Investors flock to dividend-paying stocks in hopes of juicing their portfolios with income generation and often, stability through market turbulence. Dividend-paying stocks that offer high yields and strong share price returns are an even better bet as they combine income with growth.
In 2024, Morningstar found that the three best-performing dividend stocks did just that. Analysts at the firm reviewed the Morningstar Dividend Leaders Index and found companies that outperformed.
The top three more than doubled the performance of the S&P 500 Index ($SPX), and they all yield roughly 3%.
Let’s dive in to see what made Kinder Morgan (KMI), Entergy (ETR), and Kellanova (K) shine in 2024.
Dividend Stock #1: Kinder Morgan
Kinder Morgan (KMI) is one of the largest energy infrastructure companies in North America. It operates 79,000 miles of natural gas (NGH25) pipelines and transports about 40% of the natural gas that the U.S. uses each year.
The company is valued above $65 billion by market capitalization and gained 64.4% in 2024. Kinder Morgan is also starting the year on a high note, up 8% in the year to date.
One of the reasons for this outperformance is likely that Kinder Morgan anticipates growth across key metrics in 2025. The company said that it projects 4% growth in its adjusted EBITDA to $8.3 billion from its estimated $8 billion in 2024, and it expects to report earnings per share of $1.27, up from its 2024 estimate of $1.17.
In terms of its payout, the company says it expects its year-end dividend to be $1.17 per share. This would mark its eighth annual dividend increase. At its current annualized payout of $1.15, KMI stock yields 3.86%. Although this is slightly lower than the energy sector average, Kinder Morgan makes up for it with business growth.
This year, the company said it anticipates its natural gas business, as well as its energy transition business, to primarily drive results.
Wall Street is cautiously optimistic on KMI stock for 2025 with a consensus “Moderate Buy” rating. However, shares have already surpassed the average analyst price target of $28.
Dividend Stock #2: Entergy
Entergy (ETR), like Kinder Morgan, has its fingers in the natural gas business. The company says it “powers life,” providing electric and natural gas power services to roughly 3 million customers in Arkansas, Louisiana, Mississippi, and Texas. It has 24,000 megawatts of power generation capacity.
The company is valued $33.9 billion by market cap and gained 55.9% in 2024. Its shares are also up approximately 7% in 2025. Its dividend yields 2.96% with a yearly payout of $2.40. While this is below the average for the utilities sector, Entergy makes up for it with business growth, just like Kinder Morgan.
One driver of this in 2024 was the increase in power generation demand driven by artificial intelligence (AI), and specifically, by data centers. This has lifted utility stocks and led Big Tech companies to invest in everything from their own data centers to power plants and nuclear energy development. Entergy rode that wave over the past 12 months.
Specifically, Entergy will be powering the $10 billion data center that Meta Platforms (META) is building in Richland Parish, Louisiana.
Analysts expect Entergy will report a 20% jump in earnings per share to $4.04 for 2024, and another 7% jump to $4.33 in 2025. The stock has a “Moderate Buy” consensus rating, but its shares are already trading above the average price target of $79.54.
Dividend Stock #3: Kellanova
Kellanova (K) is a rather new company, at least as a standalone entity. The snack-focused business began trading under the “K” ticker and Kellanova name while the cereal business split into the WK Kellogg Company (KLG) in 2023. Kellanova is home to brands like Pringles, Cheez-It, and Pop-Tarts.
The company is valued at a market cap of nearly $28 billion and its shares gained 49.8% in 2024. Shares are up 0.5% in the year to date.
The outperformance was largely driven by an August 2024 announcement that Mars would acquire the company in a $35.9 billion deal, or $83.50 per share of Kellanova stock. Mars is a snack food giant in its own right, with popular candy brands like Snickers and Twix, as well as the KIND brand. The deal is expected to close in the first half of 2025.
At this point, investors have bid up Kellanova shares near its $83.50-per-share merger price, and it is also trading slightly above its average price target of $81.07. Analysts have a “Hold” rating on the stock.
In terms of payout, investors who happened to be holding shares amid the merger mania also benefitted from a yield of 2.8% and an annual payout of $2.28 per share. Its dividend is above the average for consumer staple companies.
