In this article, we discuss 13 best diversified dividend stocks to invest in. You can skip our detailed analysis of dividend stocks and their performance over the years, and go directly to read 5 Best Diversified Dividend Stocks To Invest In.
Diversified stocks mean companies with exposure to a variety of sectors, industries, and geographic regions. These are usually conglomerates that make money operating in a number of businesses (think Warren Buffett's Berkshire Hathaway). The purpose of diversification is to reduce risk by spreading investments across different assets, thereby minimizing the impact of any single stock or sector performing poorly. In 2023, global stock markets experienced significant growth, with particular attention on Wall Street's impressive performance. The U.S. stock market, being the largest globally, notably led the way with remarkable gains. The S&P 500 index surged by 24.2% in 2023 and the Nasdaq index witnessed an outstanding increase of 43.4%, achieving its highest annual gain since 2020. Despite initial expectations, the economy managed to evade a recession, and the stock market rally surpassed many predictions. However, analysts hold divergent views on what lies ahead for the stock market in 2024, offering a mixed outlook for the year.
Based on the positive trends observed last year, analysts are optimistic about the stock market's prospects for the current year, although they anticipate some minor declines along the way. A report from JP Morgan suggested that due to decreasing inflation in the US and the possibility of the Federal Reserve adopting more relaxed policies, there's growing discussion of a "soft landing" rather than a severe economic downturn or bear market. Leading indicators point to a slowdown in growth but not a complete collapse. Generally, equity markets tend to hit their lowest point well before economic conditions reach their worst, although there have been exceptions such as during the dot-com cycle. While there's still a risk of recession in the upcoming year, the key takeaway is that even if it does happen, it's likely to be mild, especially considering the support the Fed is providing to the banking system through increased liquidity. The report further mentioned that in 2023, earnings for the S&P 500 remained stagnant overall. However, they saw a significant increase of 33% for the seven largest companies, while the rest of the S&P 500 experienced a decline of 5%. Looking ahead to 2024, it appears to be a year characterized by slowing GDP growth, single-digit increases in earnings, and single-digit returns for the typical S&P 500 stock.
According to analysts at JP Morgan, investors should consider a diversified portfolio consisting of cash, long-term government bonds, high-quality corporate bonds, and equities. They also find the industrial and energy sectors appealing, particularly due to the industrial policies in the US. Analysts express positivity towards the energy sector primarily because it continues to offer attractive opportunities for earnings yield, dividends, and stock buybacks.
According to Bloomberg's 2024 Outlook report, numerous analysts are favoring dividend stocks as an investment choice for the current year. The strategists at Capital Group made the following statement:
“With investors swept up in the artificial intelligence fervor, valuations for dividend-paying stocks have quietly drifted toward multi-decade lows compared to the broader market. With growth expected to moderate in 2024, and the potential for recession lingering, dividends may take a more prominent role in driving total returns for investors.”
As previously stated, diversified companies play a crucial role in reducing risk. By investing in a diversified portfolio of dividend-paying companies across various sectors, investors can spread their risk and reduce exposure to any single company or industry's performance. Furthermore, dividend-paying companies tend to be more mature and financially sound, as they prioritize returning profits to shareholders. General Electric Company (NYSE:GE), Danaher Corporation (NYSE:DHR), and Johnson & Johnson (NYSE:JNJ) are some of the best diversified dividend stocks among others that are discussed below.
For this list, we scanned Insider Monkey’s database of Q4 2023 and selected conglomerate firms that specialize in several different businesses and pay regular dividends to shareholders. The list is ranked in ascending order of the number of hedge funds having stakes in the companies. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here).
Unilever PLC (NYSE:UL) is a London-based multinational consumer goods company that operates in various sectors of the consumer goods industry, including food and beverages, cleaning agents, beauty and personal care products. On February 8, the company declared a quarterly dividend of $0.4582 per American Depositary Share (ADS). The stock's dividend yield on February 21 came in at 3.63%. It is among the best diversified dividend stocks on our list.
At the end of Q4 2023, 25 hedge funds tracked by Insider Monkey reported having stakes in Unilever PLC (NYSE:UL), growing from 21 in the previous quarter. The consolidated value of these stakes is nearly $751 million. With roughly 11 million shares, Fisher Asset Management was the company's leading stakeholder in Q4.
Church & Dwight Co., Inc. (NYSE:CHD) is an American consumer packaged goods company that is primarily engaged in the production, marketing, and distribution of a wide range of household and personal care products. On February 2, the company announced a 4.1% hike in its quarterly dividend to $0.2838 per share. Through this increase, the company achieved its 28th consecutive annual dividend hike, which makes CHD one of the best dividend stocks on our list. The stock's dividend yield on February 21 came in at 1.15%.
As of the close of Q4 2023, 30 hedge funds in Insider Monkey's database reported having stakes in Church & Dwight Co., Inc. (NYSE:CHD), down slightly from 33 in the preceding quarter. The overall value of these stakes is over $1.05 billion.
Carlisle Companies Incorporated (NYSE:CSL) is next on our list of the best dividend stocks. The diversified industrial company operates through multiple segments, serving various industries with a wide range of products and solutions. On January 30, the company announced a quarterly dividend of $0.85 per share, which was in line with its previous dividend. Overall, it holds an impressive dividend growth streak of 47 consecutive years. As of February 21, the stock has a dividend yield of 0.98%.
At the end of December 2023, 35 hedge funds owned stakes in Carlisle Companies Incorporated (NYSE:CSL), compared with 37 in the previous quarter, as per Insider Monkey's database. The collective value of these stakes is over $765.4 million. Among these hedge funds, Generation Investment Management was the company's leading stakeholder in Q4.
Corning Incorporated (NYSE:GLW) is an American multinational tech company that operates in several segments and is best known for its expertise in specialty glass, ceramics, and related materials. Corning's products and solutions are utilized across various industries, including telecommunications, display technologies, environmental technologies, life sciences, and automotive.
Corning Incorporated (NYSE:GLW), one of the best dividend stocks on our list, currently offers a quarterly dividend of $0.28 per share. The company has raised its dividends for the past 13 years in a row. The stock has a dividend yield of 3.49%, as of February 21.
The number of hedge funds tracked by Insider Monkey owning stakes in Corning Incorporated (NYSE:GLW) jumped to 37 in Q4 2023, from 24 in the previous quarter. These stakes are worth over $234 million in total.
TE Connectivity Ltd. (NYSE:TEL) is a global technology company that designs and manufactures a wide range of connectivity and sensor solutions. The company operates in several key segments and serves various industries including automotive, aerospace, defense, industrial, data communications, telecommunications, consumer electronics, energy, and medical.
On February 14, TE Connectivity Ltd. (NYSE:TEL) declared a quarterly dividend of $0.59 per share, which fell in line with its previous dividend. Overall, the company has been growing its dividends for the past nine years, which makes TEL one of the best diversified dividend stocks on our list. The stock's dividend yield on February 21 came in at 1.69%.
Insider Monkey's database of Q4 2023 indicated that 42 hedge funds owned stakes in TE Connectivity Ltd. (NYSE:TEL), compared with 46 in the preceding quarter. The consolidated value of these stakes is over $2.03 billion.
Emerson Electric Co. (NYSE:EMR) is a Missouri-based technology and engineering company that provides solutions for industrial, commercial, and residential markets. It is one of the best dividend stocks on our list as the company holds a strong 67-year-long dividend growth streak. Currently, it pays a quarterly dividend of $0.525 per share and has a dividend yield of 2.01%, as recorded on February 21.
According to Insider Monkey's database of Q4 2023, 50 hedge funds owned stakes in Emerson Electric Co. (NYSE:EMR), down from 53 in the previous quarter. The collective value of these stakes is more than $1.44 billion. With over 3.5 million shares, Adage Capital Management was the company's leading stakeholder in Q4.
Colgate-Palmolive Company (NYSE:CL) is a multinational consumer goods company that specializes in the production, distribution, and marketing of oral care, personal care, home care, and pet nutrition products. The company offers a quarterly dividend of $0.48 per share for a dividend yield of 2.25%, as of February 21. It is one of the best dividend stocks on our list as the company maintains a 61-year streak of consistent dividend growth.
Insider Monkey's database of Q4 2023 showed that 54 hedge funds held stakes in Colgate-Palmolive Company (NYSE:CL), up from 52 in the previous quarter. The total value of these stakes is nearly $3 billion.
Honeywell International Inc. (NYSE:HON) is a diversified technology and manufacturing company that operates across various sectors, providing products and services for a wide range of industries and applications. The company has raised its dividends 14 times in 13 consecutive years, which makes it one of the best dividend stocks on our list. Currently, it offers a quarterly dividend of $1.08 per share and has a dividend yield of 2.16%, as of February 21.
Honeywell International Inc. (NYSE:HON) was a part of 55 hedge fund portfolios at the end of Q4 2023, compared with 60 in the previous quarter, as per Insider Monkey's database. The stakes owned by these hedge funds have a collective value of $1.6 billion. Among these hedge funds, Adage Capital Management was the company's leading stakeholder in Q4.
