In this article, we discuss 15 best income stocks to invest in. You can skip our detailed analysis of income stocks and the performance of dividend stocks in the past, and go directly to read 5 Best Income Stocks To Invest In.
On November 22, the U.S. stock market closed with gains, driven by the positive sentiment that the Federal Reserve might halt its interest rate hikes and that the economy is still resilient. Reports on jobless claims, durable goods, and consumer sentiment seemed to suggest the economy is easing but may stay strong enough to avoid recession. In addition to this, the count of new applications for unemployment benefits in the U.S. dropped more than predicted last week. Quincy Krosby, chief global strategist at LPL Financial in Charlotte, presented a strong outlook for the market for the rest of the year. Here is what the analyst said:
"Overall you have a solid backdrop to the market. The signals for the market, despite concerns over the economy and consumer spending, is that this market has sustainability in what is probably the most hospitable season for the market."
Irrespective of market conditions, investors consistently show interest in stocks that generate income. Dividend-paying stocks specifically receive considerable attention due to their track record of being more resilient during various market situations in the past. Moreover, dividends have played a role in boosting personal income over time. By the end of 2022, dividends accounted for 8.5% of personal income, a significant increase from the 3.2% reported in the first quarter of 1980.
According to a report by S&P Dow Jones Indices, historically, stock dividends have acted as a shield against inflation, outpacing the inflation rate with their growth over the medium to long term. The report highlights a substantial difference between the growth rates of dividends and inflation in the last 20 years. This difference resulted in dividends paid by S&P 500 companies increasing in purchasing power by more than 130%.
Dividends have been quite important for investors, especially when overall market returns have been low for a while. Companies that consistently increased dividends or started paying them tend to offer better returns with less volatility compared to companies that kept their dividends the same or reduced them. RBC Wealth Management’s report highlighted that investing in stocks of companies that pay and increase dividends and reinvesting those dividends, is an excellent strategy for building long-term wealth. The report also demonstrated how a $1 dividend grew at an average annual rate of 7.2% over a period of 20 years.
The Procter & Gamble Company (NYSE:PG), Colgate-Palmolive Company (NYSE:CL), and PepsiCo, Inc. (NASDAQ:PEP) are some of the best dividend stocks for regular income. In this article, we will further discuss these stocks in detail.
15 Best Income Stocks To Invest In
photo by scott graham on Unsplash
Our Methodology:
For this list, we scanned through Insider Monkey's database of 910 hedge funds in Q3 of 2023 and selected stocks that regularly pay dividends. Among those, we singled out companies with solid balance sheets and steady cash flow. These qualities indicate they can sustain their dividends in the future, making them dependable for investors seeking stable income. The stocks are ranked in ascending order of the number of hedge funds having stakes in them.
PepsiCo, Inc. (NASDAQ:PEP) is a multinational food, snack, and beverage corporation. The company is mainly known for producing a wide range of popular brands. On November 16, the company declared a quarterly dividend of $1.265 per share, which was in line with its previous dividend. It has been rewarding shareholders with growing dividends for the past 51 years, which makes it one of the best dividend stocks on our list. The stock has a dividend yield of 2.99%, as of November 23.
At the end of Q3 2023, 65 hedge funds tracked by Insider Monkey reported having stakes in PepsiCo, Inc. (NASDAQ:PEP), compared with 68 in the previous quarter. The consolidated value of these stakes is roughly $4.3 billion.
Comcast Corporation (NASDAQ:CMCSA) is a diversified global media and technology company. It is a leading provider of cable television, high-speed internet, and phone services to residential and business customers. The company currently offers a quarterly dividend of $0.29 per share and has raised its payouts for 15 consecutive years. As of November 23, the stock has a dividend yield of 2.73%.
As of the close of Q3 2023, 68 hedge funds in Insider Monkey's database owned investments in Comcast Corporation (NASDAQ:CMCSA), up from 66 in the preceding quarter. The consolidated value of these stakes is more than $3.6 billion. With roughly 32 million shares, First Eagle Investment Management was the company's leading stakeholder in Q3.
NIKE, Inc. (NYSE:NKE) is an American multinational corporation primarily engaged in athletic footwear, apparel, equipment, accessories, and services. On November 15, the company declared an 8.8% hike in its quarterly dividend to $0.37 per share. This marked the company's 22nd consecutive year of dividend growth, which makes NKE one of the best dividend stocks for income. The stock's dividend yield on November 23 came in at 1.37%.
As of the end of Q3 2023, 69 hedge funds tracked by Insider Monkey owned stakes in NIKE, Inc. (NYSE:NKE), down from 70 in the preceding quarter. The total value of these stakes is over $3.47 billion.
An American multinational fast-food chain, McDonald's Corporation (NYSE:MCD) is next on our list of the best dividend stocks for income. The company offers a quarterly dividend of $1.67 per share, having raised it by 10% in October this year. After this hike, it is just three years away from becoming a Dividend King, as the company stretched its dividend growth streak to 47 years. As of November 23, the stock has a dividend yield of 2.37%.
The number of hedge funds tracked by Insider Monkey owning stakes in McDonald's Corporation (NYSE:MCD) grew to 70 in Q3 2023, from 68 in the previous quarter. The consolidated value of these stakes is over $2.5 billion.
Linde plc (NASDAQ:LIN) is a multinational industrial gases and engineering company. It primarily focuses on the production and distribution of industrial gases used in various industries and applications. The company was a part of 71 hedge fund portfolios at the end of Q3 2023, up from 70 in the previous quarter, according to Insider Monkey's database. The total value of stakes owned by these hedge funds is roughly $4 billion.
On October 23, Linde plc (NASDAQ:LIN) declared a quarterly dividend of $1.275 per share, which was consistent with its previous dividend. The company maintains a 28-year streak of consistent dividend growth, which makes LIN one of the best dividend stocks on our list. The stock's dividend yield on November 23 came in at 1.24%.
The Procter & Gamble Company (NYSE:PG) is an Ohio-based multinational consumer goods corporation that specializes in a diverse range of products across multiple categories. The company's dividend growth streak currently stands at 67 years and it currently pays a quarterly dividend of $0.9407 per share. The stock has a dividend yield of 2.49%, as of November 23.
At the end of the third quarter of 2023, 75 hedge funds tracked by Insider Monkey owned investments in The Procter & Gamble Company (NYSE:PG), up from 74 a quarter earlier. Their collective stake value is more than $5.7 billion. Among these hedge funds, Fisher Asset Management was the company's largest stakeholder in Q3.
The Home Depot, Inc. (NYSE:HD) is a leading home improvement retailer specializing in providing a wide range of products, tools, construction materials, and services for DIY (do-it-yourself) and professional customers. The company declared a quarterly dividend of $0.29 per share on November 16, which fell in line with its previous dividend. Overall, the company has been rewarding shareholders with 13 consecutive years of dividend growth. With a dividend yield of 2.70%, HD is one of the best dividend stocks on our list.
The Home Depot, Inc. (NYSE:HD) was a popular buy among hedge funds during the third quarter of 2023, as the company ended the quarter with 76 hedge fund positions, up from 68 in the previous quarter, as per Insider Monkey's database. The stakes owned by these hedge funds have a total value of nearly $5.2 billion.
Exxon Mobil Corporation (NYSE:XOM) is one of the world's largest oil and gas companies. It engages in exploration, development, and production activities for crude oil and natural gas. This involves locating oil and gas reserves, drilling wells, and extracting these resources. The company pays a quarterly dividend of $0.95 per share and has a dividend yield of 3.65%, as of November 23. In October this year, the company raised its dividend for the 41st consecutive year, which makes XOM one of the best dividend stocks on our list.
Insider Monkey's database of Q3 2023 showed that 79 hedge funds owned stakes in Exxon Mobil Corporation (NYSE:XOM), growing from 71 in the preceding quarter. These stakes are collectively valued at over $4.48 billion. With over 13 million shares, First Eagle Investment Management was the company's leading stakeholder in Q3.
Walmart Inc. (NYSE:WMT) is an American multinational retail corporation that operates a vast chain of hypermarkets, discount department stores, and grocery stores across various formats and geographies. The company offers a quarterly dividend of $0.57 per share and has a dividend yield of 1.47%, as recorded on November 23. With 50 consecutive years of dividend growth under its belt, WMT is one of the best dividend stocks on our list.
According to Insider Monkey's database of Q3 2023, 80 hedge funds owned stakes in Walmart Inc. (NYSE:WMT), compared with 81 in the previous quarter. The total value of these stakes is roughly $6 billion.
Johnson & Johnson (NYSE:JNJ) ranks sixth on our list of the best dividend stocks for income. The multinational pharmaceutical and healthcare company maintains a 61-year track record of consistent dividend growth and it pays a quarterly dividend of $1.19 per share. As of November 23, the stock has a dividend yield of 3.16%.
Of the 910 hedge funds tracked by Insider Monkey at the end of Q3 2023, 84 funds owned stakes in Johnson & Johnson (NYSE:JNJ). The consolidated value of these stakes is over $4.1 billion.
