yield is calculated by dividing a stock's annual per-share dividend payment by its share price. A higher dividend yield is generally better. But an extremely high dividend yield might be a red flag. It could indicate that a stock's share price has crashed and a dividend cut is imminent.
To avoid stocks that may be at risk of cutting their dividends, find those with low payout ratios. The lower a stock's payout ratio, the less financial strain its dividend payments have on the company.
Frequently Asked Questions (FAQs)
Dividends can be a reliable source of income in an uncertain environment. According to Hartford Funds, reinvested dividends have accounted for 85% of the S&P 500’s total return since 1960.
The safest dividend stocks have strong underlying business fundamentals and relatively low payout ratios. This gives them the financial flexibility to maintain their dividends even during cyclical economic downturns.
To earn $1,000 per month in dividends, you must have a portfolio with an average dividend yield that produces $12,000 per year in dividends. For example, a $400,000 portfolio of stocks with an average dividend yield of 3% would generate $1,000 per month in dividends.
Retiring on dividend stocks is a common strategy for generating passive income. But assessing your investment goals, risk tolerance and financial situation is essential. That’s because dividend stocks have risks such as market volatility and lower returns than other investments.
Diversification is crucial for minimizing your reliance on any one investment. Carefully evaluate your investment portfolio and risk tolerance to make informed decisions and achieve your retirement goals.
Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.
Blueprint has an advertiser disclosure policy. The opinions, analyses, reviews or recommendations expressed in this article are those of the Blueprint editorial staff alone. Blueprint adheres to strict editorial integrity standards. The information is accurate as of the publish date, but always check the provider’s website for the most current information.
