The 10 Best Dividend Stocks of All Time  (2024)

Any discussion regarding the best dividend stocks of all time often starts with the Dividend Aristocrats. They are S&P 500 companies that have increased their annual dividend payment for at least 25 consecutive years. There are currently 65 names on this prestigious list.

While there is no question the 65 Dividend Aristocrats have staying power, that doesn’t necessarily mean they qualify for the best dividend stocks of all time. To my mind, it’s not just about increasing the annual dividend payment but also about delivering market-beating total returns.

So, for this article, I am broadening my search to include companies in the S&P 1500 that demonstrate shareholder-friendly capital allocation by delivering both healthy dividends and share repurchases.

To make the cut, the companies on this list must have 10-year annualized total returns greater than the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) (12.18%), paid out $500 million in dividends in the latest fiscal year, repurchased shares in two of the last three fiscal years, and have a dividend yield greater than 2%.

Best Dividend Stocks of All Time: Amgen (AMGN)

Amgen (NASDAQ:AMGN) has a 10-year annualized total return of 13.69% through Dec. 30, 2022. In 2021, it paid out $4.01 billion in dividends and currently yields 3.26%.

On Dec. 12, 2022, Amgen announced that it would acquire Horizon Therapeutics for $27.8 billion plusthe assumption of $500 million in debt. The offer is a 48% premium to Horizon’s closing share price on Nov. 29, the day Amgen announced a possible acquisition was in the works.

Horizon specializes in potential treatments for autoimmune and severe inflammatory diseases. Its Tepezza drug treats thyroid eye disease. The drug received approval from the Food and Drug Administration (FDA) in early 2020.

Year-to-date, Teppezza’s sales were $1.47 billion through the first nine months of 2022. They account for 57% of Horizon’s Orphan drug segment’s revenue.

The acquisition of Horizon accelerates Amgen’s growth in the treatment of rare diseases. Starting in 2024, Horizon will add to earnings. In addition, Amgen’s expected to generate more than $500 million in annual savings from the acquisition.

Amgen’s trailing 12-month free cash flow is $9 billion. Based on a market capitalization of $139.6 billion, it has a free cash flow yield of 6.4%, putting it squarely in fair value territory.

Texas Instruments (TXN)

Texas Instruments (NASDAQ:TXN) has a 10-year annualized total return of 19.94%. In 2021, it paid out $3.89 billion in dividends and currently yields 3.04%.

Over the past several years, I’ve had the opportunity to recommend investors buy Texas Instruments stock. The most recent example is September 2022. I included TXN with two other high-tech dividend stocks to buy and hold.

The company is obsessed with capital allocation. Between 2004 and 2021, it increased its free cash flow by 12% annually, leading to a 25% annual increase in its dividend payout. Over those 17 years, it also reduced its share count by nearly 50%.

While 2023 could be another tough year for the semiconductor industry, Texas Instruments’ high yield allows you to bide your time until the sector rebounds later in the year.

Back in May 2020, I included TXN on a list of 20 stable stocks to buy if you’re still betting on America to thrive. Its stock’s up around 50% since. That’s about 50% better than the S&P 500.

In late October, the company announced healthy, if not robust revenue and earnings per share growth. The only downer was a 17% reduction in free cash flow over the trailing 12 months to $5.9 billion. However, that had more to do with a doubling of its capital expenditures than a faltering business.

It remains an excellent dividend stock to own for the long haul.

Best Dividend Stocks of All Time: BlackRock (BLK)

BlackRock (NYSE:BLK) has a 10-year annualized total return of 14.87%. In 2021, it paid out $2.55 billion in dividends and currently yields 2.74%.

The asset management firm got a downgrade in mid-October from UBS analyst Brennan Hawken. The analyst lowered his rating from “buy” to “neutral” because of the asset management company’s focus on environmental, social, and governance (ESG) principles.

While it is true that BlackRock is facing criticism from all sides on this issue, the potential loss of business it faces is overstated. As Barron’s reported, BlackRock has attracted $1.5 trillion in net new investments since the end of 2018.

In December, Tariq Fancy, BlackRock’s one-time Chief Investment Officer for Sustainable Investing — he served in the role for 21 months until September 2019 — suggested that CEO Larry Fink should step down from his role if he won’t back up the company’s ESG stance with real action.

Fox News, who reported Fancy’s call to action, got an interesting quote from a BlackRock spokesperson:

“It’s absurd that he [Fancy] would suggest a CEO step down who has delivered a cumulative total return to shareholders over 23 years of 7,700% — the best performing financial firm in the S&P over that time — by consistently putting clients’ interests first.”

Asset management firms of all kinds are suffering through bear markets and higher interest rates. Over the long haul, Fink and his management team will deliver for patient shareholders.

Lockheed Martin (LMT)

Lockheed Martin (NYSE:LMT) has a 10-year annualized total return of 19.89%. Over the past year, its total return was nearly 38%. In 2021, it paid out $2.94 billion in dividends and currently yields 2.51%.

The defense contractor best known for making the F-35 fighter aircraft got a new CEO this past June. Marilyn Hewson, one of the few women leading an S&P 500 company, stepped aside as CEO after serving in the top job since 2013. Replacing her as CEO was board member Jim Taiclet.

Under Hewson’s leadership, LMT stock gained 345% compared to 165% for the S&P 500. It’s another example of why more women should be CEOs. They deliver the goods.

As we saw in 2022, defense and aerospace businesses make excellent investments. There’s always some big project they’re working on that generates massive cash flow.

As of the end of September, the company’s backlog was $140 billion. That backlog will take several years to fulfill. In the meantime, it continues to generate lots of free cash flow — $2.7 billion in Q3 2022 and approximately $6 billion in 2022.

During Q3, LMT paid out $739 million in dividends and completed $1.4 billion in share repurchases. In October, it added $14 billion to its repurchase program and expects to finish fiscal 2022 having bought back $8 billion of its stock.

Best Dividend Stocks of All Time: Home Depot (HD)

Home Depot (NYSE:HD) has a 10-year annualized total return of 19.19%. In 2021, it paid out $6.99 billion in dividends and currently yields 2.41%.

The home improvement retailer had a rare down year in the markets. It lost nearly 24% in 2022 (not including dividends). Investors, rightly or wrongly, feel higher interest rates and inflation make home improvement stocks off limits.

If you’re buying for the long term, there is no question the stock will deliver above-average returns.

In late November, I discussed why I thought HD was one of the stocks in the Dow Jones Industrial Average that investors should take seriously in 2023. Besides being a great dividend stock, I like it for several other reasons.

First, board member Paula Santilli bought nearly $500,000 of its stock in the open market on Nov. 16. It was her first open-market purchase since she joined the board on March 1 — and it was a big one.

Second, despite inflation and rising interest rates, it reported good third-quarter results in mid-November. It might actually benefit from homeowners staying home more to save money.

Lastly, Cowen analysts recently put Home Depot on its Conviction Buy list for retail stocks in 2023. It feels that the company’s Pro business gives it an advantage over Lowes (NYSE:LOW) in an economic environment like the one we’re likely to face in the year ahead.

Yielding 2.4%, get paid to wait for the markets to come around.

Hormel Foods (HRL)

Hormel Foods (NYSE:HRL) has a 10-year annualized total return of 12.92%. In fiscal 2022 (October year-end), it paid out $558 million in dividends and currently yields 2.40%.

The food company has increased its annual dividend for 57 consecutive years. At the same time it reported record sales and earnings growth in late November, Hormel announced that it would increase its annual dividend by 6% to $1.10 per share.

I don’t know if Spam’s resurgence is a sign of how expensive food has gotten or if it really is tastier than I imagined. Hormel announced in December that Spam delivered an eighth straight year of record sales. It turns out it’s very popular in Hawaiian, Asian and Pacific island cuisine. Who knew?

Spam is part of the company’s Grocery Products division. In 2022, the division added sales of $3.02 billion, 10% higher than a year earlier. Evidently, Spam had something to do with the increase. However, it is the company’s Refrigerated Foods business that continues to generate the most revenue for the company (56%).

In the years ahead, it plans to grow its business outside the U.S. They currently account for less than 6% of its overall revenue.

It’s a stable performer in good times and bad.

Best Dividend Stocks of All Time: Illinois Tool Works (ITW)

Illinois Tool Works (NYSE:ITW) has a 10-year annualized total return of 15.32%. In 2021, it paid out $1.46 billion in dividends and currently yields 2.38%. In August, ITW announced a 7% increase in the quarterly dividend payout to $1.31 a share. The company has increased its annual dividend for 59 consecutive years.

The industrial conglomerate’s goals are straightforward. It expects organic revenue growth of 3-5%, 28% operating margins, 7-10% EPS growth, and converts 100% or more of its net income to free cash flow, and a dividend payout of approximately 58%.

Illinois Tool Works’ diversification is second to none. It has seven operating segments. And each of the seven segments accounts for at least 10% of its 2021 revenue of $14.5 billion. For all of 2022, it expects full-year organic revenue growth of 11.5% at the midpoint of its guidance to $15.9 billion with free cash flow that’s 80% of net income.

Analysts aren’t sold on ITW. Of the 24 that cover it, only three rate it overweight or an outright buy. Most (17) have it at hold with four at an outright sell with an average target price of $210.37, below where it’s currently trading.

The primary reason: It’s expensive at nearly 24x the 2023 EPS estimate of $9.22. That’s slightly higher than its five-year average of 22x.

It’s worth paying a little more for safety.

Air Products & Chemicals (APD)

Air Products & Chemicals (NYSE:APD) has a 10-year annualized total return of 15.70%. In fiscal 2022 (September year-end), it paid out $1.38 billion in dividends and currently yields 2.11%. The company has increased its annual dividend for 40 consecutive years.

On Oct. 6, 2022, Air Products announced that it would invest $500 million to build a green hydrogen production facility in Massena, New York. The facility will be able to produce up to 35 metric tons per day. In addition, the site will handle liquid hydrogen distribution and dispensing operations.

In December, the company announced that it is teaming up with AES (NYSE:AES) to build a $4 billion green hydrogen production facility in Texas. The facility will be the largest green hydrogen facility in the U.S. when it opens in 2027. The facility will be capable of producing more than 200 metric tons per day of green hydrogen.

In 2018, the company committed to investing $30 billion in capital over a 10-year period, ending in 2027. This is part of the company’s efforts to reduce its carbon dioxide emissions by one-third in 2030.

Air Products reported its Q4 2022 and full-year earnings on Nov. 3. The company’s full-year EPS estimate was $10.3o. It earned 11 cents more than that, increasing earnings by 15% over 2021.

In 2023, it expects to earn $11.35 a share at the midpoint of its guidance. That’s based on $5.0-$5.5 billion in capital expenditures. Over the past 10 years, it’s grown its adjusted EPS by 11% compounded annually. Not surprisingly, its dividends have grown by a similar amount over the same period.

Consistent growers of earnings are also consistent growers of dividends.

Best Dividend Stocks of All Time: McDonald’s (MCD)

McDonald’s (NYSE:MCD) has a 10-year annualized total return of 13.69% through Dec. 30, 2022. In 2021, it paid out $3.92 billion in dividends and currently yields 2.30%.

McDonald’s should change its slogan, “You deserve a break today,” to “Just Do It.” Yes, I know, that’s Nike’s (NYSE:NKE) mantra.

As long as I’ve followed the Golden Arches, the one thing that I’ve found about its stock is that it always seems to deliver when people least expect it to.

A good example is the past year. It’s up 0.52% over the past year at a time when its industry peers are down an average of 7.56% on a total return basis. In fact, on Nov. 10, MCD stock hit an all-time high of $281.67.

Cowen analyst Andrew Charles raised his target price by $13 to $293 in late October, suggesting that the company’s ongoing domination of the U.S. market will continue to drive an above-average performance from the company.

In these inflationary times, we in the media often talk about pricing power. McDonald’s has it. It raised prices by 10% on average compared to last year. During its Q3 2022 conference call, CFO Ian Borden said that it was gaining market share of the low-income consumer market because it still provides perceived value and affordability.

Oh, and about that U.S. performance. In the third quarter, its U.S. same-store sales grew more than 6%, its ninth consecutive quarter of growth. Internationally, they were even better, resulting in global same-store sales growth of nearly 10%.

Automatic Data Processing (ADP)

Automatic Data Processing (NYSE:ADP) has a 10-year annualized total return of 17.21%. In fiscal 2022 (June year-end), it paid out $1.66 billion in dividends and currently yields 2.10%.

The provider of payroll and human capital management solutions has increased its annual dividend for 48 consecutive years. On Nov. 9, ADP announced a 21-cent increase in its quarterly dividend. The company’s annual rate is now $5.00 a share.

Also in November, ADP announced a new $5 billion share repurchase authorization program to replace its old one.

There are 20 analysts currently covering ADP stock. Most of the analysts have a hold rating on its stock with an average target price of $252.19, just 6% higher than where its share price is currently trading.

Don’t be alarmed by this. The products and services that it offers companies — payroll management and human capital management — are services that aren’t going away. That’s why it’s expected to earn $8.11 a share in 2022 and $8.98 a share in 2023. That’s 26.5x its 2023 earnings.

At first glance, this multiple probably seems high. However, it’s less than its five-year average of 28.6x forward earnings.

ADP has one of the best 10-year total returns of the Dividend Aristocrats. That says something.

On the date of publication, Will Ashworth 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.