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The best dividend stocks can give us the best of two worlds.

“Stocks go up.” It’s the base instinct driving your typical stock purchase. When you buy a company, you hope that its sales and profits will grow, and that investors will chase that success by purchasing shares—making yours worth all the more. But dividends provide us with a stream of income—not a guaranteed one, per say, but we’ll call it a high-confidence one—that can provide us with some sort of return no matter what that stock price does.

Thing is, some investors chase as much of that high-confidence income as they can get, favoring high yields above all else—even if those payouts are built on shaky foundations. But many of us would do well to focus on high quality instead—focusing on stocks with both greater potential to enjoy price upside, and more durable payouts that we can count on being there (and possibly being higher) for decades down the road.

If that sounds like a plan to you, read on as I discuss the importance of dividends and dividend safety, followed by a look at 10 of the best dividend stocks through a high-quality lens.

 

Disclaimer: This article does not constitute individualized investment advice. These securities appear for your consideration and not as personalized investment recommendations. Act at your own discretion.

Why Dividend Stocks?


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Dividend stocks can do wonders for the long-term performance of your portfolio. These companies pay a regular flow of their profits directly back to shareholders, meaning you receive some sort of return—even when share prices aren’t cooperating.

Stocks that can both grow and pay dividends are the ultimate long-term stocks given just how much in additional returns they can generate over the long term.

Here’s a look at the return someone could expect if they received just the price returns from the S&P 500 over the past 25 years:

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Morningstar

Now look at how much better the return is when you factor in dividends had you had reinvested those dividends back into the S&P 500 (returns illustrated by an S&P 500-tracking ETF; note that expenses are included in performance):

spx spy chart apr 2024 reg
Morningstar

The price return is a little more than 270%. The total return (price plus dividends) is 480%!

Just like price return on stocks can be improved upon with dividends, though, a stock that pays dividends but doesn’t go anywhere isn’t exactly ideal, either. Thus, the best dividend stocks will provide both a steady baseline of income and provide you with the potential for meaningful price upside.

Dividend Yields (And Dividend Safety)


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Dividend yield is a simple calculation—annual dividend / price x 100—that can mean a world of difference for investors, especially those reliant on income.

But dividend yield isn’t everything. Sometimes, stocks with high yields can look more attractive, but they’re actually flashing a warning signal that the dividend isn’t sustainable. You see, a company can get a very high annual dividend yield in two very different ways: the dividend growing very rapidly, or the share price falling very quickly.

For example, Alpha Corp., which trades for $100 per share, pays a 75¢-per-share quarterly dividend, or $3 across the whole year. It yields 3.0%. In a month, however, it yields 6.0%. Here are two ways that could have happened:

  1. Alpha Corp. doubled its dividend to $1.50 per share quarterly, good for a $6-per-share annual dividend. The share price stays the same. ($6 / $100 x 100 = 6.0%)
  2. Alpha Corp. kept its dividend at 75¢ quarterly ($3 annually), but its share price plunged in half to $50 per share. ($3 / $50 x 100 = 6.0%)

In one of those scenarios, Alpha Corp. has a very safe dividend. In the other one, Alpha’s dividend could be ready to implode.

So, if you’re sniffing out the best dividend stocks to buy, make sure you’re not just looking at yield, but also gauging a dividend’s safety. Among other things, you’ll want to look at payout ratio, which determines what percentage of a company’s profits, distributable cash flow, and other financial metrics (depending on the type of stock) are being used to finance the dividend. Generally speaking, the lower the payout ratio, the more sustainable the payout.

Related: How to Get Free Stocks for Signing Up: 10 Apps w/Free Shares

How We Chose the Best Dividend Stocks to Buy


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Before I started this article, I was video calling a colleague and joked, in a pseudo-philosophical voice, “What is a good dividend stock, anyways?”

But I was only partly kidding. What’s ideal to one investor might not fit the bill for another. Ultimately, though, I coalesced around safe dividends, with some capacity to grow, sporting above-average yields, paid by larger (and thus likelier to be more stable) companies. Specifically, they have to …

  • Be in the S&P 500.
  • Have a yield greater than 1.5%, to ensure they’re better than the overall market. Most of the stocks on here are around 2% or higher. (And if that’s too low a yield for you, I suggest you instead check out our list of high-yield dividend stocks, which have payouts of 5%-plus.)
  • Have an earnings payout ratio below 60%. This is a generally safe level where there’s still at least some room for dividend growth, and the lower the payout ratio, typically the more growth potential there is. (Note: Free cash flow payout ratio is an even better metric, but screening data for this tends to be unreliable.)
  • Have at least a consensus Buy rating according to analysts tracked by S&P Global Market Intelligence. S&P boils down consensus ratings down to a numerical system where anything less than 1.5 is a Strong Buy, 1.5 to 2.5 is a Buy, between 2.5 and 3.5 is a Hold, 3.5 to 4.5 is a Sell, and anything greater than 4.5 is a Strong Sell. In this case, I only included stocks with a 2.0 rating or less—so at least a pretty firm consensus Buy rating, if not an outright Strong Buy.

I also limited the energy sector to just one stock. Energy companies were extremely overrepresented in the screen; most problematic is that several sport variable dividends that rise and fall based on available cash flow, which is largely tethered to the motion of energy prices. So a 3% yield today could be 1% in a year, 2% the year after, and so on. Instead, the list is populated with stocks that have more traditional dividend programs—regular payouts that typically only change when the company announces a hike.

The equities here are listed in reverse order of their consensus analyst rating, starting with the worst-rated stock and ending with the best-rated stock.

Related: 7 Best Stock Recommendation Services [Stock Tips + Picks]

Best Dividend Stock #10: McDonald’s


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  • Sector: Consumer discretionary
  • Market cap: $199.6 billion
  • Dividend yield: 2.4%
  • Consensus analyst rating: 1.83 (Buy)

McDonald’s (MCD) is the world’s largest fast-food chain, with a sprawling 40,000-plus locations in more than 100 countries. Big Macs and the world’s best fast-food fries are partly responsible for that reach, but so too is its business model. Most McDonald’s locations are run by franchisees, allowing McDonald’s to expand aggressively without absorbing high capital expenditures.

In recent months, the Golden Arches have been in the news for all the wrong reasons. Namely, some consumers, pinched by inflation on all fronts, are balking at rising menu prices at McDonald’s, which itself is being hit by increasing input and wage costs.

It’s hardly anecdotal. In MCD’s fourth-quarter earnings report in February, “management noted continued pressure on the lower-income consumer <$45K, citing instances of trade-down, transaction size reduction, and losing transaction share within that segment to grocery,” say Wedbush analysts Nick Setyan and Michael Symington.

But the pair note that “the middle- and high-income consumer remains resilient, with MCD continuing to gain share within these cohorts.” In fact, they’re bullish on shares, rating the stock at Outperform (equivalent of Buy) amid optimism for continued market-share growth and robust expansion plans.

They’re part of a larger bull crowd of 26 Buys, versus 11 Holds and no Sells.

“We view MCD as well positioned from on offensive perspective (gaining share in most major markets, driven by strong marketing, improving operations and increased digital mix, and accelerated development) and a defensive perspective (sales have historically remained solid during macro downturns, such as the Great Recession),” adds Truist analyst Jake Bartlett, who rates shares at Buy. “Near-term margin pressures appear temporary, giving us confidence in strong earnings growth in the next few years.”

MCD stock also offers up a safe, growing, and above-average dividend. McDonald’s management has improved the payout for 47 consecutive years, most recently in October 2023, when the company announced a 10% hike to $1.67 per share quarterly. That track record is more than enough to qualify it for membership in the S&P 500 Dividend Aristocrats—a group of Wall Street’s top dividend stocks that have bettered their dividends on an annual basis for at least 25 consecutive years. A moderate payout ratio of 54% indicates plenty of headway for decent dividend growth going forward, too.

Related: 5 Best Money Market Funds [Protect Your Savings]

Best Dividend Stock #9: Abbott Laboratories


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  • Sector: Health care
  • Market cap: $186.7 billion
  • Dividend yield: 2.1%
  • Consensus analyst rating: 1.80 (Buy)

Abbott Laboratories (ABT) is a large health care firm that develops, makes, and sells medical devices, diagnostic products, nutritional products, and generic pharmaceuticals. Among other things, it’s responsible for FreeStyle (and FreeStyle Libre) glucose monitors, Pedialyte hydration products, Similac formulas, PediaSure children’s nutritional products, and BinaxNow COVID-19 antigen tests.

Medical devices are Abbott’s biggest breadwinner at about 45% of revenues, and has been a key driver of growth of late. In fact, a big first quarter for the division prompted Abbott to raise its full-year guidance—something that made a William Blair analyst team (Outperform) take note. “The company has not raised its full-year guidance after first-quarter results since 2016, which we believe speaks to the momentum of the core business and reiterates our thesis on sustainable 8%-10% top-line growth the next several years as a result of end- market growth, new product launches, and share-taking opportunities across the portfolio,” they say.

In April, Abbott received FDA approval for the company’s novel TriClip transcatheter edge-to-edge repair system, which is designed to treat tricuspid regurgitation (TR), or a leaky tricuspid valve. Stifel analysts talked to a high-volume interventional-cardiologist following an earlier FDA panel recommendation. “This doctor expects rapid tricuspid-valve treatment/growth, and expects to use both TriClip and Evoque [a tricuspid-valve-replacement-device]. Encouragingly, by 2025, the physician potentially expects his tricuspid cases to exceed his current annual mitral case run-rate (60).”

Those Stifel analysts rate the stock at Buy, saying “In the COVID-19 recovery, we believe the stage is set for improving top- and bottom-line performance for years ahead, driven by crisper execution, the realization of multiple key pipeline products across each Abbott franchise, as well as an intensifying focus on cash generation and debt repayment.”

Abbott is a Dividend King—a Dividend Aristocrat with at least 50 consecutive years of payout growth—whose cash distribution streak has continued even after spinning off biopharma unit AbbVie (ABBV) at the start of 2013. And the dividend itself dates back a full century, to 1924. For now, a safe payout ratio of 50% provides little reason to think both streaks won’t continue.

Related: 5 Best Fidelity Retirement Funds [Low-Cost + Long-Term]

Best Dividend Stock #8: General Dynamics


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  • Sector: Industrials
  • Market cap: $80.3 billion
  • Dividend yield: 1.9%
  • Consensus analyst rating: 1.79 (Buy)

General Dynamics (GD) is an aerospace and defense firm that operates across four major segments: Aerospace, Marine Systems, Combat Systems, and Technologies. It provides a wide range of well-known products, including Abrams tanks, Stryker fighting vehicles, and Virginia-class attack submarines and Gulfstream business jets. But it also provides back-end technology: mobile communication, mission support services, intelligence and surveillance solutions, and more.

For all of that military might, one massive area of opportunity is its Gulfstream business jets.

In late March, GD announced that its G700 received Federal Aviation Administration certification, with the company saying in January that it already had 15 of the aircraft ready for delivery, and that it expects 160 aircraft deliveries in 2024, versus 111 last year.

“G700 deliveries and subsequent G800 deliveries are expected to be the cornerstone for Gulfstream’s growth and margin expansion for the next decade,” say William Blair analysts, who have the stock at Outperform. “This should lead to a rebound in the stock price as the margins for the G700 and G800 are very attractive. Management expects its aerospace margin to increase to 15% in 2024. Over the longer term, a high-teens margin appears within reach.”

General Dynamics just reported a mixed first quarter that saw revenues easily beat expectations but earnings fall just shy of estimates. Regardless, analysts remain heavily bullish on the stock; GD shares currently earn 17 Buy ratings versus six Holds and one Sell.

GD also already announced a fresh dividend hike earlier this year—a 7%-plus improvement to $1.42 per share quarterly that’s only a smidge below its 10-year average annual dividend growth rate. That dividend is very well covered, too, with payouts currently amounting to just 44% of earnings.

Related: WealthUp’s Winningest Tech Stocks for 2024

Best Dividend Stock #7: Prologis


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  • Sector: Real estate
  • Market cap: $97.0 billion
  • Dividend yield: 3.7%
  • Consensus analyst rating: 1.78 (Buy)

Prologis (PLD) is a global real estate investment trust (REIT) that specializes in logistics properties to both business-to-business and retail/online fulfillment customers. It currently leases roughly 5,600 buildings to 6,700 customers in 19 countries on four continents.

To be clear, Prologis doesn’t just rent out warehouses. It’s a total logistics provider, dealing in solutions such as forklifts, network infrastructure, automation, even providing training and education to warehouse employees.

The real estate sector has been weak in general, but Prologis looks particularly bombed-out, diving by double digits in part thanks to a recent cut in its guidance for earnings, demand, and growth in long-term market rents. And yet Wall Street remains optimistic—PLD currently enjoys 18 Buys versus five Holds and no Sells—with many analysts responding that the headwinds should be short-term in nature.

“Weaker growth and occupancy is being driven by near-record new supply, while the leasing environment remains off peak levels due to higher rates and slower e-commerce growth,” says CFRA analyst Michael Elliott (Buy). “Supply headwinds should start to fade in 2H 24, helping drive stronger growth in ’25.”

Morgan Stanley’s Ron Kamdem (Overweight, equivalent of Buy) adds that while the demand outlook is the biggest near-term overhang, a lot of that is already being priced in and he “looks to be a buyer on the weakness.”

A reminder that Prologis is a REIT, which is a special type of business structure that receives significant tax breaks, but in return, it must pay out at least 90% of its taxable income back to shareholders in the form of dividends. And unlike regular stocks, with which we use profits or free cash flow to determine payout ratio, REIT dividend coverage is typically gauged by funds from operations (FFO), a non-generally accepted accounting principles (GAAP) metric of profitability. FFO payout ratio standards are somewhat different, with 70% to 80% considered quite healthy.

Prologis? It has an FFO payout ratio of 68%. That should allow it to continue its dividend-growth streak, which hit 11 years in February with a 10% hike, to 96¢ per share.

Related: 9 Best Day Trading Platforms [Apps + Software]

Best Dividend Stock #6: BlackRock


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  • Sector: Financials
  • Market cap: $114.0 billion
  • Dividend yield: 2.7%
  • Consensus analyst rating: 1.77 (Buy)

BlackRock (BLK) is one of the world’s largest asset management firms, boasting about $10 trillion in assets across its many lines of business. Individual investors know it well for both its BlackRock mutual funds and closed-end funds (CEFs) and iShares exchange-traded funds (ETFs). But it also manages money for institutional clients, including pension plans, foundations, charities, and insurance companies, among others.

With the exception of a few understandable hiccups (COVID, for instance), BlackRock has been in a pretty consistent uptrend since the depths of the Great Recession. That has come alongside similar progression in both the company’s top and bottom lines.

It’s difficult to find any Wall Street pros with something negative to say about BLK. Shares currently enjoy 13 Buy calls versus four Holds and no Sells, and the analysts’ consensus for long-term earnings growth sits above 13% annually.

“We believe that BLK remains well positioned to deliver above-peer organic growth given its unmatched product breadth and distribution footprint (helped by its iShares franchise),” say Keefe, Bruyette & Woods analysts Aidan Hall and Kyle Voigt, who rate BLK at Outperform. “Also, its scale and demonstrated ability to generate operating leverage bodes well for future earnings growth.”

BlackRock has been a fount of dividend growth since the Great Recession, too. In the past decade alone, BLK has managed to average 10% annual dividend growth, though that pace has been slowing in recent years—its most recent hike, announced in January 2024, was a mere 2% bump to $5.10 per share. Still, a payout ratio just above 50% should keep investors plenty confident in the dividend’s health and its ability to keep growing.

Related: 15 Best Investing Research & Stock Analysis Websites

Best Dividend Stock #5: Bunge Global


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  • Sector: Consumer staples
  • Market cap: $15.5 billion
  • Dividend yield: 2.4%
  • Consensus analyst rating: 1.75 (Buy)

Bunge Global (BG) is a leading agribusiness and food company, operating across the entire agricultural supply chain through its many subsidiaries. All told, its operations span roughly 23,000 employees across more than 300 facilities in over 40 countries.

Among other things, the U.S.-headquartered but Switzerland-incorporated firm is a leading global oilseed processor and producer of vegetable oils and protein meals. It sources, processes, and distributes grains such as soybeans, wheat, and corn. And it produces agricultural products such as fertilizers and sugars.

Bunge is very much a “patience stock” right now. The company warned of a weaker-than-expected 2024, thanks in part to lower margins on crush (the process that produces soybean oil and protein meal). Moreover, its proposed mega-acquisition of Canadian grain handling business Viterra has run into a potential wall, with Canada’s Competition Bureau recently voicing concerns over the deal.

Wall Street’s pros appear patient, though. Coverage isn’t exactly thick at a dozen analysts currently, but of those, nine call BG shares a Buy, while three call it a Hold—no Sells are on the table. BMO Capital Markets analyst Andrew Strelzik did temper expectations and lowered his price target on shares, but maintained his Outperform rating, saying he “remain[s] constructive on earnings potential post-M&A closing.”

Bunge can pay investors at least a modest sum for their patience. The 2.4% yield is more than a point better than the market average. And the dividend has grown by a total of 26% over the past three years. It’s as safe as you could want it, too, with Bunge maintaining an extremely conservative payout ratio of 17%.

Related: 7 Best Stock Recommendation Services [Stock Tips + Picks]

Best Dividend Stock #4: Emerson Electric


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  • Sector: Industrials
  • Market cap: $62.8 billion
  • Dividend yield: 1.9%
  • Consensus analyst rating: 1.54 (Buy)

Emerson Electric (EMR) is an industrial-sector firm that was founded in 1890 and headquartered in St. Louis. Emerson has established itself as a global leader in technology and engineering, providing innovative solutions in process control, industrial automation, heating, ventilation, and air conditioning (HVAC), and more.

The company’s emphasis on technological advancement and diversified market penetration has been crucial in maintaining a competitive edge over the last 125-plus years. What once was a maker of electric motors and fans is now a global industrial-technology giant that produces not just tens of thousands of products, but even industry, automation, and operations management software.

And EMR continues to evolve today.

“The company has shifted its focus in recent quarters, divesting legacy segments and investing in new businesses that target energy security and affordability, sustainability and decarbonization, nearshoring, and digital transformation,” says Argus Research analysts Stephen Biggar and Michelle Han, who rate the stock at Buy.” These are good long-term businesses.”

They’re among the 19 Buys in the analyst bull camp, who greatly outnumber Holds (five) and Sells (zero).

While its most recent payout increases haven’t been much to crow about, Emerson Electric has delivered decades of consistent dividend growth. This industrial firm’s dividend track record spans 67 consecutive years, including a 1% uptick to its payout, to 52.5¢ per share quarterly, announced in November 2023. Its 43% payout ratio is plenty comfortable too.

Related: 7 Best Fidelity ETFs for 2024 [Invest Tactically]

Best Dividend Stock #3: Mondelez International


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  • Sector: Consumer staples
  • Market cap: $95.2 billion
  • Dividend yield: 2.5%
  • Consensus analyst rating: 1.50 (Buy)

Mondelez International (MDLZ) is a prototypical defensive-minded, dividend-yielding consumer staples play that peddles its snacks to people in more than 150 countries worldwide. It’s responsible for brands including Oreo, Belvita, Tang, Cadbury, Philadelphia, Toblerone, and Halls. It’s the world’s top producer of cookies and crackers (they say “biscuits”; I decline) and No. 2 in chocolate.

There’s a reason “consumer staples” are often referred to as “consumer defensive.” That’s because while our consumption of certain products might ebb and flow with the economy, there are certain products we will hunker down and keep consuming no matter what. Sure, there are more true “needs” like basic produce, dairy, proteins, and personal-care items. But it applies to snacks too. After all, if the economy forces you to cut back on going out, you’ll still want treats at home—and price be darned, you probably won’t downgrade from Oreos to store-brand cookies unless you have no other choice.

Both Mondelez’s operational and stock performances have seemed downright agnostic for more than a decade, though, deliberately marching in a pretty straight line higher. And at least on the financial side, that looks to continue in 2024.

“Mondelez expects 2024 to be another year at least in line with its long-term algorithm, including growth at the high-end of its 3%-5% organic sales growth range and high-single-digit EPS growth,” say Stifel analysts, who rate MDLZ shares at Buy. “We expect the strong momentum in the business to continue in 2024 benefiting from continued emerging market momentum, resilient categories, an advantaged product portfolio, strong brand building investments, an improved U.S. supply chain performance, and distribution expansion in both emerging and developed markets.”

Wall Street’s analyst community is largely of the same mind on this dividend stock: 23 Buys greatly outnumber a trio of Holds and an absence of Sells.

A reminder: Mondelez was previously Kraft Foods, but it adopted the new name after it spun off Kraft Foods Group–the company’s North American grocery business—in 2012. Its dividend was stagnant for a few years before that transaction, but it has grown at a pretty reliable 10% average annual rate after that. Indeed, the yield, while decent, would be much higher if it weren’t for the persistent advance in MDLZ shares … not that anyone’s complaining. And between Mondelez’s consistent earnings growth and moderate 45% payout ratio, MDLZ should have the resources to continue its brisk dividend-growth pace.

Related: 17 Best Investment Apps and Platforms [Free + Paid]

Best Dividend Stock #2: Targa Resources


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  • Sector: Energy
  • Market cap: $25.8 billion
  • Dividend yield: 2.6%
  • Consensus analyst rating: 1.46 (Strong Buy)

Energy businesses are typically referred to by their “stream.” Upstream companies search for and extract oil, gas, and other raw energy resources; midstream companies transport, store, and sometimes process those resources; and downstream companies refine these resources into final products such as gasoline, diesel, and natural gas liquids (NGLs).

Targa Resources (TRGP) deals in the midstream energy market segment—alongside its subsidiary, Targa Resource Partners LP, it owns a wide array of gathering, processing, logistics, and transportation assets across numerous natural resource plays, including the Permian Basin, Bakken Shale, Anadarko Basin, and the Gulf of Mexico, among others. The Permian Basin is arguably Targa’s biggest growth driver; roughly 3 in 5 lower-48 U.S. shale rigs are located there, and about 80% of Targa’s natural gas inlet volumes are sourced from there.

Targa went public in 2010, peaked in 2014, cratered, then largely hovered for a few years after that. But after bottoming out during COVID, the stock has roared back to life and is at its highest point since 2015. Not coincidentally, Targa is just one of two stocks meeting my criteria that earn a Strong Buy consensus rating, per analyst ratings gathered by S&P Global Market Research. That comes courtesy of 21 Buys and just one Hold (and zero Sells).

Much of this can be attributed to Targa’s positioning in the Permian.

“TRGP has become an integrated midstream player from the wellhead to the export dock with a dominant position in the Permian basin, which has the best growth profile of any basin in the U.S.,” say Stifel analysts (Buy). “Additionally, we continue to favor Targa’s attractive financial profile with leverage well within its 3.0x to 4.0x range and a dividend that is well covered.”

Energy infrastructure stocks are a different breed. Many of them are master limited partnerships (MLPs), which are required to return a majority of their income to unitholders (shares in MLPs) in the form of distributions (dividend-like payments to shareholders that have different tax consequences). Targa is technically a corporation, so it pays dividends like a traditional stock. But like an MLP, the proper metric for its payout ratio is distributable cash flow (DCF) … and by that gauge, Targa’s quarterly distribution is well-covered, indeed, at less than 25% of DCF, even after the company’s recent 50% hike to 75¢ per share.

As a result of the robust cash flow generation stemming from core and new projects, the prior annual distribution announcement of $3.00/share is a testament of TRGP’s confidence in its ability to generate robust cash flow for the foreseeable future,” says Truist analyst Neal Dingmann (Buy). “Notably, we believe distribution growth will be accelerated beyond 2024 given our forecast of increased cash flow and lower capital spend versus this year, resulting in more cash to potentially be allocated to shareholder returns and/or spent on accretive deals.” Dingmann adds there’s potential for additional buybacks, too; TRGP repurchased $374 million worth in 2023.

Related: 7 Best Value Stocks for 2024 [Smart Picks to Buy]

Best Dividend Stock #1: Lamb Weston


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  • Sector: Consumer staples
  • Market cap: $12.1 billion
  • Dividend yield: 1.8%
  • Consensus analyst rating: 1.42 (Strong Buy)

My mother, a renowned potato cognoscente, will surely break out a smile when I tell her that I wrote about a top-notch dividend stock that just so happens to specialize in spuds.

Lamb Weston (LW) does potatoes. It grows ’em. It harvests ’em. And then it turns ’em into a variety of potato products sold worldwide—under its namesake brand, the Grown in Idaho and Alexia brands, other licensed brands, and a number of white-label retail brands. It sells diced and shredded potatoes, skillet cubes, hash browns, potato wedges, stuffed spuds, mashed potatoes, regular-cut fries, crinkle-cut fries, steak fries, curly fries, shoestring fries, and the king of fries—the waffle fry.

And it sells those to grocery stores, wholesalers, businesses, schools, and restaurant chains—indeed, its top customer is none other than McDonald’s itself, accounting for 13% of total net sales last year.

Business has been good at the former ConAgra (CAG) division. Revenues have grown at a pretty steady 9% compound annual growth rate (CAGR) over the past five years. Earnings have been a lot more see-saw, but LW delivered record profits in fiscal 2023, and the pros expect adjusted earnings to grow by the high teens in 2024 and the low teens next year.

“LW remains a compelling investment opportunity,” says CFRA analyst Arun Sundaram (Buy). “Global restaurant traffic is poised to rebound within the next 12 months as consumers adjust to higher menu prices. … We see plenty of long-term growth ahead, particularly in key international markets like China.”

Sundaram is one of a dozen analysts who are bullish on LW shares. The remaining opinions on Lamb Weston … don’t exist! The stock has no Holds nor Sells. That translates into a consensus Strong Buy rating, easily putting Lamb Weston among the best dividend stocks you can buy.

Douglas Adams would tell you, “It is a mistake to think you can solve any major problems just with potatoes.” I swear by the Hitchhiker’s Guide to the Galaxy, but the man was wrong on one front: You could absolutely solve your dividend-growth problems with potatoes. Lamb Weston has fired off 12.5% average annual dividend growth over the past five years, including a 29% hike, to 36¢ per share quarterly, to start 2024. And with a meager payout ratio of 16%, LW should easily keep its dividends growing like its taters.

Related: 9 Monthly Dividend Stocks for Frequent, Regular Income

 

Kyle Woodley is the Editor-in-Chief of WealthUp. His 20-year journalistic career has included more than a decade in financial media, where he previously has served as the Senior Investing Editor of Kiplinger.com and the Managing Editor of InvestorPlace.com.

Kyle Woodley oversees WealthUp’s investing coverage, including stocks, bonds, exchange-traded funds (ETFs), mutual funds, real estate, alternatives, and other investments. He also writes the weekly Weekend Tea newsletter.

Kyle spent five years as the Senior Investing Editor at Kiplinger, and six years at InvestorPlace.com, including two as Managing Editor. His work has appeared in several outlets, including Yahoo! Finance, MSN Money, the Nasdaq, Barchart, The Globe and Mail, and U.S. News & World Report. He also has made guest appearances on Fox Business and Money Radio, among other shows and podcasts, and he has been quoted in several outlets, including MarketWatch, Vice, and Univision.

He is a proud graduate of The Ohio State University, where he earned a BA in journalism … but he doesn’t necessarily care whether you use the “The.”

Check out what he thinks about the stock market, sports, and everything else at @KyleWoodley.