As interest rates increased considerably in the past few years, dividend stocks lost some of their cachet with income investors. Now that they’re coming back down, investor interest has picked right up. 

The top three ETFs by assets investing in dividend stocks are the Vanguard Dividend Appreciation ETF (NYSEARCA:VIG), Schwab US Dividend Equity ETF (NYSEARCA:SCHD), and the Vanguard High Dividend Yield Index ETF (NYSEARCA:VYM).

These three ETFs, whose average assets under management are $68 billion, are up an average of nearly 13% in 2024, with a little less than three months to go in the year. 

Each of these three large-cap dividend ETFs holds one or more S&P 500 dividend stocks up 50% in 2024. Despite the significant gains, all three remain good buys in October.  

Here’s why investors shouldn’t think twice about owning one or more of these well-run dividend stocks.

Key Points About This Article:

• Few insurance companies are better run than Progressive (PGR).  
• Could Broadcom (AVGO) replace Elon Musk’s company in Magnificent Seven?
• Walmart (WMT) continues to evolve for the better. 
• 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 “2 Legendary High-Yield Dividend Stocks” now.

Progressive (PGR)

There aren’t too many property and casualty insurance companies in the U.S. that are as well run as Progressive (NYSE:PGR). 

In June, Barron’s published an article that said CEO Tricia Griffith was beating Geico, Berkshire Hathaway’s (NYSE:BRK.B) P&C heavyweight, in premium volume. Only State Farm is doing more.

I’m a big believer in the CEO. She’s delivered big time for shareholders. Since becoming CEO in July 2016, PGR stock has gained 750%, 4.5 times the S&P 500. In 2024, PGR stock is up 56% year-to-date, considerably higher than the index’s 20% return.

Progressive has a flexible capital allocation policy when it comes to dividends.

“Our policy is to pay a quarterly common share dividend. In addition to regular quarterly dividends, the Board will consider a common share variable dividend payment at least annually,” states the company’s dividend policy page.  

It pays four quarterly, 10-cent dividends—the annual rate of 40 cents yields 0.16% at current prices. However, based on the company’s profitability and need for capital, the variable dividend can potentially turbocharge this yield. 

For example, in January, it paid a variable dividend of 75 cents, so the total payments for the year will be $1.15 for a 0.5% yield. In 2023 and 2022, it didn’t pay a variable dividend, but in 2021, it paid two, totaling $6, bringing its four-year average annual payout to $2.09 a share. 

It pays to hold PGR for the long haul.             

Broadcom (AVGO)

Broadcom (NASDAQ:AVGO) stock is up nearly 58% in 2024 and 507% over the past five years. Despite the gains, its dividend yield remains reasonable at 1.2%.

William Blair analyst Sebastien Naji recently initiated coverage of the semiconductor infrastructure software provider’s stock. The analyst rated it Outperform, suggesting Broadcom’s annual AI revenue in 2025 and 2026 could be substantially higher than the company’s $12 billion estimate for 2024.   

Of the 46 analysts covering Broadcom stock, 39 (85%) rate it a Buy, with a $195 price target, 14% higher than where it’s currently trading. 

As Tesla (NASDAQ:TSLA) loses key executives, Broadcom has become a potential candidate to replace Elon Musk’s company in the Magnificent Seven. Broadcom’s market cap is currently $50 billion higher than Tesla’s at nearly $800 billion. 

On Sept. 6, Broadcom reported quarterly sales growth of 47% to $13.1 billion and earnings per share of $1.24, 18% higher year over year. According to Wall Street, the average EPS growth rate over the next three quarters is nearly 32%. 

AVGO stock is on a roll. 

Walmart (WMT)

Walmart (NYSE:WMT) has become a tech stock in disguise. That’s one reason why WMT stock is up 51% YTD. Another could be that it’s too big to fail, making it exceptionally alluring in this volatile political and economic environment. 

CEO Doug McMillon has made many moves to change the company since becoming its leader a decade ago in 2014. Its tech-forward approach to business is one of the most important. To that end, Walmart hired PayPal’s (NASDAQ:PYPL) CFO, John David Rainey, a little over a year ago. 

“Walmart certainly had good reason to bring Rainey aboard. His career has centered on using digital tools to facilitate seamless sales, and his previous tenures at PayPal and United Airlines Holdings (UAL) largely coincided with those stocks moving higher,” Barron’s contributor Teresa Rivas wrote in July. 

Rainey emphasizes how much work and investment has been poured into its supply chain automation and software to ensure its omnichannel retail is the best in the business. Its weekly active customers using its digital app have increased 1100% since before the pandemic.

One thing the retailer has been able to do is convert higher-income shoppers into loyal customers. It does that in several ways, including providing quality products under its Great Value store brand. Many of these wealthier customers are sticking around. I don’t know if it can get a demographic like Costco (NASDAQ:COST), but it’s taken its share of wealthier customers from somewhere. My bet is the grocery store competition.

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