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 strong and the potential for more stock market turbulence in the fourth quarter, 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 made the cut for 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 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, looking for the five highest-yielding stocks in the venerable index, and as it turns out, they are all substantial value buys now.
3M
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This top company could jump with continued economic pick-up and pay a stellar 6.62% dividend. 3M Co. (NYSE: MMM) provides diversified technology services in the United States and internationally.
The company operates through four segments:
- Safety and Industrial
- Transportation and Electronics
- Health Care
- Consumer
The Safety and Industrial segment offers:
- Industrial abrasives and finishing for metalworking applications
- Auto body repair solutions; closure systems for personal hygiene products
- Masking and packaging materials
- Electrical products and materials for construction and maintenance
- Power distribution and electrical original equipment manufacturers
- Structural adhesives and tapes
- Respiratory, hearing, eye, and fall protection solutions
- Natural and color-coated mineral granules for shingles
The Transportation and Electronics segment provides:
- Ceramic solutions
- Attachment tapes
- Films, sound, and temperature management for vehicles
- Premium large-format graphic films for advertising and fleet signage
- Light management films and electronics assembly solutions
- Packaging and interconnection solutions
- Reflective signage for highway and vehicle safety
The Healthcare segment offers:
- Healthcare procedure coding and reimbursement software
- Skin, wound care, and infection prevention products and solutions
- Dentistry and orthodontic solutions; and filtration and purification systems
The Consumer segment provides consumer bandages, braces, supports, and consumer respirators; cleaning products for the home; retail abrasives, paint accessories, car care DIY products, picture hanging, and consumer air quality solutions; and stationery products.
Realty Income
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This is an ideal stock for growth and income investors that pays a 5.88% dividend. Realty Income Corp. (NYSE: O) is an S&P 500 company that provides stockholders with dependable monthly income.
The company is structured as a REIT, and its monthly dividends are supported by the cash flow from over 6,500 real estate properties owned under long-term lease agreements with commercial tenants.
The company has declared 637 consecutive common stock monthly dividends throughout its 54-year operating history and increased the dividend 121 times since Realty Income’s public listing in 1994.
Amcor
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This is a very off-the-radar idea, but it makes sense as they produce products that are always needed and in demand, plus pay shareholders a 5.53% dividend. Amcor PLC (NYSE: AMCR) produces and sells packaging products in:
- Europe,
- North America,
- Latin America,
- Africa, and
- Asia Pacific region
The company operates through two segments:
- Flexibles
- Rigid Packaging
The Flexibles segment provides flexible and film packaging products in food and beverage, medical and pharmaceutical, fresh produce, snack food, personal care, and other industries.
The Rigid Packaging segment offers rigid containers for a range of beverage and food products, including:
- Carbonated soft drinks, water, juices, sports drinks, milk-based beverages
- Spirits, and beer
- Sauces, dressings, spreads
- Personal care items
- Plastic caps for various applications.
The company sells its products primarily through its direct sales force.
Franklin Resources
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This company is a mutual fund powerhouse that pays a safe and secure 4.55% dividend. Franklin Resources Inc (NYSE: BEN) is among the most prominent global money managers.
The firm markets mutual funds and institutional separate accounts under Franklin, Templeton, and Mutual Series brands. At times, 50% of its sales are from outside the US, an advantage given a maturing US market.
Franklin Resources offers its products and services under the brands of:
- Franklin, Templeton
- Franklin Mutual Series
- Franklin Bissett
- Fiduciary Trust
- Darby
- Balanced Equity Management
- K2
- LibertyShares
- Edinburgh Partners
The continuing bull market has proven to be a solid tailwind for the company, and while withdrawals from baby boomers may be a concern, the path forward looks solid.
T. Rowe Price Group
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This is another top mutual fund company with tremendous assets under management and also pays a 4.55% dividend. T. Rowe Price Group Inc. (NASDAQ: TROW) is a publicly owned investment manager.
The firm provides services to:
- individuals,
- institutional investors,
- retirement plans,
- financial intermediaries, and
- institutions.
It launches and manages equity and fixed-income mutual funds.
The firm invests in public equity and fixed-income markets across the globe.
It employs fundamental and quantitative analysis with a bottom-up approach. and utilizes in-house and external research to make its investments and also invests in late-stage venture capital transactions and usually invests between $3 million and $5 million.
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