3 Dividend Stocks for November 2024

David Harrell: Hi. I’m David Harrell, editor of the Morningstar DividendInvestor newsletter. In this monthly series, we take a look at the dividend prospects of three stocks that are popular with income investors.

3 Dividend Stocks for November 2024

1. Campbell Soup CPB
2. Diageo DEO
3. Enbridge ENB

Campbell Soup yields close to 3.2% and trades at a 25% discount to its Morningstar fair value estimate. But its recent dividend growth has been extremely modest, at 1.1% annualized over the past five years, and there have been several long stretches during which Campbell has left its dividend flat. However, Morningstar analysts anticipate larger future raises, forecasting that the dividend will increase from its current annual rate of $1.48 per share to $2.17 over the next five years. In a recent analyst note, they addressed Campbell’s acquisition strategy, saying: “We expect the company will continue to employ prudence in its pursuits and don’t expect any potential deals that will encumber its ability to return excess cash to shareholders while maintaining a dividend payout ratio of around 50%.”

Headquartered in London, Diageo is one of the world’s largest producers of spirits—the company was formed by the 1997 merger of Guinness and Grand Metropolitan. And its brands included Johnnie Walker whisky, Smirnoff Vodka, and Captain Morgan rum. Like many non-US firms, Diageo pays a semiannual dividend—an interim payment in April and a final dividend in October. As noted on the company’s investor website, the approximate split is 40/60, with the larger share paid in October. Based on the most recent interim and final payments, the ADR shares currently yield 3.2%, and they’re trading at around a 15% discount to Morningstar’s fair value estimate. Diageo pays about 50% of its earnings in dividends, and Morningstar analysts forecast that the dividend will increase approximately 14% by 2028. Due to a tax treaty with the UK, US investors generally aren’t subject to tax withholding for dividends paid by UK firms, but there may be fees associated with each dividend payment. Please consult your tax advisor for more details.

Enbridge is a Canadian midstream energy company. In its base currency of Canadian dollars, it has increased its dividend for 29 consecutive years, including annual raises of approximately 3% for each of the past four years. However, the currency-adjusted payouts received by US investors haven’t always seen the same trajectory, thanks to the relative strength of the US dollar. The total dividends per share that US investors received in 2023 were approximately 1.1% less than in 2022. For 2024, it looks as if US investors will receive about 2% more in dividends per share than they did in 2023. Also, while the quarterly dividend is fixed in base currency, the amount received by US investors will fluctuate each quarter due to exchange rates. Based on current rates, the stock yields around 6.4%, and it’s trading in line with its Morningstar fair value estimate of $41 per share. Please note that US investors are subject to a 15% withholding tax on dividend payments, which may be recoverable. Again, consult your tax advisor for more details.

I’m David Harrell with Morningstar DividendInvestor. Thanks for watching. We’ll see you next month.

Watch 3 Dividend Stocks for October 2024 for more from this series.