Top-Performing Dividend Stocks of January 2024 (2024)

Dividend-paying stocks that combine healthy balance sheets with hefty yields can provide investors with steady incomes, cushion against market downturns, and grow investments at a healthy clip.

In January 2024, the top-performing dividend payers included Verizon Communications VZ, MDC Holdings MDC, and International Business Machines IBM.

To find the month’s best-performing income-focused stocks, we screened the Morningstar Dividend Leaders Index, which tracks the performance of the 100 highest-yielding stocks from a broad basket of consistent dividend payers.

The Top-Performing Dividend Leaders of January 2024

1. Verizon Communications VZ
2. MDC Holdings MDC
3. International Business Machines IBM
4. CVR Energy CVI
5. Advance Auto Parts AAP
6. Citigroup C
7. Phillips 66 PSX
8. AbbVie ABBV
9. Arch Resources ARCH
10. Ally Financial ALLY

How Have Dividend Stocks Performed Over the Past Year?

In the 12 months leading up to Jan. 31, the Morningstar Dividend Leaders Index rose 0.2%, trailing dividend stocks overall, which rose 8.2% as measured by the Morningstar Dividend Composite Index.

During the same period, the overall U.S. stock market gained 19.9% as measured by the Morningstar US Market Index.

Yields and Morningstar Metrics for the Best-Performing Income Stocks

Verizon Communications

Telecom services company Verizon rose 14.1% in January to end the last 12 months up 8.2%. Trading at $42.35 per share, its stock has a forward dividend yield of 6.28%. Verizon pays investors an annual dividend of $2.64 per share. The narrow-moat stock is currently trading at a 22% discount to its fair value estimate of $54 per share, leaving it moderately undervalued.

MDC Holdings

Residential construction firm MDC Holdings rose 13.3% in January, leaving it up 71.3% over the past year. At $62.58 per share, its stock has a forward dividend yield of 3.44% and an annual dividend of $2.20 per share. The no-moat stock is moderately undervalued, trading 25% below its quantitative fair value estimate of $83.57 per share.

International Business Machines

Information technology services company IBM gained 12.3% in January to end the last 12 months up 41.2%. The stock’s $183.66 price gives it a forward dividend yield of 3.62%. IBM pays investors an annual dividend of $6.64 per share. With a fair value estimate of $139 per share, the narrow-moat stock is moderately overvalued, trading at a 32% premium.

CVR Energy

Oil and gas refining and marketing firm CVR Energy rose 11.3% in January, leaving it up 15.2% over the past year. Trading at $33.73 per share, CVR stock has a forward dividend yield of 5.93% and an annual dividend of $8 per share. The narrow-moat stock is trading near its quantitative fair value estimate of $38.63 per share.

Advance Auto Parts

Specialty retail company Advance Auto Parts gained 10.0% in January, to end the last 12 months down 54.6%. Trading at $66.85 per share, its forward dividend yield is 1.50%. Advance Auto Parts pays investors $1 per share annually. The narrow-moat stock is trading near its quantitative fair value estimate of $135.53 per share.

Citigroup

Diversified bank Citigroup gained 9.2% in January, leaving it up 11.6% over the past year. At $56.17 per share, Citigroup stock has a forward dividend yield of 3.74% and an annual dividend of $2.12 per share. The no-moat stock is moderately undervalued, trading 15% below its fair value estimate of $66 per share.

Phillips 66

Oil and gas refining and marketing company Phillips 66 rose 8.4% in January to end the last 12 months up 48.1%. Trading at $144.31 per share, Phillips 66 stock has a forward dividend yield of 2.91% and an annual dividend of $4.20 per share. The narrow-moat stock is moderately overvalued, trading 21% above its fair value estimate of $119 per share.

AbbVie

Drug manufacturer AbbVie rose 7.1% in January, leaving it up 15.3% over the past year. Trading at $164.40 per share, AbbVie stock has a forward dividend yield of 3.77% and pays investors an annual dividend of $6.20 per share. The wide-moat stock is currently trading at a 20% premium to its fair value estimate of $137 per share, leaving it moderately overvalued.

Arch Resources

co*king coal company Arch Resources gained 6.6% in January to end the last 12 months up 26.8%. The stock’s $176.96 price gives it a forward dividend yield of 4.41%. Arch pays investors an annual dividend of $4.52 per share. With a quantitative fair value estimate of $198.82 per share, the no-moat stock is fairly valued.

Ally Financial

Credit services company Ally Financial rose 5.9% in January, leaving it up 16.6% over the past year. At $36.68 per share, Ally has a forward dividend yield of 3.27% and an annual dividend of $1.20 per share. The no-moat stock is trading near its fair value estimate of $40 per share.

What Is the Morningstar Dividend Leaders Index?

The Morningstar Dividend Leaders Index captures the performance of the 100 highest-yielding stocks that have consistent records of paying dividends and can sustain those payments, weighted by the dollar value of their dividends.

It’s a subset of the Morningstar US Market Index (which represents 97% of equity market capitalization) that includes only securities whose dividends are qualified income. Real estate investment trusts are excluded. Companies are screened for dividend consistency and sustainability. Each must have a positive five-year dividend per share growth and a dividend coverage ratio greater than 1. See the full rulebook here.

The Best Dividend Stock Leaders: More Ideas to Consider

Investors who would like to find more top-performing or cheap dividend stocks can do the following:

• Review the full list of stocks in the Morningstar Dividend Leaders Index. Stocks with Morningstar Ratings of 4 or 5 stars are undervalued, according to our metrics.
• Use the Morningstar Investor Screener tool to find the best dividend stocks according to your specific criteria. You can search for stocks based on their dividend yields, valuation measures like price/earnings ratios, and more.
• Use Morningstar Investor to build a watchlist of the best dividend stocks and easily follow those stocks’ valuations, ratings, and dividend yields.
• Watch our dividend stock video series, hosted by David Harrell, for ideas to consider.

This article was edited by Lauren Solberg.

Companies that are not formally covered by a Morningstar analyst have quantitative ratings. These companies are statistically matched to analyst-rated companies, allowing our models to calculate a quantitative moat, fair value, and uncertainty rating.

As part of our mission to put more information into the hands of investors, this article was compiled from Morningstar’s data and independent research using automation technology. The original article was written by Morningstar reporters and editors. This updated version was reviewed by an editor.