7 Large-Cap NASDAQ Dividend Stocks Investors Should Consider
By: Ned Piplovic,
Despite individual portfolio strategies to achieve their specific financial goals, most income investors seek equities that have similar characteristics, such as the seven NASDAQ dividend stocks featured in this article.
Some of the criteria that income investors target are fairly obvious. Dividend yield above a certain value and number of consecutive dividend hikes are probably most common.
While these two measurements provide an incomplete picture of a stock’s dividend worthiness, both quickly can reduce the number of stocks from several thousand to just a few dozen potential candidates.
However, these two indicators have some shortcomings and should not be used as sole determinants for choosing investments. While a high or increasing dividend yield is desirable, it does not indicate whether the yield increase resulted from rising dividend payouts or a declining share price. Therefore, the total return measurement will provide additional information about whether the share price rose to complement the rising dividend for upsized returns, declined to offset dividend income growth or cancelled out the dividend income growth to cause a loss for shareholders.
Additionally, investors should review the company’s dividend payout ratio to make sure that the company can support its rising dividend distributions in the future. Investors should look for low dividend payout ratios of 50% or less. While some companies will have extremely low payout ratios, most companies with sustainable dividend growth programs will have a payout ratio between 30% and 50%.
In addition to the measurements mentioned above, investors can consider a company’s Price to Earnings (P/E) ratio, Debt to Equity ratio and percentage of shares held by investing institutions versus the portion held by individual investors. However, very few companies will meet all the desired criteria and investors rely on a combination of quantitative measurements, as well as subjective factors and estimates about company’s initiatives and perceived operational efficiencies.
The companies on this list have been selected with dividend investor’s Dividend Screener. Below is the list of the seven NASDAQ dividend stocks investors should consider.
7 Large-Cap NASDAQ Dividend Stocks: #7
Cisco Systems, Inc. (CSCO)
Cisco’s current yield is 3.2%, with nine consecutive years of annual dividend hikes. The combined total return on shareholders’ investment is 1.3% over the last 12 months, 14.1% over the past three years and 120.2% over the past five years. The current ex-dividend date is January 4, 2021, with its next date yet to be announced.
7 Large-Cap NASDAQ Dividend Stocks: #6
iShares Trust (DVY)
The iShares Trust’s current dividend of 3.4% is slightly above the equity’s five-year average yield and follows ten consecutive years of rising annual dividends until its most recent reduction in 2020. While experiencing a 19% drop during the second quarter of 2020, the share price recovered almost all those losses and closed on January 29, 2021 at 96.72 The rising dividend and asset appreciation combined for total returns of -0.5%, 6.7% and 54.8% over the past one, three and five years, respectively.
7 Large-Cap NASDAQ Dividend Stocks: #5
Xcel Energy, Inc. (XEL)
Xcel Energy’s current yield is 2.7% and the company has boosted its annual dividend over the past 17 consecutive years. After rising steadily for almost a decade, the company’s share price fell almost 10% in the first quarter of 2020. However, the share price recovered and closed on January 29, 2021 at $63.99, just 2.6% less than what it was a year earlier. Despite losing some ground on this share price decline during its COVID-19 response, the company’s total returns were still positive at 0.1%. The last three and five years, Xcel Energy has returned 55.5% and 94.5%, respectively. Its most recent ex-dividend date was December 22, 2020 and its next has yet to be announced.
7 Large-Cap NASDAQ Dividend Stocks: #4
PepsiCo, Inc. (PEP)
PepsiCo’s current 3.0% dividend yield is approximate to the median of the group. This company has a record of raising its annual dividend payout for the past 48 consecutive years. As a component of the S&P 500 and with such a long record of dividend hikes, PepsiCo is the seven NASDAQ dividend stocks and one of few companies designated Dividend Aristocrats. Better still, the company is approaching its 50th dividend hike, allowing it to join the ranks of the Dividend Kings — a prestigious group of company’s with over 50 consecutive years of dividend increases.
The company’s rising dividend helped to keep the total return positive at 2.2% over the past year, despite a 0.8% share price decline over the past 12 months. However, the total return over the past three years was a much more positive 24.9% and the total return was nearly 60% over the five-year period.
7 Large-Cap NASDAQ Dividend Stocks: #3
Huntington Bancshares, Inc. (HBAN)
Founded in 1866 and headquartered in Columbus, Ohio, the Huntington Bancshares Incorporated operates as a holding company for The Huntington National Bank, which provides standard banking and lending services in eight Midwest states through five business segments.
The firms’ $0.15 quarterly dividend distribution represents a 7.1% hike above the $0.14 quarterly dividend payout from two years earlier. This new quarterly dividend amount converts to a $0.60 annualized payout and yields 4.5%, which is more than 30% above the firm’s own 3.07% average yield over the last five years.
During the financial crisis, the company cut its quarterly dividend from $0.265 to $0.01 by the second quarter of 2009. Since resuming dividend hikes in 2011, the bank has enhanced its annual dividend 15-fold or at average annual rate of 31.1%.
The combined benefit of rising dividend income and appreciating assets rewarded Huntington Bancshares’ stockholders with a 9% total return over the last 12 months and an 86.1% gain in share price over the last five years.
7 Large-Cap NASDAQ Dividend Stocks: #2
Principal Financial Group, Inc. (PFG)
Based in Des Moines, Iowa and founded in 1879, Principal Financial Group, Inc. provides retirement, asset management and insurance products and services to businesses, individuals, and institutional clients worldwide.
After a boost of nearly 3% above the $0.55 payout from the same period last year, the company’s current $0.56 quarterly dividend amount is equivalent to a $2.24 annualized payout and a 4.5% forward dividend yield. The company enhanced its annual dividend distribution nearly five-fold over the past 11 consecutive years. This pace of advancement corresponds to an average dividend growth rate of 12.3% per year.
The company has suffered minor losses in the trailing 12-month period, losing 4.9% and approximately equalizing investors’ total returns, but Principal Financial Group’s stock gained 57.1% in value over the course of the last five years.
7 Large-Cap NASDAQ Dividend Stocks: #1
Qualcomm, Inc. (QCOM)
Qualcomm takes the top spot among these seven equities with a 1.7% dividend yield. This yield may appear low compared to other equities on this list, but it has been radically deflated by the company’s rapid growth in last year. Its most recent increase to a quarterly payout of $0.65 marks the company’s 10th consecutive year of dividend increases.
The incredibly rapid growth of Qualcomm is what marks it for consideration by investors — the share price has rocketed 81.7% in the trailing 12 months, gaining considerably every month since April 2020. Its long-term growth follows a similar trend, having returned 156.7% in the last three years and 310.2% in the last five years.
As evident from variances between the performance indicators of these NASDAQ dividend stocks, no single measurement can identify definitively the best securities to buy. This list is determined by the current dividend yields. The order would have been different based on a different indicator – such as total return over the past 12 months. Ultimately, each individual investor must make the final decision on which investments are best suited for his or her investment portfolio.
Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.