It was a strong and eventful first quarter for overall stock market. S&P 500, which has been tagged as a leading stock index globally, saw an increase of ~10.2% over first 3 months of 2024. As a result of this, index achieved best first-quarter performance over previous 5 years.
Impressive performance of global indexes has prompted investors to purchase some of the best S&P 500 dividend stocks. This is because they should provide stability and dividend income.
For the month of March, investors gave ~$50 billion to the funds targeting buying stocks in the US, per EPFR Global Data. However, investors should know that bigger companies are the main reason behind this stock market rally. Narrowing it down, stocks which are attentive to ongoing artificial intelligence wave are ones contributing to such increase.
‘Magnificent Seven’ made up for ~40% of stock market’s overall gains over first 3 months, as per data released by S&P Dow Jones Indices. Meta’s strong returns of more than ~40% during the period were supported by its announcement of its first-ever dividend.
Dividend stocks and their increasing dominance
Dividends continue to play an important role as far as investment community is concerned, and this has forced investors to focus on best S&P 500 dividend stocks. Approximately 80% of the companies in S&P 500 tend to pay dividends to their shareholders.
That being said, consistent and regular rise in payouts remains a challenging feat. To be precise, only ~13% of the companies present in index are included in S&P 500 Dividend Aristocrats Index. This is elite group tracking performance of companies which increase dividends for a minimum of 25 consecutive years.
Dividend growth stocks remain on investors’ radar as a result of strong performance over past couple years, primarily when the interest rates are high.
S&P 500 High Dividend Growth Index posted annualized return of ~11.94% between 2010 to 2022, as per report by S&P Dow Jones Indices. During this period, index increased its dividend at annual average rate of ~13.8%, surpassing US long-term inflation rate.
With this in mind, let us now have a look at some of the best S&P 500 dividend stocks which investors are buying.
1. The Goldman Sachs Group, Inc.
The Goldman Sachs Group, Inc. is an American investment banking company, offering related services to the individuals, businesses, and financial institutions.
It was committed to its shareholder obligation in 1Q24 as it returned ~$929 million to the investors with the help of dividends. It gave a quarterly dividend of $2.75 per share and its dividend yield came at ~2.48%, as on May 7.
It has posted net revenues of $14.21 billion as well as net earnings of $4.13 billion for 1Q ended March 31, 2024. The company’s global banking & markets saw quarterly net revenues of $9.73 billion. This stemmed from strong performances in Investment banking fees, Fixed Income, Currency and Commodities and Equities.
Assets under supervision went up by $36 billion during the quarter to touch $2.85 trillion, with book value per share rising 2.4% to $321.10.
Net revenues from Asset & Wealth Management business came at $3.79 billion for 1Q24, which exhibits a rise of 18% in comparison to 1Q23.
2. Amgen Inc.
Amgen Inc. is the multinational biotech company which has expertise in manufacturing innovative therapies.
On March 6, it announced quarterly dividend of $2.25 per share. This was in line with previous dividend. Overall, the company continues to increase its dividends for previous 11 consecutive years. Thus, this company qualifies to be in our list of best S&P 500 dividend stocks which investors are buying.
It has dividend yield of ~3.01% as of May 7.
For 1Q, its total revenues went up by ~22% to $7.4 billion against 1Q23. Product sales of the company increased by 22% due to 25% volume growth. It generated $0.5 billion of FCF for 1Q24 against $0.7 billion in 1Q23.
3. The Home Depot, Inc.
It is a Georgia-based home improvement company, selling related tools and products to its consumers. Cash position of the company was strong in FY23 as it saw more than $21 billion in operating cash flow. The company returned $8.3 billion to its shareholders in the form of dividends.
The company has been increasing its dividends consistently for previous 14 years. Apart from this, it has never missed a dividend over the previous 148 quarters.
As of now, it pays quarterly dividend of $2.25 per share. As at 7th May, its dividend yield came at ~2.63%.