We recently analyzed the best dividend stocks of 2024.
Though Jackson Financial Inc. (NYSE:JXN) ranks fourth on our list of the 10 Best Dividend Stocks of 2024, we have analyzed the stock in detail.
We are nearly halfway through the year, and the stock market is showing consistent signs of improvement. Even though the Dow Jones Industrial Average (DJIA) rose only 3.7% so far this year, its broader partner has surged by 11.1% this year so far, with its 12-month return coming in at nearly 26%, as of the close of May 23. However, dividend stocks are still not keeping up with the broader market, with the Dividend Aristocrats Index returning just 3.85% since the start of 2024. Last year also didn’t go well for these equities as tech stocks rose to fame. That said, the tech stocks that drove the market rally, have decided to enhance their shareholder return by initiating dividend policies this year. This could have an impact on the performance of dividend stocks and the overall market. David Harrell, an editor of the Morningstar Dividend Investor newsletter, made the following comment in this regard:
“The inclusion of the big names [Meta, Alphabet] in any sort of dividend indexes or dividend growth indexes is very likely to increase their correlation with the broad market.”
While dividend stocks lagged behind the market last year, their long-term performance suggests otherwise. Dividend equities represented an average of 34% of the market’s overall return from 1940 to 2023. Not only this, these stocks showed resilience and demonstrated strong performance in comparison to other asset classes during periods of high inflation. In our article titled 25 Things Every Dividend Investor Should Know, we cited data from Hartford Funds and mentioned that during eight inflationary periods between 1970 and 2022, dividend stocks outperformed their non-dividend counterparts. Specifically, during the 1970s, a decade marked by high inflation, dividends accounted for nearly 73% of the S&P 500’s total return.
In addition to this, the dividend growth rate has also surpassed inflation over the years. According to data from Yale University’s Robert Shiller, dividends per share have grown 1.6 percentage points faster annually than inflation since 1871. This growth advantage has increased in recent decades as over the past 50 years, dividends have surpassed inflation by 2.5 percentage points annually, and in the last two decades, by 4.6 annualized percentage points. This ability of dividends to outpace inflation makes them a more attractive investment for long-term investors. Therefore, analysts suggest that investors should not be concerned about dividend stocks underperforming the broader market in the short term.
Another factor attracting investors to dividend stocks is the increasing amount of dividends US companies have paid over the years. According to recent data, the S&P 500 companies paid $151.6 billion in dividends in the first quarter of 2024, up from $146.8 billion during the same period last year. The report also mentioned that 796 companies announced dividend hikes during the quarter, amounting to $22.7 billion, growing from $19.7 billion in the prior-year period. This indicates that dividend payments are on the right track this year. Analysts have also given a positive outlook for dividend stocks in 2024.
Veteran dividend investor Warren Buffett’s portfolio can be a good start for our readers to understand dividend investing. Read Warren Buffett’s 8 Best Dividend Stock Picks.
Jackson Financial Inc. (NYSE:JXN)
Year-to-Date Returns as of May 20: 53.8%
Jackson Financial Inc. (NYSE:JXN) is an American financial services company. In the first quarter of 2024, the company remained committed to its shareholder obligation, returning $172 million to investors, including $56 million in dividends. It started paying dividends in 2021 and has raised its payouts every year since then. The company currently pays a quarterly dividend of $0.70 per share and has a dividend yield of 3.61%, as of May 21. Since the start of 2024, the stock has delivered a 53.8% return to shareholders, which makes JXN one of the best dividend stocks of 2024.
Jackson Financial Inc. (NYSE:JXN) was included in 26 hedge fund portfolios at the end of Q4 2023, up from 19 in the previous quarter, according to Insider Monkey’s database. Among these hedge funds, Mangrove Partners was the company’s leading stakeholder in Q4.
Here is what Miller Value Partners had to say about Jackson Financial Inc. (NYSE:JXN) in its Q1 2024 investor letter:
“Jackson Financial Inc. (NYSE:JXN) reported 4Q23 adjusted operating EPS of $2.53, compared to 4Q22 EPS of $5.66, below consensus of $3.49. Registered index-linked annuity (RILA) sales rose 78.6% Y/Y to $1.0B in the quarter, while FY23 annuity sales fell -18.5% Y/Y to $12.8B. The company returned $117MM to shareholders in 4Q23, bringing FY23 shareholder capital returns to $464MM, or ~9.1% of the company’s market cap. Management raised its quarterly dividend by 12.9% to $0.70/share (~4.2% yield), and established a 2024 shareholder capital return target of $600MM (11.7% of market cap) at the midpoint.”
Jackson Financial Inc. (NYSE:JXN) is the best performing financial dividend stock of 2024, but ranks fourth among all dividend stocks. Click to see the 10 Best Dividend Stocks of 2024.
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Disclosure: None. This article is originally published at Insider Monkey.