The Kiplinger Dividend 15: Our Favorite Dividend-Paying Stocks

Dividend stalwart: Air Products & Chemicals

• Yield: 2.4%
• Annual dividend: $7.08
• Consecutive years of increases: 42
• Five-year dividend growth rate: 10.1%
• One-year total return: 6.9%

When we inaugurated the Kiplinger Dividend 15, we defined stalwarts as firms that had raised dividends for at least 20 straight years. At this point, our steady Eddies have hiked payouts for more than 40 years in a row. 

At first glance, it appears that shares in Air Products & Chemicals (APD) barely budged all year. But in truth, the stock had been in a free fall until early February, when it hit bottom, and has since jumped 37%. Earnings for the industrial-gas company, which is also the world's top supplier of hydrogen, have been "inconsistent" over the past year, says Deutsche Bank Research analyst David Begleiter, thanks in part to sluggish growth in China (one of its biggest and most profitable markets) and lower demand for helium (industrial-gas demand is sensitive to global economic conditions). 

A corporate shake-up – the chief operating officer stepped down in July, and an 11-member board of senior company leaders replaced him – may help. BMO Capital Markets analyst John McNulty called the move "shareholder friendly." But others worried it posed a near-term risk to earnings. On the whole, analysts' earnings estimates for the current fiscal year have been trending up recently. They predict a 7% jump year over year in the fiscal year that ended in September and 8% growth next fiscal year. Meanwhile, the materials stock yields a healthy 2.4%. News of the next payout hike should come in late fall. 

Dividend stalwart: Emerson Electric

• Yield: 1.9%
• Annual dividend: $2.10
• Consecutive years of increases: 67
• Five-year dividend growth rate: 1.4%
• One-year total return: 15.4%

Industrial electrical equipment company Emerson Electric (EMR) has been working to shift its business to automation and industrial software for the past several years. That partly explains why the industrial stock has lagged its large-company peers: Over the past 12 months, Emerson stock has gained 15%; its large-cap peers have returned nearly 24%. 

Even so, Emerson is a top pick of Wells Fargo Securities analyst Joseph O'Dea, who rates it Outperform and views it as "underappreciated" following its transformation. "Uncertainty has been a two-year-plus overhang. We believe that's now reduced, leaving attractive upside," given that the stock trades at a discount to historical valuations. At $105 a share, Emerson trades at 18 times expected earnings for the year ahead. That's below its five-year average price-earnings ratio of 21 and far below the typical P/E of 27 for its peers, according to Zacks Investment Research. 

Analysts forecast a 23% jump in earnings in the fiscal year that ended in September and a 9% jump in the next fiscal year. The stock yields 1.9%.

Dividend stalwart: Johnson & Johnson

• Yield: 3.1%
• Annual dividend: $4.96
• Consecutive years of increases: 62
• Five-year dividend growth rate: 5.8%
• One-year total return: 7.2%

It has been almost 18 months since Johnson & Johnson (JNJ) spun off its consumer staples business. So far, sort of so good. Its drug side, which accounts for about 65% of total revenue, is growing steadily, thanks to solid advances in sales of key oncology drugs (Erleada and Darzalex) and immunology drugs (Stelara and Tremfya). The medtech business (35% of overall revenue) includes wound-care products, contact lenses, surgical instruments and hip replacements, among other things. It posted solid results, too, but those came in below expectations, in part because of sales declines overseas. 

Overall, however, analysts expect revenues to increase by more than 3% in both 2024 and 2025 and for earnings to increase a modest 1% for the current fiscal year, which ends in December, and jump 7% in 2025. 

Other wrinkles need ironing out. As more clarity comes in 2025 on which drugs will be subject to Medicare drug-price negotiations, the company anticipates it will have a "net unfavorable impact," according to Jennifer Taubert, head of Johnson & Johnson's pharmaceutical business, who spoke to analysts after a recent earnings report. Even so, she added, "we do anticipate, as a business, growing 3%-plus next year and then 5% to 7% out through 2030." 

And the company still has to resolve the lawsuits linking its talc products to cancer. In its latest salvo, it filed a third time for bankruptcy in September, hoping to settle most cases for roughly $8 billion. Its previous tries failed in bankruptcy court.

Meanwhile, the company's leadership role in a broad mix of healthcare segments, its research-rich pipeline and its exceptional cash-flow generation give J&J a wide economic moat, says Morningstar analyst Damien Conover. "Strong cash generation has enabled the firm to increase its dividend for over the past half-century, and we expect this to continue." The stock yields 3.1%. 

Dividend stalwart: McDonald's

• Yield: 2.3%
• Annual dividend: $7.08
• Consecutive years of increases: 48
• Five-year dividend growth rate: 8.3%
• One-year total return: 18.1%

Apparently, McDonald's (MCD) meals got too costly for customers in the first half of 2024. So the company introduced a $5 value meal to appeal to more price-conscious consumers – and it worked. In August, foot traffic improved, says Jefferies Financial Group analyst Andy Barish, who says "a greater focus on value is starting to work more meaningfully." 

Though results are only for a short term so far, they show that the largest fast-food restaurant company in the world can be nimble when necessary. It also is a strong testament to the brand's strength: Consumers want to eat there, as long as they think they're getting a deal. 

In September, the company extended its $5 Meal Deal – small fries, a small drink, four Chicken McNuggets, and a choice of a McChicken or a McDouble sandwich – at most U.S. locations through the end of 2024. It launched other deals, too, including Free Fries Fridays (free medium fries with any $1 purchase on Fridays, only through the McDonald's app). 

The consumer discretionary stock has climbed 18% over the past 12 months, but it's not overpriced. It trades at 24 times expected earnings for the next four quarters, which is about average for the company over the past 10 years, according to Zacks. What's more, the company just hiked its dividend for the coming year by 6%, its 48th consecutive annual increase. The stock yields 2.3%.

Dividend stalwart: Procter & Gamble

• Yield: 2.3%
• Annual dividend: $4.03
• Consecutive years of increases: 68
• Five-year dividend growth rate: 5.7%
• One-year total return: 21.4%

When times get tough, consumers are still going to buy certain household and personal products, such as diapers, toothpaste, razors and toilet paper. That's the argument for Procter & Gamble (PG). It's not the kind of stock that will top return tables, though its 21% gain over the past 12 months is impressive. We like it for another reason: It boasts a long track record of annual increases – 68 years, the lengthiest in the Kiplinger Dividend 15. 

The company began to trim its product list and geographic reach about a decade ago, and it reaped mid- to high-single-digit sales growth in return. But sales growth over the past two quarters has fallen to the low-single-digit range, and investors are underwhelmed. One problem: A strategy to raise prices on its products – Tide, Charmin, Pampers – since early 2023 finally ran its course as penny-wise shoppers started buying other products. Even so, analysts expect 6% growth in earnings over the next four quarters. The consumer staples stock yields 2.3%.

Dividend stalwart: Walmart

• Yield: 1.0%
• Annual dividend: $0.83
• Consecutive years of increases: 51
• Five-year dividend growth rate: 1.9%
• One-year total return: 53.0%

The sun is shining these days on Walmart (WMT), the world's largest retailer. Despite a tough retail environment, shares have climbed a whopping 53% over the past 12 months as shoppers have chosen the retail giant over dollar stores. An ongoing effort to spruce up existing stores – wider aisles, brighter lighting and new displays, including digital price labels, which can be instantly adjusted – may have helped. 

In truth, everything is clicking at Walmart these days. Its omnichannel advertising business, which allows brands to target customers in its stores and on its website and mobile app, is growing and fattening Walmart's profits; its subscription service, Walmart+, recently hit record-high membership; and its e-commerce business is "on the road" to profitability, says Kevin Downing, an analyst at stock-research firm Value Line. Plans to build another 150 Walmart stores and 30 Sam's Club shops – some in China, Mexico and India – over the next seven years may lift profits, too. 

What's more, in early 2024, the company announced its 51st annual dividend hike (as well as a three-for-one stock split, which occurred in February). The current payout, 83 cents a share, denotes a 9% jump from the previous year. But share-price gains have shrunk the stock's dividend yield, which is 1.0%.

Dividend grower: AbbVie

• Yield: 3.1%
• Annual dividend: $6.20
• Consecutive years of increases: 11
• Five-year dividend growth rate: 10.5%
• One-year total return: 36.6%

The increase in annual payout matters more than yield in the dividend growers category, for which we favor high-quality, fast-growing companies that boast double-digit average annual dividend hikes over the past five years. 

We've been watching the drug company AbbVie (ABBV) closely. It raises its dividend consistently; this year marks the firm's 11th annual increase in a row. (One housekeeping note: AbbVie shares started trading in 2013, when it was spun off by Abbott Laboratories, which has a 51-year track record of consecutive dividend increases. That's why S&P Global considers AbbVie a Dividend Aristocrat, its list of the best dividend stocks for dependable growth that have boosted payouts for at least 25 straight years.) 

But the pace of dividend growth is slowing. AbbVie's five-year dividend growth rate, 10.5%, still passes the double-digit test, but it's lower than the 17%-plus five-year pace recorded in 2022 and 2023. Annual dividend hikes for the past two years hovered around 5%, roughly half the payout increases in 2020 and 2021. If the coming year's increase falls below 10%, we may replace AbbVie in the Kiplinger Dividend 15. 

AbbVie's near-term woes are no surprise. The firm's blockbuster drug Humira lost its exclusive patent in the U.S. and abroad, and sales are rapidly declining. Strong growth in sales of other drugs (Skyrizi, Rinvoq, Vraylar) and demand for its cosmetic Botox therapies have filled the gap, but the net result is that AbbVie's overall revenues are basically flat, if not down. 

Nonetheless, ABBV has been a solid gainer over the past 12 months, with a 37% return, well ahead of the 22% climb in the typical large-company healthcare stock. Also in its favor is a robust dividend yield of 3.1%, double that of the typical large-cap healthcare stock. 

Dividend grower: Broadcom

• Yield: 1.2%
• Annual dividend: $2.12
• Consecutive years of increases: 3
• Five-year dividend growth rate: 21.3%
• One-year total return: 110.2%

No stock in the Kiplinger Dividend 15 has performed better than Broadcom (AVGO), a tech giant that makes an array of semiconductors and infrastructure software products. Shares have climbed 110% over the past 12 months, and split 10-for-1 in July. 

Business is humming. VMware, the cloud-computing firm Broadcom acquired in late 2023, is already boosting overall revenues and profit margins thanks to powerful growth in subscriptions for its services and offerings, says BofA Securities analyst Vivek Arya. He recently named Broadcom a top pick and raised his earnings estimates for the next two fiscal years. 

"Broadcom is a high-quality tale of a company transformation from growth in the mid-single-digit percentages to the mid-teens, driven by a shift to AI and its acquisition of VMware," says Arya. Looking ahead, he expects 15% growth in earnings, year over year, for the fiscal year that ends in October 2025. 

Broadcom typically announces its annual dividend increase in December. But in September, the firm quietly bumped up its quarterly dividend by 0.5 cent to 53 cents per share from 52.5 cents. That puts the annual payout for calendar year 2024 at $2.11. Arya expects a $2.33 dividend in 2025, a more than 10% increase from the previous year.

Dividend grower: Home Depot

• Yield: 2.2%
• Annual dividend: $9.00
• Consecutive years of increases: 15
• Five-year dividend growth rate: 15.2%
• One-year total return: 37.0%

Though mortgage rates are falling, they are still high and continue to deter consumers from buying homes or initiating remodeling projects beyond making necessary repairs. That has held back results at goliath home-improvement store Home Depot (HD). Analysts expect a 3% increase in revenue in the current fiscal year, which ends in January, compared with the previous year. That's less than half the company's 8% annualized pace of revenue growth over the past five years. 

Of course, the Federal Reserve's recent interest rate cuts will help turn the tide, but a recovery in building-supplies demand may take some time. A leading indicator for remodeling activity in the U.S. recently signaled a contraction in projects for the second half of 2024. 

Still, Home Depot is muddling through. Its acquisition of building-supplies distributor SRS Distribution, expected to close in late 2024, expands Home Depot's addressable market to $1 trillion, up from $950 billion, and may positively impact results as soon as the second half of 2025. Baird analyst Peter Benedict says he's "taking the long view" and rates the stock Outperform. Though near-term challenges linger, he sees a rebound in demand for home-building supplies in 2025 and 2026. Plus, a shortage of homes, following a long period of underbuilding after the Global Financial Crisis, bodes well for Home Depot over the long term. 

Meanwhile, the company hiked its dividend 7% in early 2024. Argus Research analyst Christopher Graja predicts another increase of roughly 7% next year, to an annual payout of $9.65 a share. 

Dividend grower: Mastercard

• Yield: 0.5%
• Annual dividend: $2.64
• Consecutive years of increases: 10
• Five-year dividend growth rate: 17.9%
• One-year total return: 25.4%

Mastercard (MA) shares yield a pitiful 0.5%, but the company raised its dividend by nearly 16% over the past year – the biggest increase in the Kiplinger Dividend 15 over the past 12 months. And in this category, the pace of hikes matters most. 

Dividend-growth companies tend to be fast growing, too, and Mastercard is no slouch. Over the past five years, revenues have climbed by an annualized 13%; earnings, by an annualized 16%, according to Zacks. For 2024, analysts expect an 11% rise in annual revenues and 17% in earnings. Next year, they predict increases of 12% in revenues and 16% in earnings. 

The firm's good times may take a breather as the credit card market matures. But Mastercard isn't standing still. It is set to close on a deal to acquire a cyber-defense firm in early 2025, which will help keep a lid on fraud throughout its payment networks. 

And it is focused on the "virtualization of everything," says Deutsche Bank analyst Bryan Keane, by investing in ways to make every device a tool for commerce. Mastercard worked with Mercedes-Benz, for instance, to enable customers to pay for fuel at gas stations in Germany using a fingerprint sensor in their car's infotainment system. The firm's "tech innovations are driving future growth," says Keane. 

Dividend grower: UnitedHealth Group

• Yield: 1.4%
• Annual dividend: $8.40
• Consecutive years of increases: 15
• Five-year dividend growth rate: 16.1%
• One-year total return: 17.5%

Managed care is a game of scale, and UnitedHealth Group (UNH) is king, says Baird analyst Michael Ha. Its other business, Optum, which operates outpatient health facilities and offers healthcare tech services and data analysis, epitomizes the future of the industry. "Every other managed care company is chasing the model that UNH has built," says Ha. 

But its heft has made the company a target. It suffered a major cyberattack earlier this year (now under control) that cost the company upward of $2 billion and snarled member payments and prescriptions. 

The Justice Department launched an antitrust investigation into UnitedHealth earlier this year, which quashed the company's plan for two acquisitions over the summer. And the government is moving toward greater scrutiny of pharmacy benefit managers – a chunk of UnitedHealth's Optum business – for allegedly inflating drug prices, pushing expensive drugs instead of affordable alternatives, and driving independent pharmacies out of business, among other things.

Despite the snags, UnitedHealth shares are on the mend after lagging for two years. Since hitting a 12-month low in April, the blue chip stock has surged 33%. And the firm raised its quarterly dividend last June, right on schedule, to $2.10 from $1.88, a nearly 12% hike. The stock yields 1.4%.

High yield: Blackstone

• Yield: 2.2%
• Annual dividend: $3.28
• Consecutive years of increases: 3
• Five-year dividend growth rate: 6.5%
• One-year total return: 46.1%

A five-year average dividend yield of 4% or better is the initial litmus test for stocks in the high-yielders category.

Blackstone's (BX) main business, alternative asset management, is having a moment – investor interest in private equity and credit investments is rising – and that could "drive sustained, above-trend growth for longer," says Morgan Stanley analyst Michael Cyprys, who expects the financial stock to outperform the broad market. Plus, its real estate fund, BREIT, which suffered a flurry of redemptions in late 2022, should see brighter days ahead given lower interest rates and an improved outlook for capital markets. 

"We view Blackstone as best positioned to benefit from the structural growth of private markets given its brand, scale and breadth of investment expertise," says Cyprys. Shares topped the market over the past 12 months, with a 46% gain, ranking it one of the best Kiplinger Dividend 15 performers for the year. 

The catch is Blackstone's dividend. It is lumpy from quarter to quarter, depending on the company's fortunes. And its average five-year dividend yield of 3.7% only squeaks past our target of 4.0% or better if you round up. Plus, after the stock's torrid run, its dividend yield is just 2.2%. We're not ready to replace it in the Kiplinger Dividend 15, especially now with capital markets buoyed by the Fed's interest rate cuts. But we're eying possible substitutes and watching it closely.

High yield: Duke Energy

• Yield: 3.6%
• Annual dividend: $4.18
• Consecutive years of increases: 18
• Five-year distribution growth rate: 2.2%
• One-year total return: 35.3%

Regulated utilities are sleepy stocks that are viewed as safe-haven investments that deliver sturdy dividend income. But now they stand to be beneficiaries of the rise of AI, too. Data centers are popping up everywhere to meet the computational demand of AI, and that could boost electricity consumption. It won't happen overnight, but the Electric Power Research Institute estimates that data centers could grow to consume up to 9% of U.S. electricity generation a year by 2030, more than double the amount used today. 

That's just one reason we still like Duke Energy (DUK). The utility has a strong presence in fast-growing states – North Carolina, South Carolina and Florida – and it is "better positioned than peers" to expand data transmission in the region, says Argus Research analyst Marie Ferguson. (Apparently, AI queries require 10 times the electricity of traditional internet searches.) 

Plus, Duke is making substantial investments to upgrade its electric grid for renewable energy. In Florida, it has 12 new solar sites. "It's arguably the highest-quality utility in the sector," says Hatfield, the manager of the InfraCap ETF. The utility stock is up 35% over the past 12 months and it yields 3.6%.

High yield: Enterprise Product Partners

• Yield: 7.2%
• Annual distribution: $2.10*
• Consecutive years of increases: 26
• Five-year dividend growth rate: 2.9%
• One-year total return: 13.9%

Enterprise Product Partners (EPD) is a master limited partnership (MLP), which requires special attention with regard to tax accounting (even in a retirement account). So consider yourself forewarned. 

But this provider of natural-gas and natural-gas-liquid services yields 7.2%, the highest in the Kiplinger Dividend 15. It is now a Dividend Aristocrat, having logged 26 consecutive annual dividend hikes. 

"Higher yields and better dividend growth are available elsewhere," says Value Line analyst James Flood, "but no other MLP has Enterprise Product Partners' historical record of withstanding downturns in this cyclical business." He adds that the firm's three- to five-year total-return prospects are "well above average." 

* Distributions are similar to dividends but are treated as tax-deferred returns of capital and require different paperwork come tax time.

High yield: Realty Income

• Yield: 5.0%
• Annual dividend: $3.16
• Consecutive years of increases: 30
• Five-year dividend growth rate: 3.0%
• One-year total return: 32.7%

A tentative economic environment and high interest rates have weighed on real estate investment trusts (REITs). But interest rates are coming down, and if the economy avoids a recession, as many market watchers believe, real estate stocks could do well. 

Realty Income (O), a Dividend Aristocrat, coped well in an uncertain economic environment, shielded in part because it owns primarily properties that it leases to single-tenant retailers that sell necessities: drug stores, convenience stores and grocery stores. These retailers sign long leases and tend to have solid balance sheets. 

"The company has one of the sector's strongest balance sheets, in our view, the lowest cost of capital, and it pays a consistent and growing monthly dividend," says Stifel Financial analyst Simon Yarmak, who rates the stock a Buy. He estimates funds from operations, a measure REITs use that's similar to earnings for a conventional business, of $4.27 per share in 2024 and $4.41 in 2025. The stock yields 5.0%.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

Related content

• The 25 Best No-Load Mutual Funds You Can Buy
• Kip ETF 20: The Best Cheap ETFs You Can Buy
• Kiplinger ESG 20: Our Favorite ESG Stock and Fund Picks for Investors