Verizon and MDC Holdings are among the month’s high-yielding winners.
Dividend-paying stocks that combine healthy balance sheets with hefty yields can provide investors with steady incomes, cushion against market downturns, and grow investments at a healthy clip.
In January 2024, the top-performing dividend payers included Verizon Communications VZ (
To find the month’s top 10 income-focused stocks, we screened the Morningstar Dividend Leaders Index, which tracks the performance of the 100 highest-yielding stocks from a broad basket of consistent dividend payers.
The Top-Performing U.S. Dividend Leaders of January 2024
- Verizon Communications (
- MDC Holdings (
- International Business Machines (
- CVR Energy CVI (
- Advance Auto Parts AAP (
- Citigroup C (
- Phillips 66 PSX (
- AbbVie ABBV (
- Arch Resources ARCH (
- Ally Financial ALLY (
Top-Performing Dividend Leaders of January 2024
Source: Morningstar Direct.
How Have Dividend Stocks Performed Over the Past Year?
In the 12 months leading up to Jan. 31, the Morningstar Dividend Leaders Index rose 0.2%, trailing dividend stocks overall, which rose 8.2% as measured by the Morningstar Dividend Composite Index.
1-Year Dividend Performance
Source: Morningstar Direct.
During the same period, the overall U.S. stock market gained 19.9% as measured by the Morningstar US Market Index.
Yields and Metrics for the Best-Performing Income Players
Verizon Communications
Telecom services company Verizon rose 14.1% in January to end the last 12 months up 8.2%. Trading at $42.35 per share, its stock has a forward dividend yield of 6.28%. Verizon pays investors an annual dividend of $2.64 per share. The narrow-moat stock is currently trading at a 22% discount to its fair value estimate of $54 per share, leaving it moderately undervalued.
MDC Holdings
Residential construction firm MDC Holdings rose 13.3% in January, leaving it up 71.3% over the past year. At $62.58 per share, its stock has a forward dividend yield of 3.44% and an annual dividend of $2.20 per share. The no-moat stock is moderately undervalued, trading 25% below its quantitative fair value estimate of $83.57 per share.
International Business Machines
Information technology services company IBM gained 12.3% in January to end the last 12 months up 41.2%. The stock’s $183.66 price gives it a forward dividend yield of 3.62%. IBM pays investors an annual dividend of $6.64 per share. With a fair value estimate of $139 per share, the narrow-moat stock is moderately overvalued, trading at a 32% premium.
CVR Energy
Oil and gas refining and marketing firm CVR Energy rose 11.3% in January, leaving it up 15.2% over the past year. Trading at $33.73 per share, CVR stock has a forward dividend yield of 5.93% and an annual dividend of $8 per share. The narrow-moat stock is trading near its quantitative fair value estimate of $38.63 per share.
Advance Auto Parts
Specialty retail company Advance Auto Parts gained 10.0% in January, to end the last 12 months down 54.6%. Trading at $66.85 per share, its forward dividend yield is 1.50%. Advance Auto Parts pays investors $1 per share annually. The narrow-moat stock is trading near its quantitative fair value estimate of $135.53 per share.
Citigroup
Diversified bank Citigroup gained 9.2% in January, leaving it up 11.6% over the past year. At $56.17 per share, Citigroup stock has a forward dividend yield of 3.74% and an annual dividend of $2.12 per share. The no-moat stock is moderately undervalued, trading 15% below its fair value estimate of $66 per share.
Phillips 66
Oil and gas refining and marketing company Phillips 66 rose 8.4% in January to end the last 12 months up 48.1%. Trading at $144.31 per share, Phillips 66 stock has a forward dividend yield of 2.91% and an annual dividend of $4.20 per share. The narrow-moat stock is moderately overvalued, trading 21% above its fair value estimate of $119 per share.
AbbVie
Drug manufacturer AbbVie rose 7.1% in January, leaving it up 15.3% over the past year. Trading at $164.40 per share, AbbVie stock has a forward dividend yield of 3.77% and pays investors an annual dividend of $6.20 per share. The wide-moat stock is currently trading at a 20% premium to its fair value estimate of $137 per share, leaving it moderately overvalued.
Arch Resources
Coking coal company Arch Resources gained 6.6% in January to end the last 12 months up 26.8%. The stock’s $176.96 price gives it a forward dividend yield of 4.41%. Arch pays investors an annual dividend of $4.52 per share. With a quantitative fair value estimate of $198.82 per share, the no-moat stock is fairly valued.
Ally Financial
Credit services company Ally Financial rose 5.9% in January, leaving it up 16.6% over the past year. At $36.68 per share, Ally has a forward dividend yield of 3.27% and an annual dividend of $1.20 per share. The no-moat stock is trading near its fair value estimate of $40 per share.
What Is the Morningstar Dividend Leaders Index?
The Morningstar Dividend Leaders Index captures the performance of the 100 highest-yielding stocks that have consistent records of paying dividends and can sustain those payments, weighted by the dollar value of their dividends.
It’s a subset of the Morningstar US Market Index (which represents 97% of equity market capitalization) that includes only securities whose dividends are qualified income. Real estate investment trusts are excluded. Companies are screened for dividend consistency and sustainability. Each must have a positive five-year dividend per share growth and a dividend coverage ratio greater than 1. See the full rulebook here.
Photo by Jungwoo Hong on Unsplash