Companies paid a record $1.7 trillion in dividends last year. These 3 dividend stocks were leading.

By | March 16, 2024

According to a report from Janus Henderson Globally, companies will pay as much as $1.7 trillion in dividends to their shareholders in 2023. That was a record amount of cash payments, 5% above the 2022 total.

Hundreds of companies have contributed to the corporate sector’s record dividend spending. However, three of them rose to the top as the largest payers: Microsoft (NASDAQ: MSFT), Apple (NASDAQ: AAPL)And ExxonMobil (NYSE:XOM). Here’s a look at what they paid to investors last year and whether these leading dividend stocks can continue to enrich their investors through dividends.

Microsoft’s monster dividend

Microsoft paid $20.7 billion in dividends last year, the most of any company. The tech titan is routinely one of the best dividend-paying stocks. It was the leader in 2020, came second in 2021 and third in 2022. It was able to regain its place at the top by increasing its dividend (it increased its dividend per share by 10% in each of the past two years). Meanwhile, the leader of the past two years, mining huge BHP Grouphas paid out fewer dividends due to lower commodity prices.

Microsoft can easily afford its huge dividend outlay. Over the past six months, Microsoft has generated nearly $50 billion in net cash flow from operations while paying out $10.6 billion in dividends. Meanwhile, it ended last year with $81 billion in cash and short-term investments on its balance sheet, versus $74 billion in debt. That strong financial profile helps support elite AAA credit ratings.

The technology company is also investing heavily in its growth, including by acquiring gaming company Activision and co-developing AI technology OpenAI. These and other catalysts should allow Microsoft to grow its cash flow, giving the company even more money to pay dividends.

A technology titan who is rich in money

Fellow tech giant Apple clocked in at number 2 and paid $14.9 billion in dividends last year. That was slightly more than in 2022, thanks to dividend increases. Apple increased its payment per share by 4.3% last year, following a 4.5% increase in 2022.

Like Microsoft, Apple can easily afford its big payout. The tech giant produced $110.5 billion in cash from operations in 2023. It also features a balance sheet that resembles a fortress. Apple ended the year with a whopping $162 billion in cash, equivalents and marketable securities, compared to $111 billion in debt.

That also allows the company to invest heavily in research and development to launch innovative products that drive sales and cash flow growth. It recently launched its Vision Pro FRI headphones and starts to invest more heavily in them generative AI. These growth engines should allow Apple to generate more cash that it could use to pay dividends in the future.

A cash-gushing oil stock

ExxonMobil was right behind Apple last year with about $14.9 billion in dividend payments. The oil giant has steadily increased its dividend. At the end of last year, it increased its payout by 4.1%, its 41st consecutive year of dividend growth. It also increased its payout by 3.4% at the end of 2022.

The energy company produced a huge amount of cash last year despite lower oil and gas prices. Free cash flow actually rose by $1.9 billion to $36.1 billion last year, thanks to a focus on investing in high-margin capital projects. Although ExxonMobil returned an industry-leading $32.4 billion in cash to shareholders through dividends and buybacks, its cash balance still grew to $31.6 billion.

ExxonMobil’s high-return investment strategy puts the company on track to double its earnings potential by 2027. In addition, the company agreed to buy competing companies. Natural resources pioneer in a deal worth more than $60 billion, which will further boost its ability to further grow its free cash flow. These and other catalysts should give ExxonMobil more than enough fuel to continue growing its monster dividend.

High quality dividend stocks

Microsoft, Apple and ExxonMobil led the world in dividend payments last year. The huge companies produce huge cash flows, giving them the money to invest in growing their businesses, paying ever-increasing dividends and maintaining a cash-rich balance sheet. These qualities make them ideal stocks for those looking for very safe and steadily increasing dividends.

Where you can invest $1,000 now

If our analyst team has a stock tip, it could be worth listening to. The newsletter they have been publishing for twenty years, Motley Fool stock advisorhas more than tripled the market.*

They just revealed what they think are the 10 best stocks for investors to buy now… and Microsoft made the list – but there are nine other stocks you might be overlooking.

View the 10 stocks

*Stock Advisor returns March 11, 2024

Matt DiLallo holds positions at Apple and BHP Group. The Motley Fool has and recommends positions in Apple and Microsoft. The Motley Fool recommends Pioneer Natural Resources and recommends the following options: long calls in January 2026 for $395 at Microsoft and short calls in January 2026 for $405 at Microsoft. The Motley Fool has a disclosure policy.

Companies paid a record $1.7 trillion in dividends last year. These 3 dividend stocks were leading. was originally published by The Motley Fool

Leave a Reply

Your email address will not be published. Required fields are marked *