We recently compiled a list of the Top 20 Dividend Stocks of 2024. In this article, we are going to take a look at where JPMorgan Chase & Co. (NYSE:JPM) stands against the other dividend stocks.
Macroeconomic factors have weighed on US stocks in the final days of the year, with the broader market declining by over 1% in the past week. Despite this post-Christmas slowdown, US financial markets are on the verge of closing out another exceptional year. The broader market index is projected to post a roughly 25% gain for 2024, marking the first back-to-back annual increases of more than 20% since 1997-1998. This strong performance has been supported by positive economic indicators, including resilient consumer spending and a robust labor market. Inflation, though still elevated, has shown consistent signs of moderation.
Improved economic data and easing inflation have also influenced the Federal Reserve’s policy shift this year. Anticipation of rate cuts contributed to market growth, with the central bank implementing its third rate reduction in 2024.
Dividend stocks have had a relatively weak performance this year, with the Dividend Aristocrats Index achieving a modest return of about 4%, widening the gap between its performance and that of the broader market. The index tracks the performance of companies that have raised their payouts for at least 25 consecutive years. However, investors shouldn’t lose confidence in these results, as the value of dividend stocks becomes more apparent over the long term. A report by Franklin Templeton highlighted that, since 1926, dividends have accounted for nearly one-third of the total equity returns of US stocks. Additionally, from 1980 to 2019—a period marked by a sharp decline in interest rates—dividends contributed 75% to the market’s overall returns.
Investors are often drawn to dividend growth stocks because dividend payments are generally viewed as a sign of long-term commitment. Maintaining these payments demands profitability, strong returns, and consistent cash flow generation, making them a valuable indicator of a company’s quality. Businesses that regularly raise their dividends showcase their ability to consistently generate profits, which can also signal greater resilience during economic or market downturns. According to research, companies within the broader market that pay dividends have historically been more profitable compared to those that do not.
Reflecting investors’ preference for dividend stocks, many US companies are increasing their payouts and implementing dividend policies. As of September 30, 2024, around 80% of companies in the Index paid dividends, a figure consistent with a decade ago. Notably, 24% of these dividend-paying companies now belong to the technology sector, a significant rise from 13% ten years earlier, as reported by Franklin Templeton. Other innovative industries, such as healthcare and industrials, have also seen growth in dividend payers.
This broader adoption of dividends has expanded the range of options for equity income investors, offering greater access to dynamic and high-growth companies. For instance, major tech companies that are market leaders have recently introduced dividends. Meanwhile, established tech giants demonstrate that dividend payments can coexist with innovation and reinvestment, proving that companies can excel at both.
Our Methodology:
For this list, we reviewed a selection of dividend stocks and identified those that have provided positive returns in 2024. From this group, we focused on companies offering yields above 2% as of December 30. We then narrowed down the list by selecting companies with the most hedge fund investments, based on Insider Monkey’s Q3 2024 database. The stocks are arranged in ascending order of hedge funds having stakes in them.
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 group of business people discussing plans around a boardroom table adorned with a financial services company logo.
JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 105
JPMorgan Chase & Co. (NYSE:JPM) is a New York-based multinational investment banking company. The company’s diverse revenue streams make it an attractive investment option. With operations spanning consumer and commercial banking, capital markets, and asset management, its diversification enables strength in one sector to offset weaknesses in others, enhancing overall stability. In the past 12 months, the stock has delivered an over 39% return to shareholders.
In the third quarter of 2024, JPMorgan Chase & Co. (NYSE:JPM) reported revenue of $42.7 billion, marking a 7% increase from the same period last year. The company showed strong financial and operational results, with a net income of $12.9 billion and a return on tangible common equity (ROTCE) of 19%. The Corporate & Investment Bank (CIB) division performed well, with a 31% rise in investment banking fees and an 8% increase in the Market’s revenue.
JPMorgan Chase & Co. (NYSE:JPM) also proved to be a generous dividend payer, distributing around $3.06 billion in dividends to shareholders during the quarter. The company currently pays a quarterly dividend of $1.25 per share, yielding 2.09% as of December 30.
At the end of Q3 2024, 105 hedge funds tracked by Insider Monkey held stakes in JPMorgan Chase & Co. (NYSE:JPM), compared with 111 in the previous quarter. The consolidated value of these stakes is more than $8.6 billion.
Overall JPM ranks 1st on our list of the best dividend stocks of 2024. While we acknowledge the potential of JPM as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than JPM 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.