Cory MitchellCMT, Investment Expert Writer
Cory has been a professional trader for two decades. In addition to trading and investing he's widely published and coaches individual clients on the finer points of gaining an edge in the market.
Cory Mitchell
Cory MitchellCMT, Investment Expert Writer
Cory has been a professional trader for two decades. In addition to trading and investing he's widely published and coaches individual clients on the finer points of gaining an edge in the market.
CMT, Investment Expert Writer
Lisa DammeyerDeputy Editor, Investing & Retirement
With more than six years' experience an editor, investing specialist Lisa Dammeyer brings a keen eye for detail and fact-checking chops to everything she works on. Her work over the past four years at various financial publications has helped investors sort through the news and make informed decisions about their money.
Reviewed
Lisa Dammeyer
Lisa DammeyerDeputy Editor, Investing & Retirement
With more than six years' experience an editor, investing specialist Lisa Dammeyer brings a keen eye for detail and fact-checking chops to everything she works on. Her work over the past four years at various financial publications has helped investors sort through the news and make informed decisions about their money.
Deputy Editor, Investing & Retirement
Reviewed
Updated: Apr 1, 2024, 12:31pm
Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations.
When you reinvest dividend income, the magic of compounding can turbocharge your returns. Over the last century, dividend payments have accounted for about 40% of the total annualized return of the S&P 500. In addition, from 1973 to 2022, S&P 500 dividend stocks have delivered twice the return of stocks that have paid no dividends.
However, a good dividend cannot make up for an underperforming stock. Similarly, a high dividend yield could be a trap that covers up erratic payouts, poor performance or minimal growth prospects. To help you find reliable dividend investments, Forbes Advisor has identified 10 of the best dividend stocks available in the U.S. stock market today.
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Best Stocks
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Show Summary
- Best Dividend Stocks of April 2024
- Methodology
- What Are Dividend Stocks?
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Best Dividend Stocks of April 2024
| Company (ticker) | Dividend Yield |
|---|---|
CubeSmart (CUBE) | 4.5% |
Automatic Data Processing, Inc. (ADP) | 2.3% |
Broadcom Inc. (AVGO) | 1.6% |
Broadridge Financial Solutions, Inc. (BR) | 1.6% |
UnitedHealth Group Incorporated (UNH) | 1.5% |
Caterpillar, Inc. (CAT) | 1.4% |
Exponent, Inc. (EXPO) | 1.4% |
Elevane Health, Inc. (ELV) | 1.3% |
Selective Insurance Group, Inc. (SIGI) | 1.2% |
Republic Services, Inc. (RSG) | 1.1% |
CubeSmart (CUBE)
Dividend Yield
4.5%
5-Year Avg. Annualized Dividend Growth
9.8%
5-Year Avg. Annualized EPS Growth
15.6%
Editor's Take
CubeSmart owns and manages self-storage facilities throughout the United States. It has the highest dividend yield on the list, and it also boasts a “B” financial health rating from Morningstar, which indicates solid financial health.
CUBE stock has beaten the S&P 500 by 0.8 percentage points per year over the last decade on an annualized basis.
Over the next five years, analysts project 13.8% average yearly EPS growth. When earnings are increasing, a company can afford to maintain and continue raising the dividend if it wishes.
CubeSmart is a real estate investment trust, or REIT. It trades like a stock but is more like an exchange-traded fund that owns real estate holdings.
Automatic Data Processing, Inc. (ADP)
Dividend Yield
2.3%
5-Year Avg. Annualized Dividend Growth
12.1%
5-Year Avg. Annualized EPS Growth
17.2%
2.3%
12.1%
17.2%
Editor's Take
Automatic Data Processing provides human resources, payroll, insurance and retirement services to corporations.
It has a “B” financial rating from Morningstar, and its EPS has grown at 18.7% per year over the last five years. That’s the highest historical growth rate on the list.
Analysts expect 10.9% yearly EPS increases for the next five years. ADP stock has been a strong performer, beating the S&P 500 by three percentage points per year over the last decade on an annualized basis.
Broadcom Inc. (AVGO)
Dividend Yield
1.6%
5-Year Avg. Annualized Dividend Growth
14.7%
5-Year Avg. Annualized EPS Growth
12.4%
1.6%
14.7%
12.4%
Editor's Take
Broadcom is a semiconductor maker with a wide array of product and software offerings. The company has continuously expanded its product mix with multiple buyouts of other companies over the years.
It has a “B” financial health grade from Morningstar. The company has grown earnings more than 20% per year over the last five years, and analysts expect 13.2% yearly EPS growth going forward.
AVGO stock is the best-performing stock on the list over the last decade, beating the S&P 500 by 25.3 percentage points per year.
Broadridge Financial Solutions, Inc. (BR)
Dividend Yield
1.6%
5-Year Avg. Annualized Dividend Growth
10.5%
5-Year Avg. Annualized EPS Growth
6.3%
1.6%
10.5%
6.3%
Editor's Take
Broadridge Financial Solution was formerly part of ADP, mentioned earlier in the list, but it was spun off in 2007. BR focuses on investor communication and technology solutions for financial companies.
It has an “A” financial health rating, a steadily increasing dividend, and EPS growth that is expected to be slightly higher over the next five years at 11.8% compared to the last five years, which came in at 9.2%. This should allow for the dividend to continue increasing over time.
In addition to the steadily increasing dividend, the stock itself has performed well, outpacing the S&P 500 by 7.6 percentage points per year over the last decade.
Caterpillar, Inc. (CAT)
Dividend Yield
1.4%
5-Year Avg. Annualized Dividend Growth
8.6%
5-Year Avg. Annualized EPS Growth
13.3%
1.4%
8.6%
13.3%
Editor's Take
Caterpillar is an iconic brand known for its heavy equipment machinery.
It has solid all-round performance, including a “B” financial health rating, more than 14% historic EPS growth, and analysts project 12.7% average yearly EPS growth over the next five years.
CAT stock has been a steady long-term performer for those looking to beat the S&P 500. Over the last decade it has beaten the S&P 500 by 4.3 percentage points per year.
UnitedHealth Group Incorporated (UNH)
Dividend Yield
1.5%
5-Year Avg. Annualized Dividend Growth
15.9%
5-Year Avg. Annualized EPS Growth
13.1%
1.5%
15.9%
13.1%
Editor's Take
UnitedHealth Group provides health insurance primarily within the United States but also globally. UNH plans cover 152 million people.
UNH is an all-around solid stock. It has an “A” financial rating from Morningstar, and analysts expect 12.3% yearly EPS increases for the next five years.
It is the second-strongest performing stock on the list over the last decade, outperforming the S&P 500 by 9.4 percentage points per year on an annualized basis.
Exponent, Inc. (EXPO)
Dividend Yield
1.4%
5-Year Avg. Annualized Dividend Growth
11.8%
5-Year Avg. Annualized EPS Growth
7.2%
1.4%
11.8%
7.2%
Editor's Take
Exponent provides consulting on engineering and scientific projects, including biomedical, construction and food safety among other areas.
The company has an “A” financial health rating from MorningStar, and while its dividend yield is relatively low on this list, it has been growing the dividend amount at nearly 15% per year over the last five years. This is attractive for investors looking for cash flow to increase from year to year.
Analysts project average EPS growth of 15% per year over the next five years. However, they are projecting a slight decline in EPS for 2024.
The stock has outpaced the S&P 500 by 3.9 percentage points over the last decade on an annualized basis. This is even with EXPO stock struggling in 2022 and 2023.
Selective Insurance Group, Inc. (SIGI)
Dividend Yield
1.2%
5-Year Avg. Annualized Dividend Growth
11.8%
5-Year Avg. Annualized EPS Growth
9.5%
1.2%
11.8%
9.5%
Editor's Take
Selective Insurance Group is an insurance company focusing on the New York metropolitan area. SIGI stock has a “B” financial health rating, a steadily increasing dividend and solid long-term stock performance.
Analysts project 18.1% yearly EPS growth over the next five years, outpacing the historical growth rate. That allows for the dividend to potentially keep increasing, possibly at an even higher rate.
In terms of stock performance, it has beaten the S&P 500 by 5.3 percentage points per year over the last decade, making it an excellent choice for investors looking for increasing yearly cash flow and strong stock performance.
Elevance Health, Inc. (ELV)
Dividend Yield
1.3%
5-Year Avg. Annualized Dividend Growth
15.3%
5-Year Avg. Annualized EPS Growth
10.8%
1.3%
15.3%
10.8%
Editor's Take
Elevance Health is a health insurer providing individual plans as well as government- and employer-sponsored plans for approximately 100 million people.
It has a strong dividend growth rate and a “B” financial health rating from Morningstar. The stock has outperformed the S&P 500 by 7.2 percentage points per year over the last decade, annualized.
Analysts project steady EPS growth of 11.8% per year over the next half decade, which allows for the dividend to continue increasing if the company so chooses.
Republic Services, Inc. (RSG)
Dividend Yield
1.1%
5-Year Avg. Annualized Dividend Growth
7.4%
5-Year Avg. Annualized EPS Growth
11.6%
1.1%
7.4%
11.6%
Editor's Take
Republic Services operates waste management and recycling operations in the United States.
RSG has an “A” financial health rating. Its stock has performed admirably over the last decade, outpacing the S&P 500 by 8.4 percentage points per year over the last decade. It does have the smallest dividend yield and dividend growth rate on the list.
Analysts expect 8.9% yearly EPS growth over the next five years.
*All analysis and data are sourced from Trades That Swing, current as of April 1, 2024.
*At the time of publication, the author owned Automatic Data Processing (ADP) stock as part of a long-term investment portfolio.
Methodology
Our curated list of best dividend stocks is based on 10 key measures. To be included in the list, each stock must have demonstrated:
- Long-term dividend increases. The company must have increased its dividend for at least 10 years in a row.
- Decent annual dividend growth. The annual dividend amount has increased by at least 7% on average over the last five years.
- Sustained earnings growth. EPS has increased more than 8% per year, on average, over the last five years.
- No unprofitable years. Earnings must have remained positive for at least the last six years.
- Elevated current dividend yield. The current dividend yield must be at least 1%.
- Decent overall shareholder yield. Shareholder yield must be at least 1%. Shareholder yield includes dividends and share buybacks or issuances.
- Expected to grow. Analysts expect EPS to grow by at least 8% per year over the next five years.
- Outperforms the S&P 500. The stocks must have outperformed the by at least one percentage point per year, on average, over the last 10 years.
- Maximum drawdown. The maximum decline a stock price could have seen over the last 10 years is 50%. This helps exclude volatile stocks.
- Minimum stock data requirements. The stocks are listed on U.S. exchanges, have a price of at least $5 and average over half a million shares per day.
As of this writing, only 15 U.S. stocks met all the criteria. The top 10 in terms of dividend yield were selected for this list. Stocks with large earnings drops in the current year, or large expected EPS drops in their next fiscal year, were excluded.
Dividends are nice, but they aren’t the only factor to consider when buying a stock. Ideally, a dividend stock is financially strong and growing—continued stability and growth signals that the company’s dividend is sustainable over the long term and likely to be increased regularly.
An experienced financial analyst selected the stocks above, but they may not be right for your portfolio. Before you purchase any of these stocks, do plenty of research to ensure they align with your financial goals and risk tolerance.
What Are Dividend Stocks?
Dividend stocks make regular distributions of cash and stock to their shareholders. Income investors who want cash flow buy dividend stocks, although the best dividend stocks deliver good long-term appreciation in addition to income.
Here are the key concepts you need to understand when evaluating the best dividend stocks:
- Dividend payout ratio. This is a percentage figure that represents a stock’s annual dividend amount divided by its annual EPS. The payout ratio rises and falls as a company’s earnings and dividend rates change. A reasonably low payout ratio of 60% or less indicates that a company’s dividend is sustainable.
- Dividend yield. This is another percentage figure representing a stock’s annual dividend amount divided by its current price per share. Dividend yield gives investors an idea of how much a stock pays in annual dividends relative to its price.
- Sustained dividend increases. While the dividend payout ratio and dividend yield can inform your understanding of a stock’s current dividend, it’s also key to find stocks that have regularly increased their dividends over time.
- Steady growth in EPS and revenue. Dividends are only as healthy as a company’s underlying business. Look for dividend stocks that have delivered stable and growing earnings and revenue.
- Durable competitive advantages. There’s no question that companies which have maintained the best dividends for the longest periods have also secured durable competitive advantages. Whether this stems from technology, barriers to entry, high customer switching costs or a powerful brand, the best dividend stocks have it.
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