Three Dividend-Yielding Stocks and a Dividend ETF that Outperformed the S&P 500 in 2024, Maintaining their Value for 2025 Investment Consideration
In 2024, the megacap tech companies dominated the gains in the prestigious S&P 500 index, overshadowing the modest returns from dividend stocks and ETFs. Despite that, numerous dividend stocks and ETFs managed to outperform the benchmark index. Three of our writers – Scott Levine, Daniel Foelber, and Lee Samaha – share their reasons why Kinder Morgan, Delta Air Lines, and Global X MLP & Energy Infrastructure ETF remain solid buys for 2025 after their exceptional performances last year.
Kinder Morgan: A High-Yield Opportunity
Scott Levine, our contributor, praised Kinder Morgan for its 38% second-half surge and 55% yearly gain in 2024. Despite its impressive rise, Levine believes it remains undervalued due to a 4.1% forward dividend yield. Kinder Morgan is one of the leading natural gas midstream companies in the U.S., boasting about 66,000 miles of natural gas pipelines transporting 40% of the natural gas in the country. Thanks to long-term contracts with customers, Kinder Morgan's management benefits from cushioned future cash flows, making it easier to plan for capital expenditures and dividend payments.
The company has lowered its leverage by 26% since 2016, decreasing its debt-to-EBITDA ratio to 3.8 in 2025, demonstrating its financial health. Moreover, Kinder Morgan has hiked its dividend at a robust 12.6% compound annual rate over the past seven years. With a solid project backlog, Kinder Morgan could continue to strengthen its payouts to investors in the coming years.
Delta Air Lines: Primed for Continued Ascent
Delta Air Lines, which saw a significant stock price hike in 2024, was among the sectors hardest hit by the COVID-19 pandemic but has since shown impressive resilience. Despite high debt levels (~$17.7 billion, down from $33 billion in 2022), Delta's dynamics are improving, with plans to further reduce its total debt by $1.6 billion by year-end 2024.
Delta's American Express partnership enables revenue diversification, while adding loyalty and engagement. The stock currently has a low P/E ratio (8.5), showcasing its value after the precipitous price drop before 2024. Although the dividend yield is small (1%), Delta represents a compelling option for investors who expect broad consumer demand for travel and anticipate the airline's expansion and diversification efforts.
Energy Infrastructure Companies: Strong Upside Potential
Our third contributor, Lee Samaha, believes that the Global X MLP & Energy Infrastructure ETF, which outperformed the S&P 500 by 13.7%, with dividend yields of 4.3%, could continue its impressive run in 2025. As a concentrated play on the energy infrastructure sector, including MLPs and energy storage companies, the ETF represents a chance to reap the rewards from the projected long-term growth of the U.S. oil and gas industry, as well as the potential to export liquid natural gas.
With the market reevaluating fossil fuel's role in the transition, the high-yielding energy infrastructure companies are expected to maintain strong profits for longer. Against this backdrop, the 25 stock portfolio – led by energy giants such as Enbridge, Williams Companies, Oneok, Kinder Morgan, and Cheniere Energy – provides investors with an attractive option to capitalize on the prospects of this burgeoning sector.
[1] [Predicted Performance for 2025 – Kinder Morgan (KMI)][2] [Delta Air Lines – General Market Trends and Forecasts][3] [Global X MLP & Energy Infrastructure ETF (AMLP) – Performance and Yield]
Investing in Kinder Morgan could be a high-yield opportunity, as Scott Levine suggests, given its 4.1% forward dividend yield and impressive 38% second-half surge in 2024. This undervaluation might be a chance for financial gains in the future.
Even though some investors might be wary of investing money in finance sectors with high debt levels, Delta Air Lines, with its $17.7 billion debt, could still present a compelling option for those anticipating broad consumer demand for travel and the airline's expansion and diversification efforts.
