Dividend stocks offer investors a great way to generate passive income on top of potential share price appreciation. Analysts continually seek out dividend-paying companies that offer attractive yields and demonstrate resilience and growth potential.
For investors prioritizing a steady income stream, dividend stocks can be a cornerstone of a balanced portfolio. However, it is important to note that the selection process of dividend stocks can be extremely tricky. Investors should prioritize dividend stocks with steady revenue growth, cash flows and strong balance sheets to mitigate potential risks.
Let’s unpack the top dividend stocks analysts can’t stop raving about.
NextEra Energy (NEE)
NextEra Energy (NYSE:NEE) has solidified its position in the renewable energy sector. As one of the largest energy companies in the world, NextEra is rapidly expanding its global footprint and has an exemplary track record of returning cash to shareholders.
NextEra Energy is a standout dividend stock that consistently garners praise from analysts. Firstly, the company is characterized as a dividend aristocrat with a history of uninterrupted dividend payments spanning decades. Moreover, NextEra has averaged a 10% CAGR in its dividend over the last decade alone. This becomes paramount when selecting dividend stocks, showcasing the health of the underlying business.
The company has been quietly expanding its renewable energy footprint in the last year. In the back half of 2023, NEE added 3,245 megawatts of new renewables and storage capacity to its portfolio. Additionally, they said 9,000 megawatts of capacity while maintaining a 10% hike to its dividend in 2024.
American Express (AXP)
American Express (NYSE:AXP) is a global financial services powerhouse with a well-earned reputation for stability and customer loyalty. The company’s low payout ratio, steady revenue growth and profitability, and strong cash flows have rewarded its shareholders handsomely.
American Express has arguably been one of the biggest sleeper dividend growth stocks. Wall Street has largely overlooked it but has also been a key pillar to Warren Buffett’s success in Berkshire Hathaway. Furthermore, their focus on high-quality customers and diversified revenue streams has been a huge reason for their growth in the last decade. In their latest Q1 FY24 results, revenue increased 11% YOY to $15.8 billion, with EPS up an astonishing 39% to $3.33 per share.
The company continues to see strong demand for its products in the Gen Z and Millennial segment, accounting for over 60% of new customer accounts. Moreover, they raised their quarterly dividend by 17% to $0.70 per share last month. This makes AXP stock one of the best dividends in 2024 and beyond.
Automatic Data Processing (ADP)
Automatic Data Processing (NASDAQ:ADP) is among the top dividend stocks that analysts love. The company has an extraordinary track record of revenue, earnings and dividend growth.
There are very few businesses that demonstrate the resilience of Automatic Data Processing. ADP’s profitability and steady cash flow are beloved by analysts, fueling the company’s ability to pay reliable and increasing dividends. With an established market position and dependable business model, ADP is considered a haven for dividend growth investors. In FY23, ADP’s net income increased by 16% YOY to $3.4 billion, with adjusted EBITDA margin up 130 basis points to 24.8%.
Moreover, FCF swelled 35% to $4 billion, signaling the strength in operational efficiencies. The company also increased its quarterly dividend by 12% in Q4 2023 to a record $1.40 per share. This marked the company’s 49th consecutive dividend increase, and management has guided 10-12% EPS growth in 2024.
On the date of publication, Terel Miles did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.