We recently published a list of Dividend Champions List: Top 15. In this article, we are going to take a look at where Franklin Resources, Inc. (NYSE:BEN) stands in the dividend champions list.
In this dividend champions list, we will take a look at some of the best dividend stocks with at least 25 consecutive years of dividend growth and yields above 4%.
Dividend champions are companies that have raised their dividends for at least 25 years. While they share this trait with dividend aristocrats, the key difference is that dividend champions don’t need to be part of the S&P Index, whereas aristocrats do. Despite this distinction, what truly sets these stocks apart is their long-standing history of consistently increasing dividend payments to shareholders over time.
Dividend growth is one of the most appealing qualities a company can have in today’s market. Achieving 25 consecutive years of dividend increases is especially impressive, as these companies were able to boost their payouts even through challenging periods like the recent pandemic.
Although dividend stocks have lagged behind the market due to the growing prominence of tech stocks, the value of steady income remains irreplaceable. Dividend stocks are unlikely to fall out of favor. Analysts continue to express confidence in their potential. Earlier this year, BofA predicted that dividend stocks are set for growth, noting they should perform well even if consumer spending slows or a full recovery doesn’t materialize. Subramanian from BofA added that if the Federal Reserve cuts rates or halts hikes, companies can maintain their dividends by borrowing at lower interest rates. The analyst also highlighted that income investors have plenty of options for investing in dividend-paying stocks, such as broad mutual funds or exchange-traded funds (ETFs). This provides a variety of avenues to tap into dividend income.
US companies have focused on paying dividends to shareholders due to their growing cash reserves. At the end of the fourth quarter of 2023, businesses held $3.61 trillion in cash and equivalents on their balance sheets. This marked a 2% decline from the end of 2021 but an 11% increase compared to 2022, according to S&P Global Market Intelligence. The substantial cash reserves held by US companies had a significant impact on their dividend payments. A report by Janus Henderson highlighted that US businesses paid shareholders $161.5 billion in dividends during the second quarter of 2024, marking an 8.6% increase on an underlying basis. Companies paying dividends for the first time this year made the largest contribution to this growth, raising the US underlying total by 3.6 percentage points. While these companies’ dividends are relatively small compared to their profits, they still contributed a notable $3.8 billion. Excluding this effect, the remaining companies in the index saw a 5.0% growth, which aligns more closely with the nation’s long-term trend. This surge from new dividend payers is expected to continue throughout the year, keeping US payout growth ahead of the global average. The report further mentioned that 96% of the companies either maintained or increased their dividends during the quarter.
When investing in dividend stocks, many investors tend to prioritize dividend yields. However, experts recommend focusing more on stocks with consistent dividend growth rather than simply chasing high yields, which may not always be sustainable. That said, dividend yields aren’t necessarily a bad option. A balanced approach that combines healthy yields with steady dividend growth can provide strong investment opportunities for investors. In this dividend champions list, we will take a look at the highest-yielding stocks with at least 25 consecutive years of dividend growth.
Our Methodology:
For this list, we looked at a group of over 150 dividend champions, which are known for raising dividends for 25 years or more. From this list, we chose companies with the highest dividend yields as of September 24 and arranged them in order from lowest to highest yield.
We also measured hedge fund sentiment around each stock according to Insider Monkey’s database of 912 funds as of Q2 2024. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
A modern city skyline with a REIT retail building at the center to symbolize the company’s reach.
Realty Income Corporation (NYSE:O)
Dividend Yield as of September 24: 5.05%
Realty Income Corporation (NYSE:O) has always grabbed the attention of income investors because the company pays monthly dividends to shareholders. The real estate investment trust company mainly invests in commercial properties across the US. The company’s portfolio covers 90 different industries and includes over 1,500 clients. In addition to its US properties, it owns several locations in Europe. Key clients include Dollar Tree, Walgreens, and Dollar General. This level of diversification helps minimize overall risk by avoiding heavy exposure to specific industries, while also contributing to long-term stability. The stock has surged by nearly 7% since the start of 2024.
Realty Income Corporation (NYSE:O) has a strong balance sheet, largely supported by its portfolio. In the second quarter of 2024, the company reported a high occupancy rate of 98.8%, collected 105.7% of rent from re-leased properties, and saw a 0.2% rise in same-store rental revenue. Quarterly revenue reached $1.28 billion, reflecting a 29% year-over-year growth.
By the end of the quarter, Realty Income Corporation (NYSE:O) had about $443 million in cash and cash equivalents. On September 10, the company announced a 0.2% increase in its monthly dividend to $0.2635 per share, marking its 127th dividend hike since going public in 1994. Overall, the company has raised its payouts for 30 consecutive years, which makes O one of the best stocks on our dividend champions list. The stock supports a dividend yield of 5.05%, as of September 24.
Realty Income Corporation (NYSE:O) was a part of 19 hedge fund portfolios at the end of Q2 2024, compared with 25 in the previous quarter, according to Insider Monkey’s database of Q2 2024. The consolidated value of these stakes is over $135.3 million.
Overall, O ranks 8th on our list of dividend champions. While we acknowledge the potential for O to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than O but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.