In this article, we discuss 14 best S&P 500 dividend stocks to invest in 2024. You can skip our detailed analysis of dividend stocks in the S&P 500 and their performance over the years, and go directly to read 5 Best S&P 500 Dividend Stocks To Invest In 2024.
In 2023, despite the presence of higher interest rates, consumers remained unfazed, and investors displayed more optimism than apprehension, largely fueled by the excitement surrounding advancements in artificial intelligence (AI). Consequently, the S&P 500 experienced a remarkable surge, gaining over 24% last year. This surge was primarily attributed to the dominance of what has been dubbed the "Magnificent Seven." These seven major companies, which include Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL), and NVIDIA Corporation (NASDAQ:NVDA), played a pivotal role in driving the S&P 500's performance, contributing significantly to its overall returns. On the flip side, a staggering 72% of stocks failed to match the performance of the S&P 500 index, setting a new record for underperformance. Additionally, dividend-paying stocks experienced a downturn in 2023, paving the way for the dominance of technology equities. Despite this, the stock market returns throughout the year were both exceptional and notably robust in comparison to historical trends.
Despite their recent lackluster performance, dividends remain a crucial aspect of returns for equity investors and have garnered considerable attention in capital markets research. The appeal of dividend-paying stocks is substantial, and rightfully so as they have the potential to significantly enhance long-term investment outcomes. This general observation has been well-documented across various periods and global markets. For instance, one study analyzed the components contributing to total equity returns of U.S. stocks spanning from 1802 to 2002. It revealed that dividends, along with real growth in dividends, constituted a substantial portion, accounting for 5.8% of the total annualized return of 7.9% over 200 years. Another study, conducted from a global perspective by researchers at the London Business School, examined data from 1900 to 2005 across 17 countries. It found that the real return averaged around 5%, with an average dividend yield of 4.5% during that timeframe. These findings provide compelling evidence for the significance of dividends for long-term investors.
Yet another report from S&P Dow Jones Indices provided insight into the enduring impact of dividend-paying equities over the long term. This report emphasized that since 1926, dividends have played a significant role, contributing roughly 32% of the total return for the S&P 500, with capital appreciations making up the remaining 68%. Hence, both sustainable dividend income and the potential for capital appreciation are key considerations for forming expectations regarding total returns. Furthermore, the growth of dividends proves to be beneficial for investors. Over an extended period, the S&P 500 Dividend Aristocrats, which monitors the performance of companies with 25 or more consecutive years of dividend growth, has surpassed the S&P 500 index while exhibiting lower volatility, indicating higher risk-adjusted returns. The S&P 500 Dividend Aristocrats' ability to mitigate losses can be observed through its upside and downside capture ratios. According to a report by S&P Dow Jones Indices, it has outperformed the S&P 500 in down months 69.34% of the time and in up months 43.61% of the time from December 29, 1989, to July 31, 2023. Additionally, it's worth noting that the S&P 500 Dividend Aristocrats experienced lower drawdown levels compared to the benchmark index.
Considering these points, let's explore some of the top S&P 500 dividend-paying stocks.
To create this list, we first examined the S&P 500 stocks based on their weight in the index and picked the top 25 stocks that consistently distribute dividends to their shareholders. Among these, we chose 13 stocks that garnered the most attention from hedge fund investors by the conclusion of Q4 2023, using data from Insider Monkey’s database. The stocks are ranked in ascending order of the number of hedge funds having stakes in them. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here).
The Home Depot, Inc. (NYSE:HD) is a multinational home improvement retailer. It operates a chain of retail stores that offer a wide range of products and services for home improvement, construction, and renovation projects. On February 20, the company declared a 7.7% hike in its quarterly dividend to $2.25 per share. Through this increase, the company stretched its dividend growth streak to 14 years, which makes HD one of the best dividend stocks on our list. The stock's dividend yield on February 26 came in at 2.42%.
At the end of Q4 2023, 70 hedge funds tracked by Insider Monkey reported having stakes in The Home Depot, Inc. (NYSE:HD), compared with 76 in the previous quarter. The consolidated value of these stakes is nearly $6 billion.
The Procter & Gamble Company (NYSE:PG) is a multinational consumer goods corporation. It manufactures and sells a wide range of branded consumer packaged goods, including personal care products, grooming products, household cleaning agents, baby care products, and health care products. It currently pays a quarterly dividend of $0.9407 per share and has a dividend yield of 2.34%, as of February 26. With a dividend growth streak of 67 years, PG is one of the best S&P 500 dividend stocks on our list.
As of the close of Q4 2023, 71 hedge funds in Insider Monkey's database owned stakes in The Procter & Gamble Company (NYSE:PG), compared with 75 in the preceding quarter. The collective value of these stakes is roughly $6 billion. Among these hedge funds, Fisher Asset Management was the company's leading stakeholder in Q4.
Broadcom Inc. (NASDAQ:AVGO) is a global technology company that designs, develops, and supplies a broad range of semiconductor and infrastructure software solutions. The company currently pays a quarterly dividend of $5.25 per share, having raised it by 14% in December 2023. It has been growing its dividends consistently for the past 13 years, which makes AVGO one of the best dividend stocks on our list. As of February 26, the stock has a dividend yield of 1.62%.
The number of hedge funds tracked by Insider Monkey owning stakes in Broadcom Inc. (NASDAQ:AVGO) grew to 91 in Q4 2023, from 87 in the previous quarter. These stakes are collectively valued at over $8.8 billion.
Bank of America Corporation (NYSE:BAC) is one of the largest financial institutions in the US and globally. It operates as a diversified financial services company, offering a wide range of banking and financial products and services to its consumers. On January 24, the company declared a quarterly dividend of $0.24 per share, which was in line with its previous dividend. The company has a 24-year run of paying regular dividends to shareholders, which makes BAC one of the best dividend stocks on our list. As of February 26, the stock has a dividend yield of 2.83%.
Bank of America Corporation (NYSE:BAC) ended the fourth quarter with 96 hedge fund positions, up from 88 in the previous quarter, according to Insider Monkey's database. The consolidated value of these stakes is nearly $40 billion. With over 1 billion shares, Warren Buffett's Berkshire Hathaway was the company's leading stakeholder in Q4.
Merck & Co., Inc. (NYSE:MRK) is next on our list of the best S&P 500 dividend stocks. The pharmaceutical and medical device company currently offers a quarterly dividend of $0.77 per share and has a dividend yield of 2.38%, as of February 26. The company has been rewarding shareholders with growing dividends for the past 13 years.
Merck & Co., Inc. (NYSE:MRK) saw growth in hedge fund positions at the end of Q4 2023, as 98 funds owned stakes in the company, up from 85 in the previous quarter, according to Insider Monkey's database. The overall value of these stakes is over $7.16 billion.
Oracle Corporation (NYSE:ORCL) is a multinational technology company that specializes in developing and marketing enterprise software products, cloud computing solutions, and hardware systems. The company pays a quarterly dividend of $0.40 per share and has raised its dividends for eight years in a row. The stock's dividend yield on February 26 came in at 1.43%.
Oracle Corporation (NYSE:ORCL) was a part of 100 hedge fund portfolios at the end of Q4 2023, jumping from 88 in the preceding quarter, as per Insider Monkey's database. The stakes owned by these hedge funds have a collective value of over $6.4 billion. With over 18.5 million shares, First Eagle Investment Management was the company's leading stakeholder in Q4.
Eli Lilly and Company (NYSE:LLY) is a multinational pharmaceutical company that focuses on the discovery, development, manufacturing, and marketing of innovative pharmaceutical products to address various medical conditions and diseases. The company's current quarterly dividend comes in at $1.30 per share for a dividend yield of 0.67%, as of February 26. It is one of the best dividend stocks on our list as the company maintains a 10-year streak of consistent dividend growth.
At the end of Q4 2023, 102 hedge funds tracked by Insider Monkey reported having stakes in Eli Lilly and Company (NYSE:LLY), which remained unchanged from the previous quarter. The collective value of these stakes is more than $11 billion.
An American financial services company, JPMorgan Chase & Co. (NYSE:JPM) pays a quarterly dividend of $1.05 per share. During the fourth quarter of 2023, the company returned $3.1 billion to shareholders through dividends, which makes JPM one of the best dividend stocks on our list. The stock offers a dividend yield of 2.28%, as of February 26.
Insider Monkey's database of Q4 2023 indicated that 103 hedge funds owned stakes in JPMorgan Chase & Co. (NYSE:JPM), compared with 109 in the preceding quarter. The total value of these stakes is more than $9 billion. Ken Fisher's Fisher Asset Management was the company's leading stakeholder in Q4.
Thermo Fisher Scientific Inc. (NYSE:TMO) ranks sixth on our list of the best dividend stocks in the S&P 500. The multinational biotech and life sciences company declared an 11.4% hike in its quarterly dividend to $0.39 per share. Through this increase, the company achieved its seventh annual consecutive dividend hike. The stock has a dividend yield of 0.28%, as of February 26.
As of the end of Q4 2023, 111 hedge funds tracked by Insider Monkey owned stakes in Thermo Fisher Scientific Inc. (NYSE:TMO), up from 109 in the previous quarter. The collective value of these stakes is over $10.3 billion.
