3 Dividend Stocks for June 2024

David Harrell: Hi. I’m David Harrell, editor of the Morningstar DividendInvestor newsletter. In this monthly series, we take a look at the dividend prospects of three stocks that are popular with income investors.

3 Dividend Stocks for June 2024

1. Crown Castle CCI
2. Edison International EIX
3. Hasbro HAS

Crown Castle operates as a real estate investment trust and owns and leases roughly 40,000 cell towers in the United States. It also owns more than 85,000 route miles of fiber. Its primary customer base is the big three US mobile carriers. Crown Castle has an appealing yield—6.4%—but it hasn’t increased its dividend rate since late 2022. The management team was asked about the flat dividend during the April 17 earnings call. They reiterated the board’s support for the dividend but provided no information about possible future increases. There were concerns last year that cancellations by Sprint and related liquidity concerns could threaten the dividend rate, but Morningstar analysts believe that Crown Castle can sustain its dividend despite not covering it with free cash flow over the next two years. And due to the pressure from those Sprint cancellations, they don’t expect Crown Castle to raise its dividend anytime before 2026. The stock currently trades at a 25% discount to its Morningstar fair value estimate.

Full disclosure: Our next stock, Edison International, is one that I hold in my own portfolio. Edison is the parent company of Southern California Edison, which distributes electricity to 5 million customers. Currently yielding 4.2%, with 4.3% annualized dividend growth over the past five years, Edison is one of the higher yielders in its sector, and it’s trading roughly in line with its Morningstar fair value estimate. Following a 5.8% increase for its first payout of 2024, Morningstar analysts note that Edison now has a 20-year streak of annual dividend increases, which they expect to continue in 2025 and beyond. As for the rate of growth, they expect dividends to increase in line with Southern California Edisons’s earnings, noting that management has long targeted a 45% to 55% payout based on SCE’s earnings. As long as Edison continues to receive regulatory support, they believe the board will keep the dividend at the high end of its target payout range.

Last up this month is the toymaker Hasbro, which I also own in my portfolio. Hasbro’s recent dividend growth has been modest—2.6% annualized over the past five years—but the yield has grown to 4.6% due mostly to the decline in the share price during that time. During the company’s Feb. 13 earnings call, one analyst made the argument that the turnaround of rival toymaker Mattel MAT didn’t begin until that company suspended its dividend, giving it more flexibility to pay down its debt. In response, Hasbro’s CFO said that senior management and the board remain “supportive of our capital allocation strategy, which includes the dividend.” She acknowledged the need to reduce debt but believes that improving the business will allow Hasbro to meet all of its capital-allocation priorities. Morningstar analysts expect that over time, management will continue returning cash to shareholders through increased dividends. They forecast that the current annual dividend rate of $2.80 will increase to $3.30 per share by 2028. The stock is trading at more than a 25% discount to its fair value estimate, placing it in 4-star territory.

I’m David Harrell from Morningstar DividendInvestor. Thanks for watching, and we’ll see you next month.

Watch How to Maximize Credit Card Points for Better Trips and Rewards for more from David Harrell.