The earnings season has begun in full swing, and for investors like me, it means dividends. Passive income investors will always be on the lookout for companies that steadily pay and increase dividends. There are several dividend-paying companies, but you must look for the top dividend stocks that give a steady hike. This will help build wealth over the years.
These three companies will pay dividends, no matter the market situation, and can potentially increase payouts in the coming years. These businesses will not run out of demand and have shown resilience in high inflationary periods. Plus, their robust cash flows and the upcoming results could help their stocks rally. Buy these top dividend stocks for passive income in 2024.
McDonald’s (MCD)
McDonald’s (NYSE:MCD) is a dominant restaurant chain that has nailed the franchise model. Having remained at the top of the industry even in the inflationary period, McDonald’s has proved that it has become one of the best fast food chains in the world.
The company has more than 40,000 stores globally and earns a royalty income. As such, McDonald’s owns only 5% of the stores. This helps the company enjoy steady revenue while keeping operating costs minimal.
The recurring revenue helps McDonald’s report impressive growth each quarter, and it believes in rewarding investors. With a dividend yield of 2.41%, the company pays an annual dividend of $6.68 per share. MCD stock is exchanging hands for $276 today, down 6% year-to-date (YTD). The pullback after January has given investors a great opportunity to buy the stock.
We could see a dividend hike after the report results on April 30. One solid reason to invest in the stock is brand loyalty and global presence, which has only increased over decades. No matter how the economy is doing, McDonald’s has reported impressive numbers driven by strong sales.
The fast food giant has an impressive track record of 48 years of dividend increases, which makes it one of the best stocks to add to your portfolio. As the macroeconomic conditions improve and consumer spending increases, we could see an even better upside for the stock.
Caterpillar (CAT)
Caterpillar (NYSE:CAT) has remained resilient in times of high-interest rates. While there has been some weakness in the business, it is a part and parcel of operating a global business. However, compared to several other companies, Caterpillar is a strong and steady business.
The company is set to benefit from the Infrastructure Investment and Jobs Act this year. I recommended the stock in February when it was trading for $322. If you had bought it then, you’d already be sitting on gains of 13%.
CAT stock is a solid buy with a dividend yield of 1.43%. It is exchanging hands for $363 and has soared 24% YTD. It has surged 62% in the year and is on a rally. One reason to love Caterpillar stock is that the demand for construction equipment will never run out. With the government setting aside a considerable amount for the construction sector, Caterpillar will continue to grow.
It has a record of dividend payments for 91 consecutive years and has hiked its dividends in the past 30 years. Despite the steady dividends, its dividend payout ratio is only 25%, which means that the company can raise dividend payouts in the coming years.
The company reported a revenue of $67.1 billion for 2023, and the EPS came in at $20.12. It returned $7.5 billion to shareholders through share repurchases and dividends. CAT stock rallied after the robust results, which could follow when the company reports quarterly results on April 25. Several analysts are bullish on the stock and have raised their price target.
Domino’s Pizza (DPZ)
Another company with growing dividends is Domino’s Pizza (NYSE:DPZ). The company has a strong market share and is quietly moving higher. DPZ stock is up 16% YTD and 45% in the year. Trading for $481 today, the stock enjoys a dividend yield of 1.26%. With soaring popularity in the local and global markets, Domino’s has proved its ability to attract customers and increase sales.
In the fourth quarter, the company saw a 2.8% rise in the same store sales YOY, and the management announced a 25% rise in dividends to $1.51 per share. It saw a 23% increase in the free cash flow YOY. It also announced a $1 billion stock buyback program. The company’s dividend payout ratio is 32%, which means there is potential for the company to increase its dividends in the near term.
Domino’s opened 711 net new stores in 2023, with 394 added in the fourth quarter. Domino’s growth momentum is no stopping; it aims to achieve 1,100+ annual global net store growth by 2028. Out of the total store locations, almost 99% are run through a franchise model, which allows Domino’s to earn steady revenue and fees.
The company is set to announce results on April 29, and we could see another smashing quarter.
On the date of publication, Vandita Jadeja did not hold (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.
