Since 1926, dividends have contributed approximately 32% of the total return for the S&P 500, while capital appreciations have contributed 68%. Therefore, sustainable dividend income and capital appreciation potential are essential for total return expectations. A study from Hartford Funds, in collaboration with Ned Davis Research, found that dividend stocks delivered an annualized return of 9.18% over the past half-century (1973-2023). Over the same timeline, this was more than double the annualized return for non-payers (3.95%).
24/7 Wall St. Key Points:
- 2024 will likely be the second straight year with huge double-digit gains.
- With a sea of change on the way when Donald Trump is elected, gains may taper next year.
- Now is an excellent time to do an end-of-the-year portfolio with a qualified financial advisor. Click here to learn how to find one. (sponsored)
We have covered the BofA Securities US 1 List of top stock picks for years, and investors who bought them have done exceptionally well. With the fourth quarter almost over and 2025 right around the corner, many investors are looking for safer ideas amid a sustained market rally. With major indices reaching all-time highs, we’ve identified five US 1 stocks that offer serious upside potential and pay substantial, reliable dividends.
The BofA Securities US 1 list is a collection of BofA Global Research analysts’ best investment ideas drawn from the firm’s universe of Buy-rated, U.S.-listed stocks, including American depository receipts (ADRs). The list is managed to provide superior long-term investment performance.
Why do we cover dividend stocks?
Dividend stocks provide investors with reliable streams of passive income. Passive income is characterized by its ability to generate revenue without requiring the earner’s continuous active effort, making it a desirable financial strategy for those seeking to diversify their income streams or achieve financial independence.
American Healthcare REIT
This real estate investment trust owns and operates a portfolio of healthcare-related properties.
With an aging population, this is an outstanding idea with a rich 3.65% dividend. American Healthcare REIT Inc. (NYSE: AHR) is a self-managed real estate investment trust (REIT) that acquires, owns, and operates a diversified portfolio of clinical healthcare real estate properties, focusing primarily on outpatient medical buildings, senior housing, skilled nursing facilities, and other healthcare-related facilities.
Its properties are in 36 states, the United Kingdom, and the Isle of Man.
The California-based real estate investment trust reported $47.7 million, or 36 cents per share, in funds from operations during the third quarter versus the average estimate of three analysts that cover the company for funds from operations of 32 cents per share. The company expects full-year funds from operations from $1.40 to $1.43 per share.
Cisco
Cisco provides networking hardware, software, telecommunications equipment, and other high-technology services and products.
This legacy technology giant is close to reaching a 52-week high and offers a solid 2.80% dividend. Cisco Systems Inc. (NASDAQ: CSCO | CSCO Price Prediction) designs, manufactures, and sells Internet Protocol-based networking and other products related to the communications and information technology industry in:
- The Americas
- Europe
- The Middle East
- Africa
- The Asia Pacific
- Japan
- China
The company also offers a switching portfolio that encompasses campus switching as well as:
- Data center switching
- Enterprise routing portfolio interconnects public and private wireline and mobile networks, delivering highly secure and reliable connectivity to campus, data center, and branch networks
- Wireless products include wireless access points and controllers
- Compute portfolio including the Cisco unified computing system, hyperflex, and software management capabilities, which combine computing, networking, and storage infrastructure management and virtualization
In addition, it provides Internet for future products consisting of:
- Routed optical networking
- 5G
- Silicon and optics solutions
- Collaboration products, such as meetings, collaboration devices, calling, contact centers, and communication platforms as a service
- End-to-end security product consists of network security, cloud security, security endpoints, unified threat management, and zero trust
- Optimized application experience products, including full-stack observability and network assurance
Further, the company offers its customers a range of service and support options, including technical support, advanced services, and advisory services. It serves businesses of various sizes, public institutions, governments, and service providers.
Mid-America Apartment Communities
Mid-America Apartment Communities is a publicly traded REIT based in Memphis, Tennessee.
With rents soaring, this is an ideal stock for growth and income investors, and it pays a hefty 3.75% dividend. Mid-America Apartment Communities Inc. (NYSE: MAA) is a REIT focused on delivering full-cycle and superior investment performance for shareholders through the ownership, management, acquisition, development, and redevelopment of quality apartment communities, primarily in the Southeast, Southwest, and Mid-Atlantic regions of the United States.
As of June 30, 2024, the company had an ownership interest in 103,614 apartment units, including communities currently in development, across 16 states and the District of Columbia.
The company posted very strong third-quarter results, as core funds from operations exceeded Wall Street expectations, driven by better-than-forecasted same-store net operating income. In addition, record low resident turnover and substantial collections contributed positively to the quarter’s performance.
Mid-America Apartment Communities also reported early positive trends in new lease pricing, suggesting that the worst pricing pressures from new supply may be behind them.
Sempra
Sempra is a North American public utility holding company based in San Diego.
Like the entire sector, this utility has run hard but still offers a solid 2.70% dividend. Sempra (NYSE: SRE) operates as an energy infrastructure company in the United States and internationally.
It operates through three segments:
- Sempra California
- Sempra Texas Utilities
- Sempra Infrastructure
The Sempra California segment provides San Diego County electric and natural gas services. As of December 31, 2023, it offered electric services to approximately 3.6 million people and natural gas services to approximately 3.3 million people, covering 4,100 square miles.
This segment owns and operates a natural gas distribution, transmission, and storage system that supplies natural gas. As of December 31, 2023, it serves a population of 21 million, covering 24,000 square miles.
The Sempra Texas Utilities segment engages in regulated electricity transmission and distribution. As of December 31, 2023, its transmission system included:
- 18,298 circuit miles of transmission lines
- 1,257 transmission and distribution substations
- Interconnection to 173 third-party generation facilities totaling 54,277 MW
- The distribution system included approximately 4.0 million points of delivery and consisted of 125,116 miles of overhead and underground lines.
The Sempra Infrastructure segment develops, builds, operates, and invests in energy infrastructure to help enable the energy transition in North American markets and worldwide.
Wells Fargo
Wells Fargo operates in 35 countries and serves over 70 million customers worldwide.
With a solid 2.90% dividend and many headline issues in the rearview mirror, this money-center giant makes sense now. Wells Fargo & Co. (NYSE: WFC) is a financial services company that provides diversified banking, investment, mortgage, and consumer and commercial finance products and services in the United States and internationally.
The company operates through four segments:
- Consumer Banking and Lending
- Commercial Banking
- Corporate and Investment Banking
- Wealth and Investment Management
The Consumer Banking and Lending segment offers diversified financial products and services for consumers and small businesses. These include checking and savings accounts, credit and debit cards, and home, auto, personal, and small business lending services.
The Commercial Banking segment provides financial solutions to private, family-owned, and certain public companies. Its products and services include banking and credit products across various industry sectors and municipalities, secured lending and lease products, and treasury management services.
The Corporate and Investment Banking segment offers a suite of capital markets, banking, and financial products and services, such as:
- Corporate banking
- Investment banking
- Treasury management
- Commercial real estate lending and servicing
- Equity and fixed-income solutions
- Sales, trading, and research capabilities services to corporate, commercial real estate, government, and institutional clients
The Wealth and Investment Management provides wealth management, brokerage, financial planning, lending, private banking, and trust and fiduciary products and services to affluent, high-net-worth, and ultra-high-net-worth clients.
It also operates through financial advisors in brokerage and wealth offices, consumer bank branches, independent offices, and digitally through WellsTrade and Intuitive Investor.
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