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 May 2024, the top-performing dividend payers included New York Community Bank NYCB, life insurance company Lincoln Financial Group LNC, and specialty retail firm Best Buy BBY.
To find the month’s 10 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 US Dividend Leaders of May 2024
- New York Community Bank NYCB
- Lincoln Financial Group LNC
- Best Buy BBY
- International Flavors & Fragrances IFF
- Pfizer PFE
- NRG Energy NRG
- Synovus Financial SNV
- Arch Resources ARCH
- Prudential Financial PRU
- Southern Company SO
Best-Performing Dividend Stocks in the US
How Have Dividend Stocks Performed?
Over the past month, the Morningstar Dividend Leaders Index, which captures the 100 highest-yielding names, rose 4.1%. The broad Morningstar Dividend Composite Index gained 3.2%. In the 12 months leading up to May 31, the Dividend Leaders Index gained 22.7% and the Dividend Composite Index gained 21.9%.
1-Year Performance for Dividend Stocks
The US stock market, as measured by the Morningstar US Market Index, has gained 4.7% on the month and 28.1% on the year.
Yields and Metrics for the Best-Performing Income Payers
New York Community Bank
New York Community Bank rose 24.2% in May and lost 64.2% over the past 12 months. Trading at $3.29 per share, its stock has a forward dividend yield of 1.22%. New York Community Bank pays investors an annual dividend of $0.04 per share. The stock has a quantitative Morningstar Rating of 3 stars.
Lincoln Financial Group
Life insurance company Lincoln Financial Group rose 21.0% in May and gained 66.3% over the past 12 months. At $32.99 per share, its stock has a forward dividend yield of 5.46% and an annual dividend of $1.80 per share. It has a quantitative Morningstar Rating of 4 stars.
Best Buy
Specialty retail firm Best Buy gained 15.2% in May and rose 21.8% over the past 12 months. The stock’s $84.82 price gives it a forward dividend yield of 4.43%. Best Buy pays investors an annual dividend of $3.76 per share. With a fair value estimate of $90 per share and a narrow economic moat, the stock is fairly valued and has a Morningstar Rating of 3 stars.
International Flavors & Fragrances
Specialty chemicals company International Flavors & Fragrances rose 13.6% in May and gained 28.1% over the past 12 months. Trading at $96.18 per share, International Flavors & Fragrances stock has a forward dividend yield of 1.66% and an annual dividend of $1.60 per share. The stock, which has a wide economic moat, is moderately undervalued, trading 26% below its fair value estimate of $130 per share. It has a Morningstar Rating of 4 stars.
Pfizer
Drug manufacturer Pfizer gained 13.5% in May and fell 20.3% over the past 12 months. Trading at $28.66 per share, its forward dividend yield is 5.86%. Pfizer pays investors $1.68 per share annually. The stock, which has a wide economic moat, is trading at a 32% discount to its fair value estimate of $42 per share, leaving it significantly undervalued. It has a Morningstar Rating of 5 stars.
NRG Energy
Independent power producer NRG gained 11.5% in May and rose 144.4% over the past 12 months. At $81 per share, NRG stock has a forward dividend yield of 2.01% and an annual dividend of $1.63 per share. The stock, which has no economic moat, is significantly overvalued, trading 98% above its fair value estimate of $41 per share. It has a Morningstar Rating of 1 star.
Synovus Financial
Regional bank Synovus rose 10.9% in May and gained 52.1% over the past 12 months. Trading at $39.69 per share, Synovus stock has a forward dividend yield of 3.83% and an annual dividend of $1.52 per share. It has a quantitative Morningstar Rating of 3 stars.
Arch Resources
co*king coal company Arch rose 10.2% in May and gained 75.9% over the past 12 months. Trading at $173.93 per share, Arch stock has a forward dividend yield of 4.52% and pays investors an annual dividend of $4.44 per share. The stock has a quantitative Morningstar Rating of 3 stars.
Prudential Financial
Life insurance company Prudential gained 10.1% in May and rose 59.4% over the past 12 months. The stock’s $120.35 price gives it a forward dividend yield of 4.32%. Prudential pays investors an annual dividend of $5.20 per share. With a fair value estimate of $108 per share and no economic moat, the stock is fairly valued and has a Morningstar Rating of 3 stars.
Southern Company
Regulated electric company Southern rose 10.0% in May and gained 18.9% over the past 12 months. At $80.14 per share, Southern has a forward dividend yield of 3.59% and an annual dividend of $2.88 per share. The stock, which has a narrow economic moat, is moderately overvalued, trading 16% above its fair value estimate of $69 per share. It has a Morningstar Rating of 2 stars.
What Is the Morningstar Dividend Leaders Index?
The Morningstar Dividend Leaders Index captures the performance of the 100 highest-yielding stocks with consistent records of paying dividends and can sustain those payments.
It’s a subset of the Morningstar US Market Index (representing 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. The 100 highest-yielding stocks are included in the index, weighted by the dollar value of their dividends. 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 by 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.
- When it comes to buying stocks, it’s more than just dividends. Read about how valuations and competitive advantages—economic moats—matter to a stock’s potential for outperformance.
- Watch this video to learn how Morningstar uses the star rating, moat rating, and other metrics to evaluate stocks.
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.
This article was compiled by Bella Albrecht and edited by Lauren Solberg.
This article was generated with the help of automation and reviewed by Morningstar editors.Learn more about Morningstar’s use of automation.
The author or authors do not own shares in any securities mentioned in this article.Find out about Morningstar’s editorial policies.
