10 Best DRIP Stocks to Buy in 2024

What are DRIP Stocks?

DRIP stands for dividend reinvestment plan. This plan is offered by many brokerage houses. As per this plan, investors automatically reinvest their dividends from the companies they invest in.

With DRIP, the dividends are reinvested automatically, rather than being distributed to you as cash. And this additional money is used to purchase additional shares, or fractions of shares, depending on how big the dividend payment is. By reinvesting the cash received as a dividend, investors can also increase the impact of compounding over time. By using the stock signals, you can avoid hours of technical analysis to understand the market.

The Pros and Cons of Drip Stocks

Every financial instrument offers a long list of benefits that attract investors. But on the other hand, there are certain limitations to each financial instrument. Here we are discussing the pros and cons of DRIPs:

Pros

Increase your position without any additional charge – While reinvesting the dividends investors receive, the overall value of the portfolio gradually increases. This increased portfolio amount comes without any charge from the brokerage houses
No compulsion of purchasing full shares – When investors reinvest their dividends through DRIPs, they can purchase fractional shares. The whole amount of dividends gets reinvested, regardless of the ongoing share prices. Investors can continue to grow the number of shares they own, even if they don’t have enough money to purchase a complete share.
A guard against market volatility – With DRIP, investors regularly invest in the stock market. This protects them against the highs and lows of market volatility. Check out: List of Most Volatile Stocks
Worry-Free Investment – You don’t have to micromanage your investments. As an investor, all that is required of you is to invest in DRIP. Then just sit back and relax as your investments grow on auto-pilot.

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Cons

DRIPs are not for investors who want to be more involved in their investments and their returns. With DRIPS investors have zero involvement in decisions like which companies to invest in, in which companies they can increase their investments, and how much cash to retain.
DRIPs usually are a long-term investment. Investors relying on dividends as a source of income should not be using DRIPs.

List of the 10 Best DRIP Stocks

Here we have compiled a list of the 10 Best DRIP stocks for 2024:

Sr.	Company Name	Symbol	Market Cap	Price (As on 3rd Aug 2022)
1	Realty Income	O	$ 43.3 billion	$ 72
2	3M	MMM	$ 81.7 billion	$ 143.49
3	Johnsons and Johnsons	JNJ	$ 459 billion	$ 174.59
4	Emerson Electric	EMR	$ 53.35 billion	$ 89.82
5	AbbVie Inc	ABBV	$ 249.5 billion	$ 141.2
6	Microsoft	MSFT	$ 2.1 trillion	$ 282.47
7	Exxon Mobil Corp.	XOM	$ 375.5 billion	$ 89.46
8	A. O. Smith	AOS	$ 9.49 billion	$ 61.48
9	Hormel Foods	HRL	$ 26.95 billion	$ 49.35
10	American Express	AXP	$ 116.5 billion	$ 155.43

Realty Income

Realty Income is a retail-focused REIT that owns more than 6,500 properties. It owns retail properties that are not part of a wider retail development (such as a mall), but instead are standalone properties. This means that the properties are viable for many different tenants, including government services, healthcare services, and entertainment. The company has a low-risk business model as a net-lease REIT. It signs long-term leases, usually 10 to 20 years, with single-tenant commercial businesses, most of them established retail chains. Realty Income basically collects the rent with the renter responsible for most of the operating costs. Stocks are profitable. But it’s always wise to limit your exposure to risky investments like best altcoins.

In March 2022, the company announced the 98th consecutive quarterly dividend increase, which is the 115th increase. The annualized dividend amount as of March 31, 2022, was $2.964 per share. The number of monthly dividends paid per share increased 5.1% to $0.7395 in 2022, as compared to $0.7035 in 2021. In total Realty Income distributed $438.3 million in common dividends to stockholders in 2022

Realty Income pays dividends every month. Its dividend yield is higher than the average yield on the S&P 500, the Dow Jones Industrial Average, and the Equity REIT Index.

Realty Income Corporation recently announced its operating results for the three months ended March 31, 2022:

Total Revenue was reported to be $ 807 million
Net Income was reported to be $ 199 million
Net income per share was reported to be $ 0.34

Realty Income has a market capitalization of $ 43.3 billion. Its shares are currently trading at $ 72.

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3M

3M company is a technology company, which manufactures industrial, safety, and consumer products. It operates through the following segments:

Safety and Industrial – It produced tapes, abrasives, adhesives, and supply chain management software as well as manufactures personal protective gear and security products.
Transportation and Electronics – It produces fibers and circuits with the goal of using renewable energy sources while reducing costs. Renewable energy stocks have been very popular in the year 2020 and their popularity continues to increase in 2024.
Health Care – It supplies medical and surgical products as well as drug delivery systems
Consumer – It sells office supplies, home improvement products, protective materials, and stationery supplies

3M sells more than 60,000 everyday products. Its products are used every day in homes, hospitals, office buildings, and schools around the world. It has about 95,000 employees and serves customers in more than 200 countries. Learn about Best Day Trading Stocks

3M reported first-quarter earnings results for the period ending March 31st, 2022

Sales were reported to be $8.7 billion
Earnings per share were $0.14

3M returned $0.8 billion to shareholders via dividends. At the start of the year, the company announced an increase of 0.7 % to $ 1.49. This leads up to 64 consecutive years of continuous dividend growth.

3M has a market capitalization of $ 81.7 billion. Its shares are currently trading at $ 143.49.

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Johnsons and Johnsons

Johnson & Johnson is a holding company, which engages in the research and development, manufacture, and sale of products in the health care field. It operates through the following segments:

Consumer
Pharmaceutical
Medical Devices

In the second quarter report for 2022, Johnson & Johnson reported:

Sales were reported at $ 24 billion
- Worldwide consumer health care sales were recorded at $ 3.8 billion, with a slight decline of 1.3 %. Also, Covid-19 vaccine stocks are one of the best investment options.
- Worldwide pharmaceutical sales were reported to be $ 13.3 billion, with an increase of 6.7 %
- Worldwide Medtech sales were reported at $ 6.9 billion, with a slight decline of 1 %
Earnings per share were recorded at $ 1.8

Johnson & Johnson recently announced a 6.6% increase in the quarterly dividend, from $1.06 per share to $1.13 per share. This increase in quarterly dividend is for the 60th consecutive year.

At the new rate, the indicated dividend on an annual basis is $4.52 per share compared to the previous rate of $4.24 per share.

Johnson & Johnson has a market capitalization of $ 459 billion. Its shares are currently trading at $ 174.59

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Emerson Electric

Emerson Electric is a technology and engineering company providing various solutions to industrial, commercial, and residential markets. It operates through two segments:

Automation Solutions – It produces valves, actuators, regulators, control and safety systems, asset management, electrical components and lighting, welding, assembly, and cleaning.
Commercial and Residential Solutions – It is focused on a commercial building, heating and air conditioning, refrigeration and cold chain offerings, home products, professional tools, and vacuums.

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Emerson Electric reported its second quarter results for 2022:

Net Sales were recorded at $4.8 billion
- Automation net sales increased 5 percent during the quarter
- Commercial and Residential Solutions net sales increased 13 % during the quarter
EPS was reported to be $ 1.13
Declared a quarterly cash dividend of $0.515 per share

Emerson is a well-managed, financially strong, and highly focused enterprise with a history of delivering total shareholder returns and 65 consecutive years of increasing dividends.

Emerson Electric has a market capitalization of $ 53.35 billion. Its shares are currently trading at $ 89.82.

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AbbVie Inc

AbbVie discovers, develops, and commercializes advanced therapies that have an impact on people’s lives. It has approx. 50,000 employees working together to help patients around the world. AbbVie is best known for the world’s biggest-selling drug, Humira, an immunology medication with several uses.

AbbVie recently reported its second quarter results for 2022:

Net Revenues were reported at $ 14.6 Billion
- Net Revenues from the Immunology Portfolio Were $7.207 Billion, an Increase of 17.8 Percent
- Net Revenues from the Hematologic Oncology Portfolio Were $ 1.650 Billion, a Decrease of 9.1 % on a Reported Basis
- Global Net Revenues from the Neuroscience Portfolio Were $1.658 Billion, an Increase of 13.7 % on a Reported Basis
- Global Net Revenues from the Aesthetics Portfolio Were $ 1.371 Billion, a Decrease of 4.4 % on a Reported Basis
Second-Quarter Diluted EPS was recorded at $ 0.51

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AbbVie announced that it will raise its dividend by 8.5% in 2022 to $1.41 a share. That gives it a current yield of 4.14%. AbbVie has raised its dividend for 50 consecutive years. And since becoming a separate company in 2013, AbbVie has raised its dividend by 250%.

AbbVie Inc has a market capitalization of $ 249.5 billion. Its shares are currently trading at $ 141.2.

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Microsoft

Microsoft Corporation develops, licenses, and supports software, services, devices, and solutions worldwide. The company operates in three segments:

Productivity and Business Processes – It offers Office, Exchange, SharePoint, Microsoft Teams, Office 365 Security and Compliance, Microsoft Viva, and Skype for Business; Skype, Outlook.com, OneDrive, and LinkedIn; and Dynamics 365, a set of cloud-based and on-premises business solutions for organizations and enterprise divisions
Intelligent Cloud -It licenses SQL, Windows Servers, Visual Studio, System Center, and related Client Access Licenses; GitHub provides a collaboration platform and code hosting service for developers; Nuance provides healthcare and enterprise AI solutions; and Azure, a cloud platform. It also offers enterprise support, Microsoft consulting, and nuance professional services to assist customers in developing, deploying, and managing Microsoft server and desktop solutions; and training and certification on Microsoft products
More Personal Computing – It provides Windows original equipment manufacturer (OEM) licensing and other non-volume licensing of the Windows operating system; Windows Commercial, such as volume licensing of the Windows operating system, Windows cloud services, and other Windows commercial offerings; patent licensing; and Windows Internet of Things

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The company sells its products through OEMs, distributors, and resellers; and directly through digital marketplaces, online stores, and retail stores

Microsoft Corp. announced the following results for the quarter ended June 30, 2022:

Revenue was reported to be $ 51.9 billion and increased 12 % on a year-on-year basis
Operating income was $ 20.5 billion and increased 8 % on a year-on-year basis
Net income was $ 16.7 billion and increased 2 % on a year-on-year basis
Diluted earnings per share were $ 2.23 and increased 3 % on a year-on-year basis

Microsoft returned $12.4 billion to shareholders in the form of share repurchases and dividends in the fourth quarter of the fiscal year 2022, an increase of 19% compared to the fourth quarter of the fiscal year 2021.

Microsoft Corp. announced the following results for the fiscal year ended June 30, 2022:

Revenue was $198.3 billion and increased by 18%
Operating income was $83.4 billion and increased 19%
Net income was $72.7 billion GAAP and increased 19%
Diluted earnings per share were $9.65 GAAP and increased 20%, and $9.21 non-GAAP and increased 16%

Microsoft has a market capitalization of $ 2.1 trillion. Its shares are currently trading at $ 282.47.

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Exxon Mobil Corp.

Exxon Mobil Corp. engages in the exploration, development, and distribution of oil, gas, and petroleum products. It operates through the following segments: Upstream, Downstream, and Chemical. The Upstream segment produces crude oil and natural gas. Oil stocks are one of the riskier yet most profit-generating sectors. No doubt oil is the largest energy market but natural gas stocks also play an important role. The Downstream segment manufactures and trades petroleum products. The Chemical segment offers petrochemicals.

Exxon Mobil Corporation announced second-quarter 2022 earnings:

Earnings were reported at $ 17.9 billion
- Upstream earnings in the second quarter of 2022 were $11.4 billion
- Energy Products’ second-quarter 2022 earnings totaled $5.3 billion
- Chemical Products’ second-quarter 2022 earnings were $1.1 billion
Earnings were $ 4.21 per share
Oil-equivalent production in the second quarter was 3.7 million barrels per day
$ 3.7 billion in dividends were distributed during the quarter

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Exxon Mobil’s dividend payments to shareholders have grown at an average annual rate of 6.0% over the last 39 years. The most recent quarterly dividend was declared at $ 0.88 per share.

Exxon Mobil has a market capitalization of $ 375.5 billion. Its shares are currently trading at $ 89.46.

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A. O. Smith

A.O. Smith Corporation is one of the world’s leading manufacturers of residential and commercial water heaters and boilers, offering a comprehensive product line featuring the best-known brands in North America, China, India, Vietnam, and Europe. Commodity stocks have also evolved as an asset class.

A.O. Smith Corporation announced its second quarter results for the year 2022:

Sales were reported to be $ 966 million, an increase of 12 %, on a year-on-year basis, primarily driven by previously announced inflation-related pricing actions
Net earnings were reported at $ 126.2 million, an increase of 7 %, on a year-on-year basis
Earnings per share were recorded at $ 0.81, an increase of 11 %, on a year-on-year basis

The company declared a $ 0.28 per share dividend for shareholders for the quarter.

O. Smith has a dividend yield of 1.82 % and paid $ 1.12 per share in the past year.
O. Smith has a market capitalization of $ 9.49 billion. Its shares are currently trading at $ 61.48.

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Hormel Foods

Hormel Foods Corporation, based in Austin, Minn., is a global branded food company with over $11 billion in annual revenue across more than 80 countries worldwide. Its brands include:

Planters
SKIPPY
SPAM
Hormel
Natural Choice
Applegate
Justin’s
Wholly
Hormel
Black Label
Columbus
Jennie-O

and more than 30 other beloved brands.

The company was named on the “Global 2000 World’s Best Employers” list by Forbes magazine for three years, and is one of Fortune magazine’s most admired companies

Hormel Foods Corporation recently reported results for the second quarter of fiscal 2022:

Order Volume was recorded at 1.2 billion lbs., which is down by 2 % on a year-on-year basis
Record net sales of $ 3.1 billion, an increase of 19 % on a year-on-year basis
Operating income of $ 335 million, an increase of 16 % on a year-on-year basis
Operating margin of 10.8 %, compared to 11.1 % last year and 10.5 % last quarter
Pretax earnings of $ 322 million, an increase of 10 % on a year-on-year basis
Diluted earnings per share of $ 0.48, an increase of 14 % compared to last year

Hormel food announced a dividend of $ 0.26 for the quarter.

Hormel foods have a dividend yield of 2.08% and paid $1.03 per share in the past year.

Hormel Foods has a market capitalization of $ 26.95 billion. Its share is currently trading at $ 49.35.

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American Express

American Express is a globally integrated payments company, that primarily issues credit cards, processes payments, and provides travel-related services worldwide.

The company operates through three segments:

Global Consumer Services Group
Global Commercial Services
Global Merchant and Network Services.

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Its products and services include payment and financing products; network services; accounts payable expense management products and services; and travel and lifestyle services. The company’s products and services also comprise merchant acquisition and processing, servicing and settlement, point-of-sale marketing, and information products and services for merchants; and fraud prevention services, as well as the design and operation of customer loyalty programs

American Express recently reported its second-quarter results for the year 2022:

Net income of $ 13.4 billion, as compared to $ 10.24 billion, during last year’s same period
Earnings per share were recorded at $ 2.57 per share, as compared to $2.80 per share during last year’s same period
Card Member spending was up 30 % as compared to the same period last year
This quarter saw record card member spending driven by robust travel and entertainment rebound

American Express pays quarterly dividends for many years now. During this quarter the company paid a $ 0.52 dividend per share.

American Express has a market capitalization of $ 116.5 billion. Its share is currently trading at $ 155.43.

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CONCLUSION

Adding a DRIP stock to your portfolio is s good idea. But not every company offers a DRIP, and not all DRIPs are the same. Therefore, it is advised to always do your research before putting your money in any financial instrument.

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