2 Dividend Stocks and 1 ETF That Beat the S&P 500 in 2024, and Are Still Worth Buying in 2025

Daniel Foelber (Delta Air Lines): Delta Air Lines stock rocketed higher in 2024 amid a general boom for airline stocks.

The airline industry was one of the sectors that was hardest hit by the COVID-19 pandemic. Then came the period of supply chain challenges and high inflation. Navigating those obstacles was rough, but Delta did so, and eventually returned to its pre-pandemic form, which set the stage for a massive run-up in its stock price last year.

Delta is well-positioned to keep up its momentum in the new year. Its partnership with American Express is helping to diversify its revenue beyond passenger tickets while boosting loyalty and engagement. These efforts should partially insulate Delta’s performance from the ebbs and flows in the broader economy.

The airline’s debt burden understandably soared in the early phases of the pandemic, reaching roughly $33 billion in total debt by the end of 2022. Since then, management has cut it nearly in half. As of 2024’s third quarter, Delta had reduced its total debt burden to $17.7 billion with plans to reduce it an additional $1.6 billion by the end of the year. Delta’s balance sheet remains fairly leveraged, but the situation is improving.

Even in good economic times, airline stocks tend to sport dirt-cheap valuations due to the industry’s cyclical nature and a poor track record of long-term returns. Even after its monster performance in 2024, Delta still has a price-to-earnings (P/E) ratio of just 8.5, and a forward P/E ratio of 8.2 — a reflection of just how beaten down the stock was heading into 2024.

With a modest 1% dividend yield at the current share price, Delta isn’t a passive income powerhouse. But it stands out as a good buy for investors who think consumer demand for travel will remain strong and expect Delta to continue diversifying its business.

Lee Samaha (Global X MLP & Energy Infrastructure ETF): With stock price gains of almost 36% in 2024, this ETF easily beat the S&P 500’s rise of 23.3%. Its outperformance gets even better on a total return basis (including dividends reinvested). On that score, the ETF clocked returns of almost 43% compared to the S&P’s 25%.

With such returns in its immediate past, it is understandable that some investors might doubt that the Global X MLP & Energy Infrastructure ETF has the potential to deliver another market-busting year in 2025. I think it’s entirely possible, and its current dividend yield of 4.3% doesn’t hurt its chances.

As the name suggests, this ETF invests in master limited partnerships (MLPs) and other players in the midstream energy infrastructure space, such as pipeline and storage companies. The five largest positions in its current portfolio of 25 stocks are high-yielding energy infrastructure companies such as oil and natural gas pipeline storage and renewable energy company Enbridge, gas processing and transportation company Williams Companies, oil and gas midstream company Oneok, gas pipeline and terminal operator Kinder Morgan, and LNG provider Cheniere Energy.

In a nutshell, it’s a play on the long-term growth of the oil and natural gas industry in the U.S. and the potential for producers to export liquefied natural gas via terminals in the U.S. With a more fossil-fuel-friendly administration coming to the White House, growth on that front looks more likely. In addition, there’s been something of a shift over the last year in how the market views the outlook for fossil fuels.

It’s not so much that investors are denying that an energy transition is underway, but that more of them are coming to recognize that the costs and complexities of shifting to renewable energy sources may have been underestimated in the race to net zero. That’s leading the market to conclude that the pace of the transition will likely be slower than many previously expected, and in that light, the role of natural gas, in particular, as a transition fuel is being positively reassessed. That should mean more profits for longer for natural gas companies, and particularly for the MLPs that store and transport it.

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American Express is an advertising partner of Motley Fool Money. Daniel Foelber has no position in any of the stocks mentioned. Lee Samaha has no position in any of the stocks mentioned. Scott Levine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Cheniere Energy, Enbridge, and Kinder Morgan. The Motley Fool recommends Delta Air Lines and Oneok. The Motley Fool has a disclosure policy.

2 Dividend Stocks and 1 ETF That Beat the S&P 500 in 2024, and Are Still Worth Buying in 2025 was originally published by The Motley Fool