3 Dividend Stocks to Watch in December 2024

3 Dividend Stocks to Watch in December 2024

Here are three dividend-paying stocks worth considering this month, each trading below its estimated fair value.

1. British American Tobacco (BTI)

British American Tobacco, the second-largest tobacco company by volume globally, offers a fixed quarterly dividend of 58.88 pence, yielding 8.1% based on current exchange rates. For 2024, the company increased its dividend by 2% in base currency and remains committed to future hikes. Analysts project a 5% annual dividend growth, alongside share buybacks of 2 billion pounds, while maintaining a stable net leverage ratio. The stock trades at a 25% discount to its estimated fair value. Note: U.S. investors generally aren’t subject to UK dividend tax withholding due to a tax treaty, though fees may apply.

2. ConocoPhillips (COP)

With a yield of 2.9%, ConocoPhillips has achieved impressive annualized dividend growth of 27.5% over the past five years. In 2024, the company integrated its variable dividend component into its base quarterly dividend. Conoco’s leadership has expressed confidence in maintaining top-tier dividend growth compared to S&P 500 peers. The stock is currently trading slightly below its fair value estimate of $114.

3. CVS Health (CVS)

CVS Health provides a 4.5% yield with an annualized dividend growth of 3.9% over the last five years. However, the company often pauses or limits dividend increases after acquisitions, prioritizing debt reduction. 

Analysts expect this pattern to continue, with a gradual rise in the annual dividend from $2.66 per share today to $3.01 by 2028. Currently, CVS trades at a significant discount, over 35% below its fair value estimate.

These stocks offer a mix of strong yields and growth potential, making them appealing options for income-focused investors.