Investing in dividend stocks for passive income has long been a desired strategy for income-focused investors. These companies often have decades of experience returning cash to shareholders by distributing a portion of their profits.
They can hail from a wide range of sectors including financials, consumer discretionary, and information technology. When analyzing the stocks, investors should prioritize companies with stable cash flows, earnings and a relatively low payout ratio.
Additionally, more advanced investors can look towards the firm’s price to book ratio. For investors looking to add stability to their investment portfolios, these 3 dividend-paying giants stand out as stellar choices.
Now, here are the 3 best dividend stocks for passive income in 2024.
JPMorgan Chase (JPM)
JPMorgan Chase (NYSE:JPM), a global banking giant is a great first pick for reliable dividend stocks to buy. The company has averaged an 11% CAGR in its dividend in the last decade, making it a cornerstone for any dividend-focused investment portfolio.
When it comes to selecting dividend stocks, careful consideration of the management team is essential. Investors should also evaluate the CEO, which can make or break the company.
Additionally, efficient capital allocation and prudent risk management skills are crucial to ensure it can meet its dividend commitments. CEO Jamie Dimon has embodied this philosophy since he took leadership of the company prior to the great recession.
Moreover, after the regional banking crisis in 2023, JPMorgan remained in tip top financial shape and strengthened its liquidity. The company benefited significantly from higher interest rates as well as purchased a portion of First Republic’s (OTCMKTS: FRCB) consumer loan assets for pennies on the dollar.
This bolstered its net interest income to record highs in the 2023 fiscal year. With a low payout ratio of approximately 28%, JPM stock is well positioned to continue growing its dividend for years to come.
Coca Cola (KO)
Coca Cola (NYSE:KO) is a standout choice for investors looking for reliable dividend stocks in 2024. With a 62 year track record of dividend increases, Coca Cola’s dependability will give investors peace of mind during bull and bear markets.
Coca Cola has a long history of returning value to its shareholders. Its impressive dividend history, robust product portfolio and brand recognition is second to none.
The company’s beverage products are sold in 200 countries and territories across the globe, and employ more than 700,000 people. In addition, its extensive distribution network and diverse product offerings allows it to generate substantial cash flows to ensure financial stability.
After delivering double digit earnings growth in the 2023 fiscal year, Coca Cola’s financial performance is off to a slow start.
Despite its second quarter results being underwhelming, the stock surged to a record high. Investors are optimistic about its operating income growth and raised guidance for FY24.
If you’re looking for a company with income and capital appreciation potential, KO stock should be at the top of your list.
Automatic Data Processing (ADP)
Automatic Data Processing (NASDAQ:ADP) is the final company among dividend stocks for passive income in 2024. This technology driven business is truly spectacular and its dividend history is even more impressive.
Automatic Data Processing specializes in providing its customers with human capital management solutions. This sector includes a wide range of services offering from payroll to talent management and benefits administration.
The company has been operating in the space since 1949, and now boasts more than one million clients globally. What makes ADP unique is its high customer retention rate and essential service offerings in which customers pay on a recurring basis.
Unless its clients are on the brink of bankruptcy, ADP’s money wheel will keep on spinning.
Additionally, November of 2023 marked the company’s 49th consecutive year of dividend increases. The 12% increase brought its quarterly dividend to $1.40 per share, making it just one year shy of the ‘’dividend king’’ status.
ADP’s continued strong financial performance is a testament to its commitment to its shareholders.
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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.