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- The market has fully priced in a 25-basis-point rate cut in September.
- Dividend stocks should do well in a declining interest rate environment.
- Sit back and let dividends do the heavy lifting for a simple, steady path to serious wealth creation over time. Grab a free copy of “7 Things I Demand in a Dividend Stock,” plus get our two best dividend stocks to own today. Access 2 legendary, high-yield dividend stocks Wall Street loves .
Dividend stocks are a favorite among investors for good reason. They provide a steady income stream of passive income and offer a promising avenue for total return. Total return , a comprehensive measure of investment performance, encompasses interest, capital gains, dividends, and distributions realized over time.
In March 2022, as inflation exploded, the Federal Reserve made its first interest rate increase since 2018, when the Fed lifted rates from 0% by 0.25% to 0.25–0.50%. Inflation then peaked at a stunning 9.1% in June 2022. In July 2023, the Fed made its final 0.25% increase, bringing rates to 5.25–5.50%. The federal funds rate has not been cut since then, but the market expects it, and Fed Chair Powell has all but announced the first interest rate cut, which will likely come in at 25 basis points this month.
We decided to screen the Dividend Aristocrats, looking for the highest-yielding companies that have the potential to be the beneficiaries of the rate-lowering cycle, which could extend into 2026. Investors seeking defensive companies with substantial dividends are naturally drawn to the Dividend Aristocrats, and for good reason.
The 68 companies that made the cut for the 2024 S&P 500 Dividend Aristocrats list have not just maintained but increased their dividends for 25 years straight . But the requirements for membership on this list go even further, with the following attributes also mandatory:
- Companies must be worth at least $3 billion each quarterly rebalancing.
- Average daily volume must be at least $5 million transactions for every trailing three-month period at every quarterly rebalancing date.
- They must be a member of the S&P 500.
Why do we cover the Dividend Aristocrat stocks?
The Dividend Aristocrats provide investors with reliable streams of passive income. Passive income is characterized by its ability to generate revenue without requiring the earner's continuous active effort, making it a desirable financial strategy for those seeking to diversify their income streams or achieve financial independence.
Franklin Resources
Franklin Resources, one of the world's largest investment managers, is better known as Franklin Templeton.
This company is a mutual fund powerhouse that pays a safe and secure 5.92% dividend. Franklin Resources Inc. ( NYSE: BEN ) is among the most prominent global money managers.
The firm markets mutual funds and institutional separate accounts under the Franklin, Templeton, and Mutual Series brands. At times, 50% of its sales are from outside the US, an advantage given the maturing US market.
Franklin Resources offers its products and services under the brands of:
- Franklin
- Templeton
- Franklin Mutual Series
- Franklin Bissett
- Fiduciary Trust
- Darby
- Balanced Equity Management
- K2
- LibertyShares
- Edinburgh Partners
The 2023-2024 bull market has proven to be a solid tailwind for the company. While withdrawals from baby boomers may be a concern, the path forward looks solid.
Realty Income
Realty Income is a real estate investment trust that invests in free-standing, single-tenant commercial properties in the United States, Spain, and the United Kingdom.
This is an ideal stock for growth and income investors looking for a safer contrarian idea for the rest of 2024 that pays a whopping 5.17% dividend. Realty Income Corp. ( NYSE: O ) is an S&P 500 company that provides stockholders with dependable monthly income.
The company is structured as a real estate investment trust (REIT), and its monthly dividends are supported by the cash flow from over 15,540 real estate properties owned under long-term lease agreements with commercial tenants.
The company has declared 644 consecutive common stock monthly dividends throughout its 55-year operating history and increased the dividend 123 times since Realty Income's public listing in 1994.
T. Rowe Price
T. Rowe Price is a global investment management firm dedicated to helping clients achieve long-term success.
This is another top mutual fund company with tremendous assets under management and pays a 4.45% dividend. T. Rowe Price Group Inc. ( NASDAQ: TROW ) is a publicly owned investment manager.
The firm provides services to:
- Individuals
- Institutional investors
- Retirement plans
- Financial intermediaries and Institutions
It launches and manages equity and fixed-income mutual funds.
T. Rowe Price invests in public equity and fixed-income markets worldwide. It employs fundamental and quantitative analysis with a bottom-up approach.
The firm utilizes in-house and external research to make its investments. It employs socially responsible investing focusing on environmental, social, and governance issues.
It also invests in late-stage venture capital transactions and usually invests between $3 million and $5 million.
Amcor
Amcor provides high-quality, responsible packaging solutions for food, beverage, pharmaceutical, and other packaging requirements.
This top company makes sense now as its products are always needed, and it pays a robust 4.5% dividend. Amcor PLC ( NYSE: AMCR ) manufactures and sells packaging products in Europe, North America, Latin America, Africa, and the Asia Pacific regions.
The company operates through two segments:
- Flexibles
- Rigid Packaging
The Flexibles segment provides flexible and film packaging products in food and beverage, medical and pharmaceutical, fresh produce, snack food, personal care, and other industries.
The Rigid Packaging segment offers rigid containers for a range of beverage and food products, including:
- Carbonated soft drinks
- Water
- Juices
- Sports drinks
- Milk-based beverages
- Spirits
- Beer
- Sauces
- Dressings
- Spreads
- Personal care items
- Plastic caps for various applications.
The company sells its products primarily through its direct sales force.
Federal Realty Investment Trust
Federal Realty Investment Trust invests in shopping centers in the Northeastern United States, the Mid-Atlantic states, California, and South Florida.
While commercial real estate has slowly come back, hard assets are always suitable investments, and this stock pays a solid 4% dividend. Federal Realty Investment Trust ( NYSE: FRT ) is a recognized leader in the ownership, operation, and redevelopment of high-quality retail-based properties in major coastal markets, from the District of Columbia to Boston and San Francisco to Los Angeles.
Federal Realty's mission is to deliver long-term, sustainable growth through investing in densely populated, affluent communities where retail demand exceeds supply.
Its expertise includes creating urban, mixed-use neighborhoods like:
- Santana Row in San Jose, California
- Pike & Rose in North Bethesda, Maryland
- Assembly Row in Somerville, Massachusetts
Federal Realty's 105 properties include approximately 3,300 in 26 million square feet tenants and approximately 3,100 residential units. Federal Realty has increased its quarterly dividends to its shareholders for 56 consecutive years, the longest record in the REIT industry.
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