For investors who are seeking both income and growth, now presents a great time to consider the best dividend stocks to buy. Dividend-paying companies exhibit strong financial performance, with a proven track record of profitability. 

This stability can contribute to a lower overall risk profile in comparison to high-growth companies. Additionally, they often have a history of increasing their dividend payouts overtime. This is advantageous for those who are looking for an additional source of passive income. 

Now, let’s discuss the 3 best dividend stocks to buy in 2024.

Mastercard (MA)

Mastercard (NYSE:MA) has demonstrated an unwavering commitment to driving dividend growth and shareholder returns over the last decade. The company has averaged a 20% CAGR in its dividend and the stock has more than doubled over the last 5 years. 

Mastercard offers a diverse range of financial services, but they are commonly known for their branded credit cards. Their partnership model as one of the leading credit card processors allows them to work with thousands of startups, banks and financial institutions around the world. This has been the key to their success, and has contributed to their robust revenue, EPS and FCF growth. They continue to drive shareholder value through share buybacks and issuance of quarterly dividend payouts. 

In their latest financial results, Mastercard delivered another impressive quarter. Revenue increased 13% YOY to $6.55 billion, with GAAP EPS up 13% to $2.97 per share. Gross margins remained robust at 56.2%, and cross border transactions fueled strong double digit growth. If you’re looking for the best of both worlds, then you might want to consider Mastercard.

PepsiCo (PEP)

PepsiCo (NASDAQ:PEP) should be kept on your radar when considering the top dividend stocks to buy. Over the last decade, they have averaged a 7% CAGR in their dividend and earnings have started to reaccelerate. 

There exists an elite class of dividend stocks known as “dividend aristocrats,” and PepsiCo falls under that category. Their strong moat covering both manufacturing and distribution has positioned them to weather even the most difficult economic environments. Moreover, the company just recently announced their 52nd annual dividend increase. This highlights their steadfast commitment to returning value and cash to their shareholders. 

In PEP’s most recent financial results, revenue saw a slight increase of 6% YOY to $91.5 billion. Although earnings were nothing spectacular, they continue to see strength in Latin America. During this period operating profit for the region was up 67% from the year prior. Now management issued its 2024 guidance calling for 4% organic revenue growth and 8% EPS growth. This makes PepsiCo one of the top dividend stock prospects to snap up.

Automatic Data Processing (ADP)

Automatic Data Processing (NASDAQ:ADP) takes the cake for those seeking a dividend growth stock that is likely to outperform its peers. The stock is well positioned to grow its dividend by double digits over the next decade, driven by their strong cash flows and earnings growth. 

ADP’s technology is critical to a diverse sector of businesses and there is a strong chance that the company you work for already uses them. They offer an extensive suite of HR, payroll, tax and administrative services to more than 1 million businesses. Their cloud-based systems are less prone to human errors, and can seamlessly calculate salaries, taxes and deductions. This can help ensure compliance with all regulations and enhance HR efficiency and customer experience. However, what investors can be confident in is the company’s ability to consistently deliver above average cash flows and earnings growth. 

In the 2023 fiscal year, ADP’s revenue increased 9% YOY to $18 billion. EPS increased 17% YOY to $8.21 per share, driven by strong execution and margin expansion. Additionally, operating cash flow swelled 36% YOY to $4.2 billion and FCF hit $3.63 billion. Management is forecasting between 6% to 7% revenue growth and 10% to 12% EPS growth in FY24. With the company’s demonstrated ability to consistently grow revenue, EPS and FCF, they are well positioned to outperform over the long term. 

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.