In this article, we discuss 11 best halal dividend stocks to buy. You can skip our detailed analysis of dividend stocks and their previous performance, and go directly to read 5 Best Halal Dividend Stocks To Buy.
Halal stocks refer to shares of companies that comply with Shariah law. These stocks are from companies that operate in line with Shariah guidelines, meaning they avoid industries like alcohol, gambling, tobacco, and non-Islamic finance. Additionally, they maintain ethical business practices, ensuring their sources of income align with Islamic principles. The S&P High Yield Dividend Aristocrats Shariah Index monitors how certain Shariah-compliant companies, selected from the S&P 1500 Composite, perform in the market. These companies are specifically chosen because they've consistently increased their dividend payments for a period of 20 years or longer. This index tracks the performance of long-standing dividend-growing companies that adhere to Shariah principles within the broader market context of the S&P 1500 Composite. The index is down by 0.78% this year so far and its 5-year return came in at 6.98%.
Dividend-growing stocks have historically been popular among investors because they provide a regular income stream for them. As these companies increase their dividends over time, investors benefit from higher payouts. Companies that consistently pay increasing dividends usually have a strong financial foundation. They must not only turn a profit but also generate more cash than they require for their operations. A report conducted by Middlefield Capital Corporation found that dividend growers have shown remarkable performance compared to the broader market over the past three decades. This success isn't just chance—it's attributed to the fact that these companies are dedicated to managing their resources and investments with a disciplined approach. The same report also mentioned that chasing high yields without considering the underlying factors can be risky for investors. While a high dividend yield might seem attractive at first glance, it's essential to look beyond the numbers. Sometimes, stocks offering the highest yields might actually carry greater risk or have unsustainable dividend payments.
The way inflation affects fixed-income and income portfolios differs significantly. A high-quality company that consistently pays dividends has the potential to increase its income over time, acting as a safeguard against the negative effects of inflation. Research from Ned Davis shows that S&P 500 companies have raised their dividends by 9.70% in the past year, surpassing even the relatively high recent inflation rates. Over the last fifty years, the S&P 500® Index's dividend payments have grown at an average rate of 6%, which notably exceeds the historical inflation rate in the US.
Exxon Mobil Corporation (NYSE:XOM), AbbVie Inc. (NYSE:ABBV), and Chevron Corporation (NYSE:CVX) have a longstanding history of consistently increasing their dividend payouts, making them favored options among investors. Alongside their dividend track records, these companies also adhere to Shariah principles in their investments, appealing to investors seeking Shariah-compliant opportunities. In this article, we will further take a look at some of the best halal stocks that pay dividends.
To compile this list, we chose the top 11 stocks from the S&P High Yield Dividend Aristocrats Shariah Index. These specific companies are known for consistently providing substantial dividends to their shareholders and demonstrating robust financial stability. We ranked these holdings based on the number of hedge funds that had invested in them by the end of Q3 2023, using data from Insider Monkey's database. This ranking method helps identify stocks that attract interest from hedge funds, providing insight into investor sentiment and confidence in these particular companies.
Kimberly-Clark Corporation (NYSE:KMB) is an American multinational corporation that is engaged in the manufacturing and marketing of personal care and consumer tissue products. In the third quarter of 2023, the company posted revenue of $5.2 billion, which showed a 2% growth from the same period last year. Its operating cash flow for the first nine months came in at $2.3 billion and it returned $1.3 billion to shareholders through dividends and share repurchases.
Kimberly-Clark Corporation (NYSE:KMB) currently pays a quarterly dividend of $1.18 per share and has a dividend yield of 3.86%, as of November 25. It is one of the best halal stocks on our list as the company has been growing its dividends for 51 consecutive years.
At the end of Q3 2023, 31 hedge funds tracked by Insider Monkey reported having stakes in Kimberly-Clark Corporation (NYSE:KMB), compared with 38 in the preceding quarter. The consolidated value of these stakes is over $790.4 million.
General Dynamics Corporation (NYSE:GD) is a Virginia-based global aerospace and defense company. It also offers a wide array of IT services, including cloud computing, data analytics, and enterprise IT solutions. The company offers a quarterly dividend of $1.32 per share and has been raising its dividends for 26 years consistently. As of November 25, the stock has a dividend yield of 2.13%.
General Dynamics Corporation (NYSE:GD) generated $10.6 billion in revenues in the third quarter of 2023, which saw a 6% growth from the same period last year. The company's operating cash flow for the quarter came in at $1.3 billion. It is one of the best halal stocks on our list as the company returned $363 million to shareholders through dividends during the quarter.
As of the end of Q3 2023, 39 hedge funds in Insider Monkey's database reported having stakes in General Dynamics Corporation (NYSE:GD), down from 46 in the previous quarter. The collective value of these stakes is over $7 billion.
Air Products and Chemicals, Inc. (NYSE:APD) is a global industrial gases company that provides atmospheric gases, process and specialty gases, performance materials, equipment, and services. The company's dividend growth streak currently stands at 41 years, which makes ADP one of the best halal stocks to buy. It currently pays a quarterly dividend of $1.75 per share and has a dividend yield of 2.55%, as of November 25.
The number of hedge funds tracked by Insider Monkey owning stakes in Air Products and Chemicals, Inc. (NYSE:APD) stood at 43 in Q3 2023, which remained unchanged from the previous quarter. The total value of these stakes is over $952.3 million. With nearly 1 million shares, Citadel Investment Group was the company's leading stakeholder in Q3.
3M Company (NYSE:MMM) is a diversified multinational corporation operating in various industries. They specialize in the development, manufacturing, and marketing of a wide array of products and solutions across different sectors.
In the third quarter of 2023, 3M Company (NYSE:MMM) reported revenue of $8.31 billion, which beat analysts' estimates by $280 million. The company generated $1.9 billion in free cash flow during the quarter and returned $828 million to shareholders through dividends. This shows that the company's cash generation is strong enough to fulfill its shareholder obligation.
3M Company (NYSE:MMM), one of the best halal stocks on our list, currently pays a quarterly dividend of $1.50 per share. The company holds a 65-year streak of consistent dividend growth. As of November 25, the stock has a dividend yield of 6.25%.
The number of hedge funds tracked by Insider Monkey owning stakes in 3M Company (NYSE:MMM) grew to 54 in Q3 2023, from 49 in the preceding quarter. The consolidated value of these stakes is over $818.6 million.
The Coca-Cola Company (NYSE:KO) is a Georgia-based multinational beverage company. In the third quarter of 2023, the company's revenue showed an 8% year-over-year growth at $12 billion. In the first nine months of the year, the company generated nearly $9 billion in operating cash flow and its free cash flow for the period came in at $7.9 billion.
The Coca-Cola Company (NYSE:KO) has been rewarding shareholders with growing dividends for the past 61 years, which makes KO one of the best halal stocks on our list that pay dividends. The company offers a per-share dividend of $0.46 every quarter and its dividend yield on November 25 came in at 3.14%.
The Coca-Cola Company (NYSE:KO) was a part of 57 hedge fund portfolios at the end of Q3 2023, according to Insider Monkey's database. The total value of stakes owned by these hedge funds is over $25 billion. Among these hedge funds, Warren Buffett's Berkshire Hathaway was the company's leading stakeholder in Q3.
Target Corporation (NYSE:TGT) is an American retail company that operates a chain of retail stores offering a wide range of products. The company's stores are designed to cater to various customer segments, offering both essential items and trendy products.
Target Corporation (NYSE:TGT) has been raising its dividends for 52 consecutive years and currently pays a quarterly dividend of $1.10 per share. The stock's dividend yield on November 25 came in at 3.35%. During its most recent quarter, the company returned over $507 million through dividends to shareholders.
In the third quarter of 2023, Target Corporation (NYSE:TGT) posted revenue of $25.4 billion, which fell by 4.2% from the same period last year. However, the revenue surpassed analysts' estimates by $160 million. Through the first three quarters of the year, the company generated over $5.3 billion in operating cash flow.
Target Corporation (NYSE:TGT) was a popular buy among hedge funds during the third quarter of 2023, as the company ended the quarter with 58 hedge fund positions, up from 45 in the preceding quarter, according to Insider Monkey's database. The total value of stakes owned by these hedge funds is over $1.3 billion. With over 2.8 million shares, Diamond Hill Capital was the company's leading stakeholder in Q3.
