2 Dividend Stocks Building Enormous Returns for 2024

These two dividend stocks are due for some strong years ahead, especially as we continue to see buildings and mining accelerate.

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The market opened fairly weak to start off the first full week of February. But not all stocks experienced this drop. In fact, there are two dividend stocks that should continue to see strength over the next year and have already demonstrated as much.

Today, let’s look at these dividend stocks that are showing that investors can build some serious returns in 2024.

Caterpillar

Caterpillar (NYSE:CAT) shares jumped over 5% after reporting operating profit growth in the double digits, beating estimates. And what’s more, it seems as though this should only improve in 2024 and beyond.

Mining equipment sales were a strong source of income for the company, with higher prices helping the company’s margins. CAT stock saw commercial clients buying up its heavy machinery, with dealer inventories falling for the first time in four quarters. Therefore, it seems as though President Biden’s recent US$1 trillion infrastructure law should continue to help the company keep machinery flying off the lot.

CAT stock has, therefore, become, in the words of one analyst, “a barometre for not just the industrial economy but the global economy writ large.” Commercial construction makes up about 75% of CAT stock’s business, and this new law should continue to see CAT remain strong in 2024 and beyond.

Profit margins have also been helped along by a whopping US$28.1 billion order backlog for construction equipment. This caused profit to rise 21% year over year during the quarter. So, with all this and a 1.65% dividend yield on hand, it’s certainly a strong dividend stock to consider.

Finning

If you want to keep things Canadian, then investors would also be wise to consider Finning International (TSX:FTT), which also sells heavy machinery around the world. What’s more, earnings are coming out today, with an investor call on Feb. 7 that could give shares a boost.

In fact, as the economy returns to normal, Canadians should continue to see heavy equipment dealers see their sales return to normal as well. As demand rises, so too will deliveries, eventually rising back to 2019 levels as inventory shrinks and price increases slow.

But here’s the thing. Even with these improvements, Finning stock is still incredibly valuable. This stock trades at an 18% discount compared to where it was during the middle of last year at 52-week highs. So, despite shares rising 26% in the last few months from lows, it’s still offering huge value.

Analysts don’t expect any earnings per share drops to be large enough that the stock can’t bounce back quickly. Given this and the improvements in the market, there should be continued growth for Finning stock, not just in 2024 but far beyond.

With all that in mind, we could see shares perform similarly to CAT stock in the near term. This is why it’s still an excellent time to pick up the stock, especially with a 2.48% dividend yield on hand. So, certainly consider this stock if you’re looking at CAT stock as well. Both could bring you some strong returns over at least the next two years.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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