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3 dividend stocks that have the potential to outperform the S&P 500

Do Kwik
24. 4. 2024
4 min read

The U.S. stock market remains buoyant despite economic challenges such as inflation and geopolitical uncertainties. Indexes such as the S&P 500 and Wilshire 5000 are reporting significant annual gains, which has led to downward pressure on dividend yields, making many stocks appear overvalued.

Still, there remain stocks in the market with above-average dividends and favorable valuations that are worthy of consideration. All three stocks may represent attractive investment opportunities with significant potential for dividend yield and capital growth.

Bank OZK $OZK+0.2%

Bank OZK, founded in 1903, is one of the region's leading banks in the United States. Over the past few years, Bank OZK has shown steady growth, as evidenced by recent financial results. In 2023, the bank announced that its total loans and deposits increased by 27%, an indication of strong demand growth and customer confidence. In addition, the bank's net interest income increased by 11% compared to the previous year, highlighting its ability to effectively manage interest margins in a challenging economic environment.

Bank OZK's dividend policy is another key element. The Bank maintains a strong balance sheet that allows it to regularly increase its dividend, which has already amounted to more than 54 quarters consecutive quarters. At the beginning of 2024, the Bank announced another quarterly dividend increase to 38 cents per share, a 2.7% increase over the previous quarter and an annual increase of 11,8 %. This consistent dividend growth is a reflection of its sustained financial performance and strategy focused on maximizing shareholder value.


Bank OZK

$46.50 $0.10 +0.22%

OZK Bank is also investing in expanding its operations and technological innovationto remain competitive in an increasingly digitalised banking environment. The recent launch of new technology platforms and digital banking tools makes it easier for its customers to access financial services and improves the user experience. This technological modernization should support the bank's further growth and strengthen its market position.

Sonoco Products $SON+0.0%

Sonoco Products is a globally recognized leader in Packaging and industrial products, delivering innovative solutions to its customers for more than for over a century. Founded in 1899, the company reported sales of nearly $7 billion last year, confirming its strong position. Sonoco specializes in a wide range of products, from consumer packaging to industrial applications, and its products are used in a variety of industries including food, pharmaceuticals and construction.

In recent years, Sonoco has maintained solid financial performance with dividend growth that has sustained for 41 years. This puts the company among the dividend aristocrats, a group of companies in the S&P 500 that have increased their dividends every year for at least 25 years. In addition to its robust dividend policy, Sonoco also invests in innovation and sustainability of its products. In 2023, it invested more than $300 million in the development of new technologies and sustainable materials, an intention to strengthen its competitiveness and respond to the growing market demand for eco-friendly packaging solutions.

$60.61 -$0.03 -0.05%

Sonoco Products' financial health is further supported by its strategic approach to acquisitions and expansion. Over the past decade, Sonoco has made several key acquisitions that have expanded its product portfolio and geographic presence. For example, in 2021, the acquisition of Can Packaging for US$300 million enabled Sonoco to strengthen its position in the European paper packaging market. This strategy not only increases revenues, but also allows Sonoco to diversify its revenue sources and mitigate potential risks associated with market fluctuations.

Bristol-Myers Squibb $BMY-0.7%

Bristol-Myers Squibb, a major player in the pharmaceutical industry, continues on a proven path of innovation and growth, as reflected in their recent financial results. In the fourth quarter of 2023, the company recorded revenue of 11.48 billion which represents a slight year-over-year increase. This growth was mainly driven by strong sales of their key drugs such as Revlimid, Opdivo and Eliquis, which have maintained high growth rates in global markets. Adjusted earnings per share for the quarter were $1.70, 12 cents above market estimates, although down slightly from $1.82 in the prior year.

$41.24 -$0.30 -0.72%
Fair Price: $57.51
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Bristol-Myers Squibb's total annual revenue for 2023 was $45 billion, representing a decline of 2.6% compared to the previous year. This decline is partly due to challenges and patent expirations on some key drugs. However, Bristol-Myers expects to new products and indications for existing drugs that are expected to be approved in the coming years will contribute significantly to a recovery in revenue growth and profitability.

$41.24 -$0.30 -0.72%

Despite these challenges, Bristol-Myers Squibb remains an attractive investment from a valuation perspective. The company's shares trade at approximately 6.7 times estimated earnings per share for 2024, which is substantially below the average The company also expects adjusted earnings per share for 2024 to be in the range of $7.10 to $7.40, indicating the potential for stable financial performance.

Disclaimer: You will find a lot of inspiration on Bulios, but stock selection and portfolio construction is up to you, so always conduct a thorough analysis of your own.


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