3 Top-Performing Dividend Stocks to Acquire in Q1

In 2024, the stock market is humming along, with the S&P 500 and the Dow Jones Industrial Average hitting new all-time highs in January. This builds on bullish performance from 2023. As Q1 winds to a close and the economy strengthens, it is time to look at three top-performing dividend stocks.

Dividend stocks are typically great investments. Investors buy them for income, with capital appreciation as a bonus.

The stocks we will analyze are companies that are benefitting from positive price momentum, asset-light business models, and external tailwinds. Most importantly, each stock on the list sports a yield of more than 10% for the last 12 months.

Overall, the investment mood of 2024 suggests quiet confidence. As a result, capitalizing on the positive momentum is paramount for forward-thinking investors looking for top-performing dividend stocks.

Karooooo (KARO)

Karooooo (NASDAQ:KARO) is a software company with roots in South Africa and Singapore. It operates an on-the-ground operations cloud and is gaining attention this year due to its strong overall performance.

Due to its base outside the United States, the company is not on everyone’s radar. However, prudent debt management and a commitment to shareholder returns make it stand out among top-performing dividend stocks. Furthermore, a foothold in two emerging markets helps it gain unique, strategic positioning.

The firm is asset-light due to its early internet of things software offerings and a cloud infrastructure that supports a software as a service model. It gives the company a healthy recurring cash flow, which is vital for a regular dividend payer.

A low debt-to-capital ratio of 3.8%, solid interest coverage, and $1.34 in cash per share show that the company is well-positioned to manage its financial commitments and continue to pursue an aggressive dividend policy.

Financially, KARO demonstrates solid performance with a substantial return on equity of 25.7%, indicating effective management and profitability. The firm’s forward P/E ratio is 18.9x, with a trailing P/E of 22.8x, showcasing reasonable valuation metrics.

The company has a strong dividend yield of 12.9%, supported by an annual dividend of $3.40. Karooooo is undertaking a share buyback program to bolster shareholder returns further, repurchasing up to 1 million shares.

Lastly, the stock is up 12% over the last six months, cementing KARO among the top dividend-paying stocks.

Invesco Mortgage Capital (IVR)

Invesco Mortgage Capital (NYSE:IVR), a specialized real estate investment trust focused on mortgage-backed securities, makes this list due to its structure and strong dividend profile.

IVR’s investment focuses on dividends and capital growth. Because it is a specialized REIT and must distribute at least 90% of its taxable revenue as dividends, income investors find it attractive because it provides a consistent and high return.

As a result, buying IVR stock means you get access to an annual payout of $1.60. The figure translates to a juicy dividend yield of 17.5%.

It’s important to note that IVR focuses on mortgage-backed securities sensitive to interest rate changes and economic conditions. At the moment, there are tailwinds which will support the stock. Whispers of potential rate cuts from the Federal Reserve and President Joe Biden’s initiatives to shore up the housing market are brightening the outlook for IVR stock.

Medical Properties Trust (MPW)

Medical Properties Trust (NYSE:MPW) stock has risen over 17% in the last month, making it a clear winner among top-performing dividend stocks.

MPW is a triple net lease real estate investment trust, owning 439 properties across nine countries. The triple net lease structure puts the onus on the tenant for all property expenses, giving MPW a strategic advantage. In addition, it is reducing its dependence on its largest tenant, Steward Health Care System. This is a relief for investors because Steward Health had not paid all its dues.

Moreover, as America’s population ages, Medical Properties Trust will benefit from a sustainable long-term tailwind because medical costs will only rise and its properties are all in the healthcare space. According to the Centers for Medicare and Medicaid Services, total healthcare expenses will hit $6.8 trillion by 2030. Consequently, total health spending will grow to represent 19.6% of the GDP by 2031, quite a leap from 18.3% in 2021. MPW stock, under these circumstances, will only grow.

On the publication date, Faizan Farooque did not have (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.