IBM

The 3 Hottest Dividend Stocks to Watch in 2024

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You know what I hate about the typical article about hottest dividend stocks to watch? You’re excited about adding passive income to your portfolio, only to read about company after company that pays a dividend yield of 1%. Like, seriously – you would need a boatload of shares to see substance from such a lowly yield.

Rest assured, I’m not going to do you like that. Instead, every one of these dividend stocks to watch features a forward yield of at least 4% at time of writing. What’s more, the underlying fundamentals justify the generous payout. In other words, I’m not going the other extreme, feeding you a bunch of junk with unsustainable yields.

So, if you’ve already identified your growth plays and are seeking relevant, high-yielding enterprises, you’ve come to the right place.

IBM (IBM)

Photo of IBM (IBM) building as seen through the canopy of a tree. IBM logo is in large letters on side of building.

Source: shutterstock.com/LCV

To be quite blunt, legacy technology juggernaut IBM (NYSE:IBM) doesn’t get much love. It’s completely understandable. In the hip innovation sector, Big Blue comes off as the “okay boomer” play of the ecosystem. I mean, the company first originated in June of 1911. I dare say we don’t have too many folks walking among us that were around when IBM made its corporate debut.

Set aside preconceived notions, though, and I think you’ll find that it’s one of the dividend stocks to watch. For one thing, IBM put up an intriguing performance. No, 15.5% up in 2023 is hardly impressive when the benchmark equities index is smoking you. But look at the second-half performance of 22.2% up; that’s better than – shock! – Nvidia (NASDAQ:NVDA), which gained only 17% during this period.

No, before you fire up an angry email, I’m not comparing the two. But here’s the thing. IBM has been doing artificial intelligence and machine learning for a long time. It deserves more respect than it’s getting. Of course, the forward yield of 4.06% is quite enticing. In my opinion, it’s easily one of the dividend stocks to watch.

AbbVie (ABBV)

ABBV Stock: Offering Oil Yield Without Oil's Risk

Source: Piotr Swat / Shutterstock.com

A pharmaceutical giant, AbbVie (NYSE:ABBV) offers a relevant platform for dividend stocks to watch. At a cynical level, no matter what happens in the economy, society will always have a need for advanced therapeutics. Therefore, I view the red ink in ABBV – it lost almost 5% in 2023 – as a contrarian opportunity. Indeed, in the past six months, shares gained 15%, suggesting a possible comeback in 2024.

But I’m more looking forward to 2025 and many, many years beyond that. Earlier, AbbVie acquired Allergan and in doing so, it took over the Botox neurotoxic protein. As you know, people undergo Botox injections for anti-wrinkle solutions. But here’s something I didn’t know. Many folks also use Botox as a preventative treatment; that is, it may be better to start treatment at a younger age to extend a youthful appearance.

I believe that’s a huge catalyst for ABBV considering that millennials and Generation Z – the social-media-obsessed cohorts – are intensely focused on their physical appearance. It’s cynical but that makes AbbVie’s forward dividend yield of 4% all the more credible. I’m a fan.

Philip Morris (PM)

Philip Morris factory offices in Lithuania. PM stock.

Source: Vytautas Kielaitis / Shutterstock

Easily the most controversial idea for dividend stocks to watch on this list, if you’re ideologically agnostic, then Philip Morris (NYSE:PM) deserves a long look. At first glance, the tobacco giant seems completely anachronistic. Let’s face it. In many parts of the world, government agencies have cracked down on public areas where smoking was previously allowed. Sports organizations have heavily discouraged tobacco advertising.

So, is that the gallows for the tobacco stalwart? Hardly. While “analog” smoking may be fading away in several western nations, “digital” smoking is on the rise. According to Grand View Research, the global e-cigarette and vape market size reached a valuation of $22.45 billion in 2022. Further, this sector may expand at a blistering compound annual growth rate (CAGR) of 30.6% to 2030. At the forecast culmination point, the market could post revenue of $182.84 billion.

You know what’s really off the charts? Government agencies worldwide may eventually ban flavored e-cigarettes, which is the domain of small business. Big tobacco, on the other hand, may find exemptions with non-flavored tobacco-centric e-cigs. Cynical, yes, but that’s why Philip Morris’ forward yield of 5.53% is so enticing.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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