Top 3 Dividend Stocks to Buy for 2024

January 19, 2024
By The Investing Insider Staff

Key Takeaways:

  • Verizon (Ticker: VZ) offers an attractive 6.84% forward dividend yield, consistent payouts for 19 years, and a strong position in the telecom sector.

  • Pfizer (Ticker: PFE) boasts a 5.65% forward dividend yield, 13 years of consecutive dividend growth, and exceptional performance relative to its healthcare sector.

  • Enterprise Products Partners (Ticker: EPD) has an impressive 7.54% forward dividend yield, 25+ years of payout growth, and strength in gas and oil midstream.

2024 stands as a pivotal yet uncertain moment for investors. Amidst the market's volatility, dividend stocks emerge as beacons of stability.

These income plays offer tangible returns and relative reliability versus speculative dart throws. They provide a buffer against volatility's ebbs and flows. And can provide a consistent income stream for those seeking cashflow.

Reinvesting dividends also enables an investor to leverage the immense power of compound interest.

In the investment arena of 2024, J.P. Morgan's analysis paints a picture of cautious optimism. While moderate growth is anticipated in the equity market, with projections pointing towards a 2-3% earnings growth for the S&P 500, this scenario underscores the importance of selecting dividend stocks known for their stability and consistent performance.

Moderate S&P 500 growth is anticipated this year with projections pointing towards a 2-3% earnings growth for the S&P 500.  This underscores the importance of selecting resilient dividend payers known for their stability and consistency – especially those that consistently perform in historically defensive sectors.

In this article, we delve into three dividend stocks that show promise for the year ahead: Verizon Communications (Ticker: VZ), Pfizer (Ticker: PFE), and Enterprise Products Partners (Ticker: EPD).

These selections are not random; they are grounded in a rigorous analysis of each company's financial health, dividend history, market position, and sector-specific prospects.

Let's explore why each looks poised to deliver as 2024's volatility looms.

Dividend Stock to Buy #1: Verizon Communications (Ticker: VZ)

Verizon is a top dividend stock to buy

Verizon Communications Summary:

Verizon Communications Inc. is a $164 billion market cap company that needs little to no introduction. It is one of the largest telecommunications companies in the United States with a long and impactful history.

Founded in 1983 as Bell Atlantic, the company has grown into a leading provider of wireless, broadband, and entertainment services, serving millions of customers across the country.

Verizon boasts the largest 4G LTE network in the US, covering over 99% of the population. It's also at the forefront of 5G deployment, expanding its next-generation network to more cities and rural areas.

Beyond wireless, Verizon offers a range of services including:

  • Fios, a high-speed fiber-optic internet and TV service
  • Verizon Business, providing communication and IT solutions for businesses
  • Verizon Media, which includes Yahoo, AOL, and other media brands

At first glance, VZ stock seems like an obvious buy for dividend investors.  The dividend yield, the P/E ratios, and the projected growth of the addressable market (and the company's position in it) are all heavily weighted to the positive side.

Why We Think Verizon is a Top Dividend Stock to Buy:

Verizon stands out in the telecommunications sector with its robust dividend profile.

The forward dividend yield of 6.84% is significantly higher than the sector median, highlighting Verizon's commitment to returning value to its shareholders. This yield is also an improvement over the company's five-year average, indicating a favorable trend in dividend returns.

With an annual forward payout of $2.66 and a payout ratio of 54.41%, Verizon demonstrates a balanced approach to dividend distribution, maintaining a sustainable payout while investing in future growth.

The company also has a commendable record of dividend growth, with 19 consecutive years of increases.  This showcases its financial resilience and commitment to shareholders. Furthermore, the five-year dividend growth rate stands at 2.02%, reflecting steady, albeit moderate, increases over time. To conclude, Verizon Communications (VZ) presents a compelling case for dividend investors in 2024. With a high forward dividend yield, consistent payout history, and a strong position relative to its sector, Verizon is well-positioned as a stable income-generating stock.

Dividend Stock to Buy #2: Pfizer (Ticker: PFE)

Pfizer is a top dividend stock to buy

Pfizer Summary:

Pfizer, the name synonymous with life-saving vaccines and groundbreaking medications, boasts a rich history dating back to 1849.

Founded by two German immigrants, Charles Pfizer and Charles F. Erhart, the company started small, producing chemicals and citric acid in a Brooklyn basement. Over the decades, Pfizer expanded its reach through acquisitions and mergers, becoming a global healthcare powerhouse.

Today, it stands as one of the world's largest pharmaceutical companies, employing over 78,000 people across 125 countries. Its diverse portfolio encompasses:

  • Vaccines: Pfizer has established itself as a leader in vaccine development, with major contributions to immunizations against pneumococcal disease, meningitis, and, most recently, COVID-19.
  • Specialty Medications: Pfizer delves deep into research and development, bringing forth innovative treatments for various conditions, including oncology, immunology, cardiovascular diseases, and rare diseases.
  • Consumer Healthcare: Familiar brands like Advil, Centrum, and Robitussin fall under Pfizer's consumer healthcare wing, offering over-the-counter solutions for everyday ailments.

Why We Think Pfizer is a Top Dividend Stock to Buy:

Pfizer's forward dividend yield of 5.65% is a strong indicator of the company's commitment to returning value to its shareholders.

This yield is considerably higher than the sector median, positioning Pfizer as an attractive choice for dividend-focused investors.

The forward annual payout stands at $1.68, with a payout ratio of 56.79%. This ratio suggests a well-balanced approach to dividend distribution, signifying that the company retains a portion of its earnings for future growth while also rewarding shareholders.

A key aspect of Pfizer's dividend appeal lies in its growth consistency.

The company has achieved dividend growth for 13 consecutive years, demonstrating its financial stability and reliability. The five-year growth rate of 4.95% is commendable, indicating a consistent increase in dividends over time. Pfizer's dividend performance is remarkable when compared to its sector.

The company's four-year average dividend yield received an A+ grade, vastly outperforming the sector median by 177.80%.

To conclude, Pfizer presents a strong case for inclusion in dividend-focused portfolios in 2024. With its above-average forward dividend yield, consistent payout history, and solid track record of dividend growth, Pfizer stands out as a reliable choice for investors seeking stable income.

The company's exceptional performance compared to its sector further cements its status as a leading dividend stock in the pharmaceutical industry.

Dividend Stock to Buy #3: Enterprise Products Partners (Ticker: EPD)

Enterprise Products Partners is a top dividend stock to buy

Enterprise Products Partners Summary:

Enterprise Products Partners (EPD) is a significant player in the American energy sector, often operating under the radar of mainstream attention.

As a midstream company, EPD operates a comprehensive network of pipelines, storage facilities, and processing plants. This extensive system, spanning over 50,000 miles, is crucial for transporting a significant portion of the nation's natural gas, petroleum, and petrochemicals.

Founded in 1968, EPD began with a focus on natural gas liquids. Through calculated expansions and acquisitions, it has evolved into a midstream powerhouse. Its infrastructure, extending from Texas to New York, represents the often unseen yet indispensable arteries of the American energy sector.

Amidst growing environmental consciousness, EPD prioritizes safety and sustainability. The company invests in technologies for pipeline integrity and leak prevention, addressing concerns about fossil fuels and their impact. EPD is also exploring avenues like carbon capture and collaborations with renewable energy sectors to stay adaptive and relevant in a changing energy landscape.

Why We Think Enterprise Product Partners is a Top Dividend Stock to Buy:

Enterprise Products Partners (EPD) offers a forward dividend yield of 7.54%, which is notably higher than both the sector median and its own five-year average.

This impressive yield reflects the company's commitment to delivering substantial returns to its shareholders and underscores its attractiveness in the midstream oil and gas sector. With a forward annual payout of $2.00 and a payout ratio of 80.27%, EPD demonstrates a strong commitment to shareholder returns.

However, the relatively high payout ratio suggests that a significant portion of earnings is being distributed as dividends, which is typical in the midstream sector due to stable cash flow structures.

EPD has a remarkable history of dividend growth, extending over 25 years.

This consistency highlights the company’s ability to maintain and increase dividend payments, even in varying market conditions. The five-year growth rate of 2.92% further indicates a steady, albeit moderate, upward trend in dividends.

In comparison to its sector, EPD’s dividend performance stands out. The company’s four-year average dividend yield is rated A-, significantly higher than the sector median by 88.04%.

To conclude, Enterprise Products Partners presents a robust dividend profile for investors in 2024.

The company's high forward dividend yield, combined with a long track record of dividend growth and strong performance relative to its sector, positions EPD as a compelling choice for those seeking high-yield dividend stocks in the energy sector.

Final Thoughts:

The selection of Verizon Communications (VZ), Pfizer (PFE), and Enterprise Products Partners (EPD) reflects a strategic approach to dividend investing in 2024.

These companies not only offer attractive yields but also possess the robust business fundamentals necessary to thrive in a fluctuating economic environment.

While the promise of steady income is appealing, investors should always align their investment decisions with their personal financial goals and conduct thorough research before committing capital.

Frequently Asked Questions:

Q: Why are dividend stocks appealing for 2024 investments?

A: With moderate S&P growth expected, dividend stocks offer stability and income versus volatility and speculation.

Q: What makes Verizon’s dividend profile robust?

A: The high 6.79% forward yield, consistent 19-year payout history, and leading position in U.S. telecommunications.

Q: How does Pfizer stand out as a dividend payer?

A: Pfizer offers above-average yields, 13 years of dividend growth, and sector-beating performance on dividend metrics.

Q: What are Enterprise Products Partners’ dividend strengths?

A: EPD has an impressive 7.41% forward yield, 25+ years of dividend growth, and a vital role in U.S. oil and gas midstream.

-Investing Insider Staff
This article is informational purposes only and is not investment advice.  See full disclaimer here
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