Buy Alert: 3 Dividend Stocks That Outperformed the Nasdaq in 2024

The Nasdaq-Composite has had a strong start this year. Driven by the Magnificent Seven shares, the index is up 24% year-to-date (Annual course). Investors would like to achieve this kind of return every year because compound growth can make long-term financial goals more achievable.

While a 24% year-to-date return is quite impressive, there are some stocks that have even exceeded that return. Some of these stocks also offer dividends, which means you get solid capital gains and cash flow. Another benefit of dividend stocks is that they tend to be less speculative. Companies can only pay dividends when they report earnings. In addition, companies can only sustain double-digit dividend growth every year if they have low dividend payout ratios and increasing net earnings.

So you’re wondering which dividend stocks will beat the Nasdaq Composite while delivering quarterly distributions to their investors? Let’s take a closer look at these three dividend stocks that have outperformed the Nasdaq in 2024.

Alphabet (GOOG, GOOGL)

You can always search within the “Magnificent Seven” for stocks that have consistently outperformed the stock market. alphabet (NASDAQ:GOOG:GOOGLE) is one of the dividend-paying stocks that has outperformed the Nasdaq Composite. Google’s parent company has gained 34% year-to-date and has more than tripled in the past five years. The Nasdaq Composite has gained “only” 122% over the same period.

In addition, Wall Street analysts believe the stock still has room to grow. It is considered a strong buy with a projected upside of 8% from current levels. The highest price target of $225 per share means Alphabet can gain 21%.

In addition, Alphabet continues to grow and attract a lot of attention with its search engines. Billions of people use Alphabet’s websites every month and advertisers continue to compete for ad space. This momentum led to a 15% increase year-over-year (Year-on-year comparison) Revenue growth in the first quarter. Profit rose 57% year-over-year due to Alphabet’s cost-cutting efforts, providing plenty of room for future dividend increases.

Broadcom (AVGO)

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Broadcom (NASDAQ:AVGO) is a leading chip manufacturer that benefits from artificial intelligence (AI). The company recently released its second quarter fiscal 2024 results, which showed the company’s revenue growth of 43% over the same period last year. In addition, Broadcom generated $3.1 billion from AI products, which is a record for the company.

Investors are particularly excited about the stock’s upcoming 10-for-1 split. While stock splits don’t increase intrinsic value, they do make it easier for options traders to buy calls and puts, which increases volatility. The increased volatility can lead to higher profits if things go right for Broadcom. So far, it’s been a smooth ride for investors. Shares are up 57% year-to-date and have gained about 500% over the past five years.

Despite these gains, Broadcom still offers a yield of 1.23%. The technology group has also had a double-digit dividend growth rate for several years. Wall Street analysts are optimistic about the stock’s long-term prospects. It is currently considered a strong buy with a projected upside potential of 14%.

American Express (AXP)

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It’s not every day that a credit and debit card issuer outperforms the Nasdaq Composite.

American Express‘ (NYSE:AXP) 5-year gain of 87% shows that’s not always the case. However, the stock is up 27% year-to-date, putting it ahead of the Nasdaq Composite. It remains to be seen whether American Express will maintain its lead, but the stock offers a 1.17% yield to sweeten the deal. Additionally, shares trade at a P/E ratio of 20, which is more reasonable than most stocks given the company’s financial growth.

American Express reported 11% revenue growth and 34% year-over-year net income growth in the first quarter of 2024. Most of the growth came from millennials and Gen Z consumers, who accounted for more than 60% of the company’s new account openings in the first quarter. American Express acts as a good hedge against inflation because it takes a percentage of each transaction. When prices rise, American Express’ average transaction fee also rises.

Not surprisingly, Wall Street is behind this stock. The stock received a moderate buy rating from 19 analysts. The highest price target of $285 per share suggests that the stock can gain another 19%.

As of the date of publication, Marc Guberti held long positions in GOOG and AVGO. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com’s disclosure policies.

At the time of publication, the editor in charge did not hold any positions (either directly or indirectly) in the securities mentioned in this article.