Dividend Heroes end 2024 with a 29.8% gain
Comfort Systems USA (FIX) big winner, Westlake (WLK) loser
As 2024 came to a close, The Dividend Heroes, our curated list of the top 25 U.S. dividend growth stocks, delivered an impressive 29.8% Total Return. This performance highlights the strength of our selection methodology and the enduring appeal of dividend growth investing. Here's a look at the highlights and insights from the past year.
Winners and Losers: A Look at 2024 Performance
While the portfolio excelled overall, not every stock had a banner year. Here's how it broke down:
Biggest Winner: Comfort Systems USA (FIX) stole the spotlight with a staggering 109.4% Total Return.
Biggest Loser: Westlake Corp (WLK) ended the year as the only double-digit loser, declining in value.
Four of the 25 stocks finished the year with losses, but the portfolio’s overall strength ensured outstanding results.
Dividend Highlights for 2024
Our Dividend Heroes didn’t just shine in terms of capital appreciation; they also performed admirably on the income front. Here’s a breakdown:
Total Dividends Received: $1.983 per share, reflecting a 2% yield on cost.
Current Yield: At year-end, the average dividend yield stood at 1.7% for the entire portfolio.
Additionally, dividend growth was a key feature:
Average Dividend Growth Rate: 15.7%
Stocks Without Dividend Hikes: Three stocks—Oracle (which hikes every two years), Dillard’s (which paid a special dividend), and Discover Financial (currently an M&A target)—did not announce increases in 2024.
Notably, Westlake Corp, the year’s worst performer, also had the smallest dividend hike at just 5%. This underscores the correlation between dividend growth and stock performance.
Financial Metrics and Portfolio Insights
The top 25 Dividend Heroes exhibited robust financial fundamentals at the end of 2024:
Estimated P/E for 2025: 18.9
Average EBIT Margin: 19.5%
Return on Invested Capital (ROIC): 18.9%
Payout Ratio: 45.5%
These metrics reflect the strength of the portfolio and its balanced approach to growth and stability.
Comparing to the Broader Selection
The broader Dividend Heroes selection of 109 stocks delivered a solid average return of 13.7% for 2024. However, the top 25 significantly outperformed with their 29.8% gain. Notably, stocks like Broadcom (AVGO), which ranked #70 in our broader selection, didn’t make it to the top 25 but still contributed positively.
Conversely, avoiding lower-ranked stocks such as Humana, Microchip, Brown-Forman, and Nike helped bolster overall results.
Looking Ahead to 2025
Our process for selecting the 2025 Dividend Heroes is underway. Using proprietary data and a comprehensive set of metrics, we’re handpicking the next cohort of dividend growth champions. The new list will be announced next week, so stay tuned for our next update!
Final Thoughts
2024 was an outstanding year for The Dividend Heroes, with the portfolio delivering exceptional total returns and dividend growth. As we turn the page to 2025, we remain committed to uncovering the best opportunities in dividend growth investing. Remember that the Full Selection of stocks will be available exclusively to our paying subscribers.
Thank you for following along, and here’s to another successful year ahead!
Stay tuned for our 2025 Dividend Heroes announcement next week!
Disclaimer: The information provided here is for informational purposes only and should not be considered financial advice. Investors should conduct their own research or consult with a financial advisor before making any investment decisions.