Best Dividend Stocks to Invest in November 2024 | Top Picks & Tips

What should investors look for when selecting the best dividend stocks?

FinanceProsper believes that the best dividend stocks are not simply those with the highest dividend yields. We recommend that investors look beyond a stock’s yield and instead choose stocks with long-term dividends, buying them when they are undervalued.

Table of Contents

• What Are Dividend Stocks?
• Top 10 Dividend Stocks by Forward Dividend Yield in November 2024
• Top High-Yield Dividend Stocks in November 2024
• 10 Best Stocks to Buy Without Dividend Yields Provided in November 2024
• Why Are These the Best Dividend Stocks?
• Investing for Income: Dividend Stocks vs. Dividend Funds
• How to Pick Dividend Stocks in November 2024
• What Should Investors Look For in Dividend Stocks?
• How to Invest in Dividend Stocks Successfully in November 2024
• What Are the Best Dividend Stocks?
• Conclusion

What are dividend stocks?

Dividend stocks are shares of companies that pay a portion of their earnings to shareholders regularly. Some stocks pay annual, semi-annual, or quarterly dividends, while others pay monthly dividends. The average dividend yield for some of the best dividend stocks is 12.69%.

The best dividend stocks are well-established companies that have increased payouts over time. Investors can also reinvest dividends if they do not require the income. Here’s more on dividends and how they work.

Dividend-paying companies are typically well-established, so dividend stocks may help to stabilize your portfolio. This is one of the reasons we included them on our list of low-risk investments.

If you’re looking to discover undervalued stocks with solid long-term potential, check out our recommendations for the best stocks to buy now.

Top 10 Dividend Stocks by Forward Dividend Yield in November 2024

Top High-Yield Dividend Stocks in November 2024

The following is a list of the 20 highest-dividend stocks headquartered in the United States, sorted by annual dividend yield. This list also considers the 5-year average dividend growth rate and dividend payout consistency, as well as whether the company is in the S&P 500 or Russell 2000.

• Ready Capital Corp (RC) – 13.43%
• Arbor Realty Trust Inc. (ABR) – 12.90%
• International Seaways Inc (INSW) – 12.75%
• Chicago Atlantic Real Estate Finance Inc (REFI) – 12.74%
• Buckle, Inc. (BKE) – 12.44%
• REV Group Inc (REVG) – 12.16%
• Pennymac Mortgage Investment Trust (PMT) – 11.97%
• Franklin BSP Realty Trust Inc. (FBRT) – 11.51%
• AG Mortgage Investment Trust Inc (MITT) – 11.14%
• Seven Hills Realty Trust (SEVN) – 10.95%
• Angel Oak Mortgage REIT Inc (AOMR) – 10.33%
• Evolution Petroleum Corporation (EPM) – 9.62%
• CVR Energy Inc (CVI) – 8.84%
• Insteel Industries, Inc. (IIIN) – 8.45%
• Artisan Partners Asset Management Inc (APAM) – 8.19%
• Altria Group Inc. (MO) – 8.05%
• Washington Trust Bancorp, Inc. (WASH) – 7.85%
• Ames National Corp. (ATLO) – 7.55%
• First Of Long Island Corp. (FLIC) – 7.26%
• Eagle Bancorp Inc (MD) (EGBN) – 7.25%

10 Best Stocks to Buy Without Dividend Yields Provided in November 2024

• Exxon Mobil (XOM)
• Verizon Communications (VZ)
• Altria Group (MO)
• Comcast (CMCSA)
• Medtronic (MDT)
• Starbucks (SBUX)
• Dow (DOW)
• General Mills (GIS)
• LyondellBasell Industries (LYB)
• WEC Energy Group (WEC)

Exxon Mobil (XOM)

• FinanceProsper Rating: 4 stars
• FinanceProsper Economic Moat Rating: Narrow
• FinanceProsper Uncertainty Rating: High
• Trailing Dividend Yield: 3.28%
• Industry: Oil and Gas Integrated

Exxon Mobil holds the top spot on our best dividend stocks list. In early May, the oil company finished buying Pioneer Natural Resources. This was a smart move because it fits well with the company’s focus on oil and gas. Even though Exxon is more focused on oil and gas than other companies, it still has strong potential for earnings growth. For the past 25 years, Exxon has increased dividends yearly, earning the title of “dividend aristocrat.” We believe the stock is worth $138, but it’s currently trading 17% lower than that.

Verizon Communications (VZ)

• FinanceProsper Rating: 4 stars
• FinanceProsper Economic Moat Rating: Narrow
• FinanceProsper Uncertainty Rating: Medium
• Trailing Dividend Yield: 6.68%
• Industry: Telecom Services

Verizon is among the dividend stocks on our list that offer the greatest yields. As of right now, the stock is trading 25% below our $53 per share assessed value. FinanceProsper director Karar Abbas thinks the market is too focused on Verizon’s difficulties in getting new postpaid wireless customers. Karar believes that the improving competition in the wireless industry will help big US carriers, like Verizon, become more profitable in the future. Verizon’s second-quarter results showed its struggle to grow its wireless customer base, and we expect Verizon to lose some market share as it focuses on keeping prices stable rather than growing. However, we still expect Verizon to generate strong cash flow in 2024. Karar reports that Verizon used 60% of its cash flow to pay dividends in 2023.

Altria Group (MO)

• FinanceProsper Rating: 4 stars
• FinanceProsper Economic Moat Rating: Wide
• FinanceProsper Uncertainty Rating: Medium
• Trailing Dividend Yield: 7.94%
• Industry: Tobacco

On our list this month, Altria is the highest-yielding stock. It is now trading 15% below our estimated value of $58 per share. As the leading tobacco company in the U.S., Altria is working on several alternatives to cigarettes. The company’s ability to price its products higher than the rate at which cigarette sales are dropping should help it keep growing its revenue, earnings, and dividends. However, second-quarter results showed a bigger drop in cigarette sales. Altria aims to grow its dividend by a mid-single-digit percentage each year.

Comcast (CMCSA)

• FinanceProsper Rating: 4 stars
• FinanceProsper Economic Moat Rating: Wide
• FinanceProsper Uncertainty Rating: Medium
• Trailing Dividend Yield: 3.06%
• Industry: Telecom Services

The current price of Comcast stock is 27% less than our projected share value of $54. FinanceProsper’s Karar believes that Comcast’s ability to keep prices stable is the key to its success. By accepting small customer losses while growing revenue per customer, Comcast has managed to balance out concerns about its Peacock streaming service. Comcast started paying dividends in 2008 and has increased them by an average of 15% each year. We believe Comcast’s finances are strong, and the returns to shareholders are generally good.

Medtronic (MDT)

• FinanceProsper Rating: 4 stars
• FinanceProsper Economic Moat Rating: Narrow
• FinanceProsper Uncertainty Rating: Medium
• Trailing Dividend Yield: 3.45%
• Industry: Medical Devices

The price of Medtronic stock is 28% less than our projected value of $112 per share. As the largest maker of medical devices, Medtronic is a key partner for hospitals because it offers a wide range of products for many chronic diseases. The company aims to return at least 50% of its yearly free cash flow to shareholders, but it has been returning 60% to 70% in recent years. Medtronic has also increased its dividend for 46 years in a row, making it a dividend aristocrat.

Starbucks (SBUX)

• FinanceProsper Rating: 4 stars
• FinanceProsper Economic Moat Rating: Wide
• FinanceProsper Uncertainty Rating: Medium
• Trailing Dividend Yield: 3.03%
• Industry: Restaurants

Starbucks, one of the most well-known restaurant brands globally, has built a strong market position. The company has a solid financial foundation, generating strong free cash flow, and aims to pay out 50% of its earnings as dividends in the long term. The third-quarter results were weak, and Dunlop expects this trend to continue until 2025 when consumer spending is expected to pick up. The present price of Starbucks stock is 22% less than our projected value of $95 per share.

Dow (DOW)

• FinanceProsper Rating: 4 stars
• FinanceProsper Economic Moat Rating: Narrow
• FinanceProsper Uncertainty Rating: Medium
• Trailing Dividend Yield: 5.49%
• Industry: Chemicals

The Dow is back on our best dividend stocks list, trading 29% below our $72 estimate. As one of the world’s biggest chemical producers, Dow benefits from cost advantages in its ethylene and propylene operations in North America, giving it a slight edge in the market. Recent results were impacted by weak construction activity, affecting its industrial intermediates and infrastructure segment, says FinanceProsper director Karar Abbas. Dow has paid $2.80 per share in dividends over the past three years, and we expect this to continue.

General Mills (GIS)

• FinanceProsper Rating: 4 stars
• FinanceProsper Economic Moat Rating: Narrow
• FinanceProsper Uncertainty Rating: Low
• Trailing Dividend Yield: 3.47%
• Industry: Packaged Foods

General Mills is new to our list of top dividend stocks. The company has a small competitive advantage because it owns well-known brands like Pillsbury, Yoplait, Cheerios, and Nature Valley. Slowing consumer spending has recently hurt its performance and might continue until 2025, but FinanceProsper Karar believes the company’s brands will do well in the long run. General Mills has paid steady dividends for many years and only paused increases to manage debt after acquisitions. We think the stock is worth $74, and it’s currently trading 8% below that.

LyondellBasell Industries (LYB)

• FinanceProsper Rating: 4 stars
• FinanceProsper Economic Moat Rating: Narrow
• FinanceProsper Uncertainty Rating: Medium
• Trailing Dividend Yield: 5.50%
• Industry: Specialty Chemicals

LyondellBasell Industries is new to our list of top dividend stocks, trading 22% below our estimated value of $118 per share. This company is the world’s largest producer of polypropylene, and its cost advantages give it a slight market edge. He adds that using cheaper materials should help increase profits. LyondellBasell has raised its dividend every year for the past 12 years, and we expect it to keep generating enough cash to continue growing the dividend.

WEC Energy Group (WEC)

• FinanceProsper Rating: 4 stars
• FinanceProsper Economic Moat Rating: Narrow
• FinanceProsper Uncertainty Rating: Low
• Trailing Dividend Yield: 3.66%
• Industry: Utilities—Regulated Electric

WEC Energy Group is the last on our list of top dividend stocks, trading 8% below our estimated value of $96 per share. As the largest utility in the Midwest, WEC has a slight market edge due to its regional monopolies and efficient operations. The company’s payout ratio of between 65% and 70% makes sense given its steady, regulated assets. We also believe the management team has done an excellent job of managing the company’s resources.

Why Are These the Best Dividend Stocks?

Based on their highest forward dividend yield, we have chosen the best dividend stocks from among stocks listed on the Nasdaq or New York Stock Exchange. We excluded stocks priced below $5, those with a market capitalization of less than $300 million, and those with a daily volume of trade of less than 100,000. Additionally, we did not include businesses whose payout ratios were greater than 100% or negative.

Dividend-focused investors seek a consistent income stream as well as the potential for stock price appreciation. Even if a company has a good track record, future dividends are not guaranteed. Considerations to keep in mind:

Dividends are adjusted

During periods of economic uncertainty, a company may reduce or eliminate dividend payments to preserve capital to weather expected storms. Alternatively, in a strong economic environment, companies may raise dividend payments to attract investors.

Variations in the percentage yield

These stocks may offer a lower dividend yield than previously if they are subject to altered market conditions, shifts in financial stability, and adjustments to market value.

Some dividend yields may mislead

Some dividend-paying companies may raise their dividend yield to attract investors in the short term, but higher dividends can be unsustainable. This makes a company’s payout ratio extremely important to monitor.

Investing for income: Dividend stocks vs. dividend funds

Dividend stocks can be purchased in two ways: through funds that hold dividend stocks (such as index funds or exchange-traded funds) or individually.

Dividend ETFs and Index Funds

Diversification and Convenience

Dividend ETFs, also known as index funds, give investors access to a variety of dividend stocks in a single investment, allowing them to build a dividend portfolio with a single transaction.

Regular Income

The fund will then pay you dividends regularly, which you can use for income or reinvest. Dividend funds provide instant diversification — if one of the fund’s stocks reduces or suspends its dividend, the others will still provide income.

Reinvesting Dividends

Whether you do it with funds or stocks, reinvesting dividends can greatly boost your return on investment. Dividends typically boost the return on a stock or dividend fund by a few percentage points.

Impact of Dividend Reinvestment

For example, the S&P 500’s historical total annual return (including dividends) has been approximately two percentage points higher than the index’s annual change in value. Furthermore, the differences can add up.

By using an Investment calculator, we can see that a $5,000 investment that grows at 6% per year for 20 years could increase to more than $16,000. $5,000 could grow to be more than $24,000 if dividends are taken into account and the growth rate is raised to 8%.

Individual Dividend Stocks

Customization and Potential Higher Returns

Although it requires more effort on the part of the investor — in the form of researching each stock to ensure it fits into your overall portfolio — individual dividend stocks allow investors to build a custom portfolio that may yield more than a dividend fund.

Lower Expenses

Dividend stocks may also have lower expenses because ETFs and index funds charge investors an annual fee known as an expense ratio.

For the reasons stated above, it is generally recommended that you invest the majority of your portfolio in index funds. However, investing in individual dividend stocks with a small portion of your investment portfolio can be beneficial.

How to Pick Dividend Stocks in November 2024

By considering these crucial factors, you can choose the best dividend stocks to buy:

• Companies with strong fundamentals
• Strong cash flow and low earnings expectations
• Steer away from companies with high debt
• Check sector trends
• Steady long-term profitability
• A steady dividend yield that has increased in recent years

What Should Investors Look For in Dividend Stocks?

Dividend yield

Dividend yield is the annual value of dividends received to a security’s per-share market value. This can be calculated by dividing the annual dividend per share by the current stock price, but most brokerage platforms and financial news sites provide this information.

For example, if Company ABC pays a $10 dividend per year and has a current share price of $100, the dividend yield is 10% ($10 / $100). Investors looking for high-yielding stocks should start by looking for companies with a dividend yield of more than a certain percentage. Remember that dividend yield is only one of several factors to consider when investing.

Dividend payout ratio

The DPR metric measures how much of a company’s earnings are distributed to shareholders. Investors divide total dividends by net income to get the ratio. This can be found on financial websites and other platforms.

For example, Company ABC would have a DPR of 30% ($15,000 / $50,000 = 30%) if it reported a net income of $50,000 and paid $15,000 in dividends annually. In other words, the business gives its shareholders 30% of its profits. Less than half of a company’s net earnings in dividends is generally regarded as stable and indicative of the possibility of long-term, sustainable earnings growth.

Dividend coverage ratio

This indicates how frequently a company can distribute dividends to its owners. By dividing a company’s annual earnings per share by its annual dividend per share, investors can determine the dividend coverage ratio.

For example, Company ABC would have a dividend coverage ratio of five ($10 million / $2 million) if it reported $10 million in net income and paid a $2 million annual dividend to shareholders. Generally speaking, investors consider a higher dividend coverage ratio to be better.

How to invest in dividend stocks successfully in November 2024

Building a portfolio that includes individual dividend stocks takes time and effort, but many investors find it worthwhile. Here’s how to buy dividend stocks:

1. Find a dividend-paying stock

In addition to the website of your online broker, many financial sites allow you to search for stocks that pay dividends. Free stock screeners are also available for you to look at.

Paper trading is always an option if you’re not quite ready to risk your hard-earned money. Using paper trading, you can simulate investing with virtual currency.

2. Evaluate the stock

Start by evaluating the dividend yields of a high-dividend stock’s peers to gain insight into its inner workings. A company’s dividend yield may be cause for concern if it is significantly higher than that of comparable companies. If nothing else, it’s worth it to look into the company and dividend safety in more detail.

Next, take a look at the payout ratio of the stock, which indicates the percentage of the company’s income that is allocated to dividends. An excessively high payout ratio, typically above 80%, though industry-specific variations may occur, indicates that a significant portion of the company’s revenue is allocated to dividend payments. Dividend payout ratios exceeding 100% occasionally indicate that a company may be taking on debt to fund dividend payments.

3. Choose the quantity of stock you want to buy

If you are buying individual stocks, you will need to determine how much of your portfolio is invested in each stock to attain diversification. For instance, you could allocate 2% of your portfolio to each of the five stocks you purchase. If the stock is riskier, though, you may want to purchase fewer of it and allocate a larger portion of your funds to more secure investments. You must recalculate your cost basis or the amount you initially paid for the stock if you plan to reinvest your dividends.

The safety of a dividend is the primary factor to take into account when purchasing a dividend stock. Any dividend yield above 4% warrants close examination; yields above 10% are dangerous. A dividend yield that is too high may be a sign that the payout is unsustainable or that investors are selling the stock, which will lower its share price and raise the dividend yield.

Another thing to consider is that, unlike stocks that do not pay dividends, which are primarily taxed at the time of sale, dividends in taxable brokerage accounts result in taxes being realized in the year the dividends occur. In high-income brackets, dividend stocks may not be the most tax-efficient option for investors with taxable accounts.

What are the best dividend stocks?

The stocks in the chart may have high yields, but this does not necessarily imply that they are the best dividend stocks for any individual investor. The ideal portfolio is unique to each individual, depending on their goals and timelines. Furthermore, many investors are better off purchasing index funds rather than individual stocks.

A high dividend yield can indicate a variety of things, not all of which are favorable. As previously stated, falling stock prices can increase dividend yields, and some companies incur debt by overspending on dividends. Overspenders may eventually be forced to reduce their dividends if they become unsustainable.

If you’re looking for dividend stocks that are unlikely to cut their dividends, look into the dividend aristocrats, a group of S&P 500 stocks that have increased their dividends annually for at least 25 years.

Conclusion

To pick the best dividend stocks, look for companies with a good history of raising dividends, solid finances, and manageable payout ratios. Focus on stocks that offer a steady income and potential for growth. Whether you choose individual stocks or dividend funds, do your research and match your choices to your financial goals. Keep informed and make smart decisions to build a strong investment portfolio.