Finding the best dividend stocks to buy is a popular choice among investors seeking a steady income stream. With market volatility and ongoing uncertainty with interest rates, dividend-paying companies can add an extra layer of stability.
As we step into July 2024, the market presents a plethora of options to diversify your investment portfolio. When selecting dividend stocks, it’s essential to consider the company’s dividend yield and growth prospects. A dividend yield between 1-3% often indicates a company’s financial health. However, the yield alone should not be the sole determinant. Understanding the company’s earnings growth, free cash flow, and dividend growth is crucial to ensure the sustainability of the dividend payments.
By carefully selecting companies that meet these criteria, investors can be on their way to achieving financial freedom. Now, let’s unpack the 3 best dividend stocks to buy in July 2024!
NextEra Energy (NEE)
NextEra Energy (NYSE:NEE) is a leading renewable energy and utility company headquartered in Juno Beach, Florida. The company operates through its two wholly owned subsidiaries, Florida Power and Light and NextEra Energy Resources.
NextEra Energy is well-positioned to benefit from the global shift towards sustainable energy solutions. Its subsidiary, Florida Power & Light, is the largest electric utility company in Florida, and one of the largest in the United States. Moreover, NextEra Energy Resources is the world’s largest generator of renewable energy from the wind and sun. This segment operates energy storage facilities, an area that will see robust growth over the next decade. NextEra also had an incredible operational year in the 2023 fiscal year, while growing its backlog of solar and energy storage projects. Presently, management is extremely confident in its ability to execute its long-term strategy. NEE’s dividend yield currently stands at 2.87%, with a payout ratio that ensures the sustainability of its dividend. With 10% dividend growth forecasted through 2026, NEE stock is among the best dividend stocks to buy in 2024.
Eaton Corporation (ETN)
Eaton Corporation (NYSE:ETN) is a multinational power management company headquartered in Dublin, Ireland. With a diversified portfolio spanning electrical, hydraulic, vehicle transmissions, and industrial control systems, Eaton is able to cater to a wide range of industries.
Eaton’s relatively low payout ratio and growing cash flow display positive signs for future dividend raises. The company has raised its dividend for 15 consecutive years and has maintained a payout ratio of around 40-50%. This is a testament to its diversified business model, providing stable revenue and cash flow from operations. Furthermore, its business has never looked stronger after emerging from its pandemic slump in 2020. Management’s strong execution has translated to significant revenue and earnings per share growth over the last 3 years.
Additionally, its growth is accelerating in the 2024 fiscal year. In Q1 FY24, revenue increased 8% year over year to $5.94 billion. It saw record segment margins of 23.1%, up 340 basis points from the year prior. For investors seeking the best dividend stocks to buy in 2024, ETN stock should certainly be kept on your radar.
Republic Services (RSG)
Republic Services (NYSE:RSG) provides waste disposal and recycling services, offering a unique investment opportunity in the environmental services sector. As the world continues to grapple with the challenges of waste management, Republic Services is well-positioned to meet the growing demands.
Republic Services is a great company for investors seeking investment opportunities in a stable industry. The company’s extensive network of landfills, recycling centers, and transfer stations positions it as a leader in the industry. Its strategy of acquiring smaller waste management companies has significantly bolstered its market position and expanded its service offerings. Furthermore, its financial performance has been extremely impressive over the last few years. Its strong cash flow generation, stable business model, and growing demand for its services underpin its ability to sustain and grow its dividend.
This has allowed the company to increase its dividend for 21 consecutive years. Additionally, Republic Services boasts a dividend yield of around 1.11%. With a strong outlook for the 2024 fiscal year, discerning investors have a unique opportunity to capitalize on its long-term upside potential.
On the date of publication, Terel Miles 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.