3 top US dividend stocks for value investors to consider in 2024

I’m searching far and wide to find the best dividend stocks that money can buy. Do the Americans have more to offer when it comes to value investing?

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Having largely covered every valuable dividend stock in the UK market, I decided to see what’s happening across the pond. US stocks on average don’t appear to pay as high dividends as the UK, with a stronger focus on growth

However, I’ve uncovered three US stocks that could secure investors decent value via dividends in 2024.

AbbVie

AbbVie (NYSE:ABBV) is a pharmaceutical giant in the US and the largest company on this list with a $292bn market cap. In addition to being a good dividend payer, it’s a powerful growth stock, up 110% in the past five years.

Its growth could be affected from that one thing that always threatens pharma firms – patents expiring. The patent for AbbVie’s top-selling product, Humira, expired last year, allowing a flood of biosimilar products into the US. It also faces strong competition from Johnson & Johnson and Procter & Gamble, two larger US pharma giants with higher revenue.

Still, AbbVie is doing well enough to pay a decent 3.8% dividend yield, despite earnings per share (EPS) at half the cost of its dividend per share ($2.72 compared to $6.20). Yet that hasn’t affected payments – they’ve been stable and consistent for the past 10 years, increasing from $0.42 to $1.55.

Verizon

Verizon (NYSE:VZ) is one of the largest telecom companies in the US, providing mobile, broadband and wireless services to retail and business clients. It’s the 47th largest company on the S&P 500, with a market cap of $167.8bn and a $39.91 share price. That’s higher than fellow telecom stalwarts AT&T and Comcast but lower than key competitor T-Mobile, which places 40th with a $191bn market cap. 

Verizon’s share price growth has been slow of late, with only a 3.1% gain in the past year. I believe the company is facing a saturated market and the high cost of implementing new 5G technology. 

Fortunately, it has a great 6.7% dividend yield, albeit with a slightly high payout ratio of 96%. That’s because its EPS and dividend per share are very close, at $2.76 and $2.66, respectively. Still, it’s got a solid track record of making payments, with a $0.67 dividend due on 1 May.

IBM

Arguably the world’s oldest computer company, IBM (NYSE:IBM) is still pushing boundaries despite stiff competition from newcomers in the tech industry. It’s the smallest of the three companies on this list, just below Verizon with a $166.4bn market cap.

Although it has a lasting reputation and strong market presence, IBM’s pivot towards AI and cloud computing has been costly. Debt has been rising while revenue has declined, threatening the firm’s profitability. With Microsoft and Amazon taking the lion’s share of this market, IBM may struggle to remain relevant. 

But for now, it’s a strong dividend payer in the US market. The 3.6% yield isn’t great but still better than the S&P 500 average of 1.35%. It currently pays out $6.64 per share, which is sufficiently covered by an EPS of $8.20. So it’s unlikely that the dividend will be cut any time soon.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Mark Hartley has positions in Microsoft. The Motley Fool UK has recommended Amazon, International Business Machines, and Microsoft. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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