There are reasons for that. Technology stocks are still leading the market, and although names like Meta Platforms Inc. (NASDAQ: META) and Alphabet Inc. (NASDAQ: GOOGL) joined the rank of dividend payers, the tech sector is still underrepresented in terms of dividends. You should also consider that traditionally strong dividend sectors, such as energy and consumer staples, have continued to be market laggards.
However, whether dividend stocks are one part or the entirety of your investment plan, you know that dividend investing is a long game. And when you pick companies that have a proven track record of increasing their dividends, you'll benefit from the compounding effect and grow your total return over time.
In this special presentation, we analyze seven dividend stocks to consider buying at the end of 2024, backed by strong potential for dividend increases in the next two quarters. That means by summer 2025, you'll already be seeing larger dividend payouts on your investments.
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- Costco
- Thermo Fisher Scientific
- Applied Materials
- Home Depot
- United Parcel Service
- Sherwin-Williams
- Marriott International
#1 - Costco (NASDAQ:COST)
Costco Wholesale Corp. (NASDAQ: COST) stock is up more than 42% in 2024, outpacing the broader market. The company delivered its first-quarter earnings for the fiscal year 2025 and posted a beat on the top and bottom lines.
Those beats come in the quarter after the company announced the first increase to its membership fees in seven years. This is further confirmation of the company’s business model, which continues to show that consumers are resilient in the face of sticky food inflation.
As part of that report, Costco announced a special dividend payment to investors. And, with 21 consecutive years of dividend increases, investors ca expect to hear the company will increase its dividend in January 2025.
This is an example of looking past the 0.49% yield and noting that the annual payout per share is $4.64. Plus, Costco’s dividend payout ratio is around 27.25%, and its annualized three-year dividend growth has been 12.92%.
About Costco Wholesale
Costco Wholesale Corporation, together with its subsidiaries, engages in the operation of membership warehouses in the United States, Puerto Rico, Canada, Mexico, Japan, the United Kingdom, Korea, Australia, Taiwan, China, Spain, France, Iceland, New Zealand, and Sweden. The company offers branded and private-label products in a range of merchandise categories.
Read More - Current Price
- $958.82
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 19 Buy Ratings, 8 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $1,011.74 (5.5% Upside)
#2 - Thermo Fisher Scientific (NYSE:TMO)
Thermo Fisher Scientific Inc. (NYSE: TMO) is an American supplier of scientific instrumentation, reagents, consumables, and software services for the medical industry. This is a favorable position for the company to be in with the incoming Trump administration’s America First agenda, which includes less regulation.
TMO stock is down approximately 1.2% in 2024. Much of that is due to the company’s revenue from China, which has been flat over the last year. However, TMO stock has been a savvy long-term investment among medical stocks, with a 62.33% total return in the last five years. And when you zoom out over a longer period, the total return is even more impressive.
With a stock price of over $550 per share as of December 23, 2024, investors should look past the yield of just 0.30%, which is below the average yield for medical stocks. However, the company has increased its dividend for seven consecutive years, the annualized three-year growth rate is 16.7%, and it has a very sustainable payout ratio of around 9.7%.
About Thermo Fisher Scientific
Thermo Fisher Scientific Inc provides life sciences solutions, analytical instruments, specialty diagnostics, and laboratory products and biopharma services in the North America, Europe, Asia-Pacific, and internationally. The company's Life Sciences Solutions segment offers reagents, instruments, and consumables for biological and medical research, discovery, and production of drugs and vaccines, as well as diagnosis of infections and diseases; and solutions include biosciences, genetic sciences, and bio production to pharmaceutical, biotechnology, agricultural, clinical, healthcare, academic, and government markets.
Read More - Current Price
- $528.98
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 17 Buy Ratings, 5 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $650.05 (22.9% Upside)
#3 - Applied Materials (NASDAQ:AMAT)
You might not expect to see a semiconductor on a list of dividend stocks to buy. But Applied Materials Inc. (NASDAQ: AMAT) is one to consider. Applied Materials manufactures Dynamic Random-Access Memory (DRAM). The company’s revenue and earnings have been fine. However, many analysts are expecting DRAM growth to slow next year.
That seems like an unlikely bet, as more demanding AI applications will require even more memory. And Applied Materials is well-positioned to meet that demand.
AMAT stock is flat in 2024, but over the last five years, it’s delivered an impressive 163.59% total return to investors. With a dividend yield of just 0.96%, much of that growth is due to stock price appreciation.
Nevertheless, AMAT has increased its dividend for seven consecutive years and will most likely make it eight straight years in the first quarter of 2025. The company has delivered an impressive annualized three-year growth rate of 11.93% and has a sustainable payout ratio of around 18.5%.
About Applied Materials
Applied Materials, Inc engages in the provision of manufacturing equipment, services, and software to the semiconductor, display, and related industries. The company operates through three segments: Semiconductor Systems, Applied Global Services, and Display and Adjacent Markets. The Semiconductor Systems segment develops, manufactures, and sells various manufacturing equipment that is used to fabricate semiconductor chips or integrated circuits.
Read More - Current Price
- $168.37
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 15 Buy Ratings, 6 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $220.29 (30.8% Upside)
#4 - Home Depot (NYSE:HD)
The importance of the housing market has been on display in 2024. The company’s revenue and earnings were lower year-over-year in the first two quarters but rebounded in the third and fourth quarters as housing activity picked up with lower interest rates. That performance has pushed HD stock up 13.2% for the year. It also all but ensures that Home Depot will make it 16 consecutive years of dividend increases, and most likely that increase will occur when it reports earnings in February 2025.
The company has a dividend yield of 2.3% and a robust annual per-share payout of $9. The company also has delivered an annualized three-year dividend growth of 11.6%. The trailing 12-month payout ratio of 61% is a little high, but when measured in terms of the company’s cash flow, it’s a more appealing 52%.
About Home Depot
The Home Depot, Inc operates as a home improvement retailer in the United States and internationally. It sells various building materials, home improvement products, lawn and garden products, and décor products, as well as facilities maintenance, repair, and operations products. The company also offers installation services for flooring, water heaters, bath, garage doors, cabinets, cabinet makeovers, countertops, sheds, furnaces and central air systems, and windows.
Read More - Current Price
- $396.14
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 23 Buy Ratings, 6 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $426.00 (7.5% Upside)
#5 - United Parcel Service (NYSE:UPS)
United Parcel Service Inc. (NYSE: UPS) has been a tough hold, with a negative total return of 30% in the past three years due to a package shortfall and higher labor costs from the renegotiated contract in 2023, among other factors.
Another unattractive feature could be an unsustainable payout ratio of around 80%. However, even if you believe the worst isn’t over for UPS stock, dividend investors should be encouraged by the company’s commitment to maintaining and raising its dividend.
One reason for that is the belief among many analysts that, with UPS a year removed from the contentious labor negotiations, it will have easier revenue and earnings expectations. And that will come at a time when the package shortfall is expected to turn into a surplus that should drive growth on the top and bottom lines and make the dividend even more attractive.
About United Parcel Service
United Parcel Service, Inc, a package delivery company, provides transportation and delivery, distribution, contract logistics, ocean freight, airfreight, customs brokerage, and insurance services. It operates through two segments, U.S. Domestic Package and International Package. The U.S. Domestic Package segment offers time-definite delivery of express letters, documents, small packages, and palletized freight through air and ground services in the United States.
Read More - Current Price
- $126.26
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 14 Buy Ratings, 7 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $151.29 (19.8% Upside)
#6 - Sherwin-Williams (NYSE:SHW)
The Sherwin-Williams Company (NYSE: SHW) stock is down about 9% since the company missed on revenue and earnings in its third quarter earnings report. The stock is under pressure even though the numbers were higher on a year-over-year basis.
But much of the stock price loss has come with the broader market selloff in December. It's also important to note that prior to the company’s earnings report, SHW stock was trading at a 52-week and all-time high of around $400 per share.
Analysts expect Sherwin-Williams stock to make another run at that $400 resistance level in 2025. Not only will that be good for stock price appreciation, but it will come with a likely dividend increase in the coming quarter. That will make it 48 consecutive years of increases for the company. And the company’s payout ratio of around 28% is sustainable for the long term.
About Sherwin-Williams
The Sherwin-Williams Company engages in the development, manufacture, distribution, and sale of paints, coating, and related products to professional, industrial, commercial, and retail customers. It operates through three segments: Paint Stores Group, Consumer Brands Group, and Performance Coatings Group.
Read More - Current Price
- $346.52
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 12 Buy Ratings, 6 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $397.63 (14.7% Upside)
#7 - Marriott International (NASDAQ:MAR)
Marriott International (NASDAQ: MAR) has been a big winner as travel stocks have done exceptionally well since the travel boom that started in 2021. That’s evident in the MAR stock price, which is up 25% in 2024 as of December 23.
Even though it doesn’t appear the travel boom will go bust anytime soon, MAR stock is trading near its 52-week high. That means it’s not only possible but likely that the stock will have a short-term pullback.
Nevertheless, Marriott continues to look attractive as both a growth and a dividend stock. The company’s latest earnings report was mixed, but its revenue and earnings were higher on a year-over-year basis.
That means that the company is likely to continue aggressively growing the dividend it suspended at the outset of the pandemic in 2020. In the last three years, Marriott has delivered an average annual return of over 59%. And the company achieved this with a sustainable payout ratio of around 28%.
About Marriott International
Marriott International, Inc engages in operating, franchising, and licensing hotel, residential, timeshare, and other lodging properties worldwide. It operates its properties under the JW Marriott, The Ritz-Carlton, The Luxury Collection, W Hotels, St. Regis, EDITION, Bvlgari, Marriott Hotels, Sheraton, Westin, Autograph Collection, Renaissance Hotels, Le Méridien, Delta Hotels by Marriott, Tribute Portfolio, Gaylord Hotels, Design Hotels, Marriott Executive Apartments, Apartments by Marriott Bonvoy, Courtyard by Marriott, Fairfield by Marriott, Residence Inn by Marriott, SpringHill Suites by Marriott, Four Points by Sheraton, TownePlace Suites by Marriott, Aloft Hotels, AC Hotels by Marriott, Moxy Hotels, Element Hotels, Protea Hotels by Marriott, City Express by Marriott, and St.
Read More - Current Price
- $286.39
- Consensus Rating
- Hold
- Ratings Breakdown
- 6 Buy Ratings, 14 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $266.25 (7.0% Downside)
With the strong growth of many artificial intelligence stocks, dividend investing may seem too conservative for many investors. But solid dividend payers can keep you from experiencing FOMO while providing assurance that you're investing in companies that deliver strong revenue and earnings. This is particularly true for companies that raise their dividend annually, like the ones in this report.
But how do you find great dividend stocks? To help come up with this list, we used the MarketBeat dividend screener. This allows investors to filter their selections based on various factors such as payout ratio, three-year dividend growth percentage, years of dividend growth, annual dividend yield, and more.
However, for this list, we focused on two specific areas. First, we were looking for companies that averaged annual dividend growth of at least 10% over the past three years. Second, we looked at companies with a dividend payout ratio of 60% or less, which suggests the dividend is sustainable.
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