The appeal of finding the best dividend stocks will be a growing trend for decades to come. Investors often find themselves sacrificing income for growth, and that doesn’t always have to be the case. A unique class of dividend growth companies exists that can provide their shareholders with the best of both worlds.
Identifying these dividend stocks is undoubtedly a challenging task. Therefore, investors must find the sweet spot in investing in companies that can compound their dividend per share year after year. These companies below provide investors with stability, income, and the prospect of capital appreciation over time.
Below are the three best dividend stocks to buy in January 2024!
Automatic Data Processing (ADP)
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Automatic Data Processing (NASDAQ:ADP) is arguably one of the best dividend growth stocks for 2024. The company is a leader in enterprise software for Human Resources and has averaged 14% EPS growth over the last five years.
While the above-mentioned metric is impressive, that is not the only thing ADP has going for it. Despite economic uncertainty, the company has seen considerable growth in revenue, EPS, and FCF. This has translated into the company consistently growing its dividend and returning cash to shareholders.
For FY23, ADP revenue grew 9% YOY to $18 billion. Earnings per share (EPS) grew 17% YOY to a record $8.21 per share, with adjusted EBITDA margin increasing by 130 basis points. Despite operating in a higher interest rate environment, CEO Maria Black’s strong execution continues to drive profitable growth. A recent 12% increase in its quarterly dividend makes ADP one of the best dividend stocks for January 2024.
McDonald’s Corporation (MCD)
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McDonald’s Corporation (NYSE:MCD) is a compelling dividend stock to buy. While growth revenue growth has decelerated in recent years, the company’s next expansion plans hold a promising future ahead.
McDonald’s Corporation is one of the most iconic brands in the world, serving more than 70 million customers per day. Over the last decade, revenue and EPS have been largely mixed, and their growth prospects have been abysmal. However, with McDonald’s new expansion plans underway, now is a great time to look closer.
The company’s expansion plan includes adding 8,802 restaurants by 2027 and ramping up its digital plans for its loyalty program. This could be a huge turning point for MCD and contribute to higher revenue growth and cash flow generation capabilities. Moreover, the company recently declared a 10% increase in its quarterly dividend to a record $1.67 per share. This makes MCD one of the best dividend stocks to consider for 2024.
UnitedHealth Group (UNH)
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UnitedHealth Group (NYSE:UNH) should be on your radar when considering the best dividend stocks. It is hard to go wrong with this healthcare giant that provides investors with significant diversification and stability.
Apart from the company’s substantial revenue and EPS growth over the last decade, they have morphed into a FCF giant. In FY22, UNH generated a record $26.2 billion in cash flow from operations. Additionally, the company has seen robust double-digit sales growth thanks to its core business, Optum Health.
Optum Health is one of North America’s most transformative businesses, serving more than 120 million customers. Their growth also doesn’t seem to be slowing down, with Q3 2023 revenue up 22% YOY. Furthermore, UNH has delivered a 23% CAGR in its dividend over the last decade. With the healthcare sector set for rapid growth, UnitedHealth Group is one of the safest dividend stocks to hold for 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.