Dividend stocks can be incredible investments. They've historically outperformed the market over the long term. The best returns have come from companies that routinely increase their dividends.
Dividend growers also tend to deliver better returns in flat to slightly higher markets. That could be what's in store in 2024 following the market's massive rally in 2023. Four exceptional dividend stocks are AbbVie (ABBV -4.58%), Brookfield Renewable (BEPC 0.09%) (BEP 0.19%), Realty Income (O -0.17%), and T. Rowe Price (TROW 4.77%). They all offer dividends yielding 4% or more (more than double the S&P 500's 1.5% yield) that should continue rising in 2024.
1. A healthy dividend
AbbVie's dividend yield is right around 4%. The healthcare company has an excellent track record of growing that payout. It has increased its dividend every year since its inception in 2023, including already unveiling plans to lift it by another 4.7% for 2024. With that increase, AbbVie has boosted its payout by 285% since its formation.
The therapeutics and aesthetics company should be able to continue increasing its dividend in the future. While sales of its blockbuster Humira are declining due to generic competition, it's delivering accelerated growth across the rest of its portfolio. AbbVie is also investing heavily in research & development to continue finding new therapies to drive future growth. Meanwhile, it's using its financial strength to make acquisitions to bolster its growth prospects. It recently agreed to buy ImmunoGen for $10.1 billion and Cerevel Therapeutics for $8.7 billion. Those acquisitions will significantly enhance its drug pipeline, setting the stage for future dividend growth.
2. A powerful dividend
Brookfield Renewable currently offers a 4.7%-yielding dividend. The renewable energy company has grown its payout by at least 5% annually for the past dozen years. That should continue, with Brookfield targeting 5% to 9% annual dividend growth over the long term.
The company has plenty of power to deliver growth toward the upper end of that range. It currently sees a trio of organic drivers (inflation-linked rate increases, margin expansion, and development projects) fueling 7% to 12% annual growth in its funds from operations (FFO) per share through 2028.
Meanwhile, the company sees M&A activities potentially adding over 9% to its FFO per share each year. Brookfield recently closed three deals and has a couple more in the pipeline. Those acquisitions will add significant incremental FFO, positioning the company to deliver 10%+ FFO per share growth in 2023 and 2024. That sets the stage for it to give its investors another healthy raise in 2024.
3. Locking in growth
Realty Income's dividend currently yields 5.3%. The real estate investment trust (REIT) has a phenomenal record of increasing its payout. It has given investors a raise 123 times since its public market listing in 1994, including five times in the past year.
That growth should continue. Realty Income has already agreed to acquire fellow REIT Spirit Realty in a $9.3 billion deal. That acquisition should increase its adjusted FFO by more than 2.5% per share in 2024. That's over half its growth target of 4% to 5% per year. Meanwhile, after combining with Spirit, Realty Income will generate enough retained cash after paying dividends (about $800 million annually) to fund the acquisitions to push it into that range without raising any equity capital. It should have no shortage of investment opportunities, especially since it has continued to expand its portfolio into new areas, including adding data centers, credit investments, and consumer-centric medical properties over the past year.
4. The steady upward climb should continue
T. Rowe Price currently offers a 4.5%-yielding dividend. The mutual fund manager has an exceptional track record of increasing its payout. It raised it by another 1.7% in 2023, its 37th straight year of dividend growth.
While the company's assets under management (AUM) took a hit in 2022 due to the slumping stock market, they resumed their upward trend in 2023. T. Rowe Price ended November at nearly $1.4 trillion (up from less than $1.3 trillion at the end of 2022). AUM should continue climbing as stock and bond prices rise and more investors entrust T. Rowe Price with their money. The company also continues to launch new funds to help investors meet their financial needs, which will also help grow AUM. Rising AUM will help grow the asset manager's fee-related earnings and cash flow, enabling it to continue pushing its payout higher.
These high-yielding payouts should keep heading higher in 2024
AbbVie, Brookfield Renewable, Realty Income, and T. Rowe Price all pay dividends yielding more than 4%. Better yet, those high-yielding payouts should continue rising in the coming year. That sets these stocks up to produce attractive total returns, making them great ones to buy for income and upside in 2024.
