Best Dividend Stocks to Invest in for 2024

Dividends don’t always indicate a good investment, but they offer additional income and short-term returns to hedge against poor market conditions. Furthermore, some stocks offer significantly higher annual yields, helping you generate more dividend income on your investment.

This article will cover a few of the top dividend stocks for investors to monitor in 2020 and beyond. Keep in mind that it’s important to evaluate potential investments on other factors—dividends alone don’t tell the whole story. These stocks come with historically reliable returns and reasons to expect future growth.

McDonald’s

As one of the most successful American chains, McDonald’s is a dependable investment that has grown rapidly over the past few months. While the share price dropped to roughly $190 near the end of 2019, it quickly rose back over $215 and has shown no signs of slowing down.

McDonald’s currently pays out a total of $5 in yearly dividends per share divided into four quarterly payments of $1.25. Assuming an average price of $200, that works out to an annual dividend yield of 2.5% in addition to strong performance on many investment indicators.

With a three-year earnings growth rate of over 16%, McDonald’s is set up to offer returning value through 2020 and into the next decade. $5 in dividends per share is just a small bonus considering the other factors that make McDonald’s a good investment.

AT&T

Like McDonald’s, AT&T has a long history of paying out dividends, with uninterrupted increases going back to the 1980s. Shares are just $38.26 as of closing on 2/18/20, less than 20% of the value of a share of McDonald’s.

The company’s annual dividend of $2.08 (again split into quarterly payments) adds up to a yield of roughly 5.4%, and its price has increased by roughly 25% in the last year. With such a strong reputation for increasing payouts, AT&T is the perfect way to begin investing in dividend stocks.

In 2019, AT&T started expanding into streaming by purchasing HBO Max, a premium service that costs $15 per month. This is just one example of the company’s forward-thinking, adaptive attitude—it’s likely to continue providing returns throughout the 2020s.

Starbucks

Starbucks is another massive corporation with an incredible degree of stability, allowing it to pay out significant dividends to shareholders. In fact, despite the unpredictable conditions surrounding the stock market in general (and coffee shops in particular), Starbucks actually increased its dividend payouts by 10 percent around the end of September.

Starting from the dividends that will be paid out on November 27th, Starbucks shareholders will receive a quarterly dividend of 45 cents per share. That works out to $1.80 per share, slightly lower than the annual dividend at AT&T and just under half of the annual McDonald’s dividend.

At a share price of $88.45 as of closing on Wednesday, October 7th, Starbucks is currently offering an annual dividend percentage of more than 2 percent, which is lower than AT&T’s dividend yield but significantly higher than that of McDonald’s. Furthermore, Starbucks stock recovered quickly following the crash at the beginning of the pandemic, and it has experienced relatively consistent growth since the end of June.

Dividends are a reliable way to earn income from stocks if you’re concerned about market conditions during the pandemic and recession, and Starbucks is also a fairly safe investment under the circumstances. Unlike local coffee houses and even smaller international brands, Starbucks has the cash reserves and brand appeal to come out of the pandemic without suffering too much damage.

Coca Cola

Coca Cola has been known for reliably strong dividend payments for a long period of time, and they’ve managed to increase the dividend every year for 58 years. For 2020, the quarterly payment was increased from 40 cents to 41 cents, which represents a jump of 2.5 percent.

The share price is just under $50 at $49.56, leading to an annual dividend yield of more than 3 percent. In other words, you’ll get an annual return on investment of 3 percent even if the stock price remains at its current level for the next 12 months.

Additionally, Coca Cola has one of the best track records of any stock when it comes to increasing dividends, so you won’t have to worry about dividends being canceled due to poor market conditions. Like Starbucks, some of that stability comes from the fact that Coca Cola is the largest soft drink company in the United States and has significant exposure to foreign markets.

Pepsi

OK maybe you don’t like Coke, and that’s fine because Pepsi actually provides a pretty similar dividend in terms of yield. Pepsi’s share price is actually a lot higher than Coca Cola at $137.01, and the dividend is also larger at a dollar and 0.225 cents per share per quarter.

So if you extrapolate that to a full year it works out to $4.09, which again is right around three percent of the share price. And three percent is a pretty common number for inflation, something like two to three percent in most years, so if you’re getting three percent in dividends then that should be enough to at least maintain your value.

Pepsi had a pretty similar progression to both Starbucks and Coca Cola over the course of the year, and obviously a lot of companies have been in comparable situations. That said, Pepsi has recovered much more completely than Coca Cola, which could be a sign of better things to come.

The current price is only around $10 lower than its peak in mid-February, while Coca Cola has also dropped by roughly $10 from a much smaller peak. So in relative terms Pepsi has lost around 7 percent of its value while Coca Cola has lost more like 17 percent. Of course past performance doesn’t necessarily correspond to future gains, but Pepsi’s quick and near-complete recovery is still a good sign for new investors.

Chevron

Continuing the trend of larger companies that can weather the storm of COVID-19, Chevron offers a strong dividend yield and outstanding stability. The company’s board voted to increase quarterly dividends from $1.19 to $1.29, a bump of almost 10 percent compared to 2019.

Chevron is trading at $73.78 as of the time of writing, with a notable decrease starting in mid-August after a post-pandemic peak set in the first half of June. Its value has gone down by roughly 40 percent from a trading price of over $120 at the beginning of 2020. Whether it will return to normal prices or continue to fall remains to be seen.

At $1.29 per quarter or $6.16 per year, Chevron is currently offering a dividend yield of nearly 10 percent. This makes it one of the best-paying dividend stocks on this list on a percentage basis. The dividend has only increased since it was a payout of $1 per quarter in 2013, so you should be able to depend on Chevron for consistent dividends regardless of market conditions. That said, you should keep an eye on its recovery given its inconsistent performance throughout 2020.

3M

Similar to Coca Cola, 3M is a massive enterprise with one of the best dividend histories on the market. Its streak of increasing dividends is even longer than that of Coca Cola at an incredible 61 years—in other words, your dividend would have gone up every single year if you invested in 3M in 1959.

Each of the dividends paid out so far in 2020 have been $1.47 each, with one paid on March 12th, June 12th, and September 12th. Given the company’s track record, we expect that number to stay constant for the last quarter of 2020 and go even higher in 2021. 3M is currently trading at $166.49, giving it a dividend yield of about 3.5 percent.

The brand’s stock history for 2020 has been roughly in line with the other companies on this list, suffering a deep decline from late January to mid-March. That said, it went on to have a relatively quick recovery, although it’s still close to 10 percent down from its value at the beginning of the year.

3M’s price was actually far higher in 2018, with a slow decline since then that was only punctuated by the coronavirus pandemic. All things considered, it’s an excellent stock to consider investing in if you’re looking for reliable stocks with a history of providing robust dividends.

Texas Instruments

Texas Instruments is probably most well-known for its calculators, but it also works on a wide range of other technology products. If you look at the brand’s dividend history you’ll see that its payouts have actually increased dramatically over the last decade, going from 17 cents per share in 2011 to the current quarterly dividend of $1.02 on October 29th. Even that is a significant jump from the 90 cent dividends that were paid out in the second and third quarters.

$1.02 per quarter works out to $4.08 per share per year, and Texas Instruments currently trades at $146.75. $4.04 per share at $146.75 each leads to a dividend share of roughly 2.7 percent without taking into account any gains in value.

Furthermore, Texas Instruments has experienced a relatively painless recovery since its initial drop around the end of February. It traded for as high as $135 before the pandemic, then fell all the way to $93 in March, a decrease of more than one-third from its 2020 peak. It started to show the first signs of recovery in April.

Texas Instruments finally reached a new 2020 high in July, already making up all the losses it experienced during the second quarter. It has gained more than 10 percent from the beginning of 2020, with relatively consistent growth since mid-June. It’s another excellent dividend stock that also has the potential to pay off in terms of growth.