Investing

5 Dividend Aristocrats Primed for a Big 2024

Lee Jackson

Published: January 7, 2024 12:44 pm

Last Updated: January 12, 2024 7:31 am

Since 1926, dividends have accounted for almost a third of the total return of the S&P 500, so regardless of whether the market is up, down, or flat, regular dividend payments from high-quality blue chip stocks provide investors with a much better chance for success. With inflation staying frustratingly steady and the potential for more stock market turbulence in 2024, looking at quality stocks that pay dependable quarterly dividends makes sense.

Often, when income investors look for defensive companies paying big dividends, they are drawn to the Dividend Aristocrats, and with good reason. The 68 companies that cut the 2024 S&P 500 Dividend Aristocrats list have increased dividends (not just remained the same) for 25 years straight. But the requirements go even further, with the following attributes also mandatory for membership on the Dividend Aristocrats list:

• Companies must be worth at least $3 billion each quarterly rebalancing.
• Average daily volume of at least $5 million transactions for every trailing three-month period at every quarterly rebalancing date.
• Be a member of the S&P 500

We screened the 2024 Dividend Aristocrats and found five companies that could be primed for a huge year. All are rated Strong Buy on Wall Street.

AbbVie

Source: vzphotos / iStock Editorial via Getty Images

This stock is one of the top pharmaceutical stock picks across Wall Street and pays a dependable 3.86% dividend. AbbVie Inc. (NYSE: ABBV) is a global, research-based biopharmaceutical company formed in 2013 following its separation from Abbott Laboratories.

The company develops and markets drugs in areas such as:

• Immunology
• Virology
• Renal disease
• Dyslipidemia
• Neuroscience

One of the biggest concerns with AbbVie is what might eventually happen with the anti-inflammatory therapy Humira, which has some of the most significant sales for a drug ever recorded. The company was concerned, so in June of 2019, they announced they had agreed to pay $63 billion for rival drugmaker Allergan Plc, the latest merger in an industry where some of the biggest companies have been willing to pay a high price to resolve questions about their future growth. The purchase officially closed in May of 2020.

AbbVie may be nearing the limits of how far it can boost Humira’s price as cheaper competitors come to market. This is a problem Allergan is already grappling with as more alternatives to Botox emerge. Concerns over the potential for generics in both spaces have kept a lid on shares this year.

Atmos Energy

Source: lagereek / Getty Images

This utility stock struggled some last year but is perfect for conservative accounts looking for income and pays a 2.73% dividend. Atmos Energy Corp. (NYSE: ATO) and its subsidiaries engage in the regulated natural gas distribution and pipeline and storage businesses in the United States.

The company operates in two segments:

• Distribution and Pipeline
• Storage.

The Distribution segment is involved in the eight states’ regulated natural gas distribution and related sales operations. This segment distributes natural gas to approximately 3.3 million residential, commercial, public authority, and industrial customers. As of September 30, 2023, it owned 73,689 miles of underground distribution and transmission mains.

The Pipeline and Storage segment engages in the pipeline and storage operations. This segment transports natural gas for third parties, manages five underground storage reservoirs in Texas, and provides ancillary services customary to the pipeline industry, including parking arrangements, lending, and inventory sales. As of September 30, 2023, it owned 5,645 miles of gas transmission lines.

Essex Property Trust

Source: krblokhin / iStock Editorial via Getty Images

This stock is an outstanding way for investors to add an inflation-busting real estate position that pays a hefty 3.81% dividend. Essex Property Trust Inc. (NYSE: ESS), an S&P 500 company, is a fully integrated real estate investment trust (REIT) that acquires, develops, redevelops, and manages multifamily residential properties in selected West Coast markets.

Essex has ownership interests in 246 apartment communities comprising approximately 60,000 apartment homes, with six additional properties in various stages of active development.

Realty Income

Source: ChrisBoswell / iStock via Getty Images

This is another ideal stock for growth and income investors looking for a safer contrarian idea for the rest of 2024 that pays a whopping 5.33% dividend. Realty Income Corp. (NYSE: O) is an S&P 500 company that provides stockholders with dependable monthly income.

Realty Income is structured as a real estate investment trust or REIT, and its monthly dividends are supported by the cash flow from over 13,250 real estate properties primarily owned under long-term lease agreements with commercial tenants.

The company has declared 640 consecutive common stock monthly dividends throughout its 54-year operating history and increased the dividend 122 times since Realty Income’s public listing in 1994. It is a top real estate member of the S&P 500 Dividend Aristocrats index.

Target

Source: Sundry Photography / iStock Editorial via Getty Images

This company remains a solid and safe retail total return play despite some rough public relations issues last year and pays a solid 3.17% dividend. Target Corp. (NYSE: TGT) is a general merchandise retailer in the United States.

The company offers apparel for:

• Women
• Men
• Boys
• Girls
• Toddlers
• Infants and newborns

Target also provides:

• Dry grocery
• Dairy
• Frozen food
• Beverages
• Candy
• Snacks
• Deli
• Bakery
• Meat and food service
• Electronics, which includes video game hardware and software
• Toys
• Entertainment
• Sporting goods and luggage
• Furniture
• Lighting
• Storage
• kitchenware
• Small appliances,
• Home décor
• bed and bath
• Home improvement
• School/office supplies
• Greeting cards
• Party supplies
• Seasonal merchandise.

In addition, the company sells merchandise through periodic design and creative partnerships, shop-in-shop experience; and in-store amenities. Further, it sells its products through stores and digital channels, including Target.com.

Last year, the company suffered a “Bud Light” moment after disastrous merchandising of LBGTQ products that struck a nerve with many shoppers. While not as bad as the beer giants’ problem, it is still a huge negative that has seemingly subsided.