23 Top Dividend Stocks to Buy and Hold in 2023 The Motley Fool

The logistics company last raised its semiannual dividend in May 2023, to 69 cents a share from 67 cents a share. CHRW stock has a mixed record when compared to the broader market over the longer term. Shares have outperformed the S&P 500 on an annualized total return basis over the past one- and three-year periods, but are laggards over the past five, 10 and 15 years. Going back 20 years, CHRW’s annualized total return beats the S&P 500 by a bit more than 2 percentage points. Still, you can make conclusions about a company’s priorities and ability to create value by looking at its dividend track record. Maintaining a competitive dividend for decades requires consistent growth in profits and cash flow.

The bank pays shareholders in January, April, July and October, and has been raising the payout by a double-digit percentage annually. The materials producer pays a quarterly dividend of $0.70 per share in March, June, September and December. Between 2011 and 2017, Dow’s quarterly dividend rose from $0.25 to $0.46, but the company paid no dividend in 2018. Diamondback also pays a quarterly dividend with base and variable components. In May 2022, the company raised its annual base dividend 17% to $2.80 per share. The variable dividends in fiscal year 2022 to date have outpaced the base, totaling $6.16 per share.

The insurance company last raised its payout in May 2022, by 3.8% to 83 cents a share per quarter. With that move, Chubb notched its 29th consecutive year of dividend growth. The best dividend stocks have ample free cash flow to cover the dividend, and CAT checks that box easily. For the 12 months ended Dec. 31, 2022, CAT had free cash flow after debt payments of $2.9 billion, and that was after disbursing $2.4 billion in dividends. Companies with long histories of annual dividend growth also offer some peace of mind.

Market Recap

Raytheon is the largest defense contractor on the market today with a market cap of $146 Billion. However, back in July of 2018, Lowe’s hired CEO Marvin Ellison, and I have written about it a number of times, but he is a big reason for the position I had built in the stock. When you look into his background, you see loads of amazing experience within retail and home improvement.

Payout Ratio – This tells investors how much of a company’s earnings goes towards the dividend. A higher number means that a company is applying more of its earnings towards its dividend. Payout ratios are also an imperfect measurement https://business-oppurtunities.com/why-is-network-marketing-so-lucrative/ because while a higher number is generally better, the more of a company’s earnings that go towards a dividend is less money that can go towards growth. Some of them could also have significant upside potential over the next 12 months.

Constructing your portfolio

It also delivers reliable increases to its dividend each and every year. The top 10 list for April performed well last month, collectively the chosen stocks gained 1.91%. The top 10 list is off to a great start this year and is making up for a lackluster showing in 2022. Since inception, which was 30 months ago, the watchlist trails VYM by 1.53% but is outpacing SPY by 2.65%. Those parameters will likely include some or all the metrics defined below. As you dive into stock research, though, you’ll see that no company outperforms in all areas.

When economic conditions improve, Whirlpool is likely to make a big recovery, as the market re-rates the stock. On a longer timeframe, dividends could provide a further boost to total returns with WHR shares. Dividend growth has averaged 9.73% annually over the past five years. Dividend stocks are also less volatile than other asset classes because of their solid financials and proven track record of success. Investors who look for stable sources of income may be more likely to hold onto their dividend-paying stocks during market volatility, which can help stabilize the stock price and reduce volatility. Historical analysis has shown that dividend stocks have generated high returns with lower volatility over the years.

How to Understand Three Common Dividend Terms

If you only focus on the dividend amount, you could lose a lot of money if the stock loses value. Note that Brookfield Infrastructure Corporation and Brookfield Infrastructure Partners share the same underlying business (in a similar way that we saw earlier with the two Brookfield Renewable stocks). Investing in Brookfield Infrastructure Corporation doesn’t have the tax complications of Brookfield Infrastructure Partners, which is a limited partnership. As such, right now you can pick up shares of Microsoft at just 21x next year’s earnings which is quite low for a company of MSFT’s stature considering they tend to trade closer to 29x.

The most recent hike came in February 2023 with an 8.3% increase to the quarterly payment to 65 cents per share. But sometimes boring can be beautiful, and that’s the case with Amcor when it comes to reliable income. It was named to the list of payout-hiking dividend stocks at the start of 2020 after its June acquisition of Bemis. Bemis, which fell out of the S&P 500 Index and thus the Aristocrats in 2014, rejoined by merit of its merger with Amcor.

Finally, there is Simon Property Group, which owns and manages retail malls and outlets. This has been an extremely difficult time for retail stores, and Simon Property’s spotty earnings and falling share price have reflected that. It is a real estate investment trust (REIT), which is required to pay out at least 90% or more of its taxable income in dividends. Telecom giant Verizon is probably the best dividend stock among the five highest yielders, but it has issues as well. The earnings have been fairly steady, and the payout ratio is a manageable 51%. However, the company has struggled with debt and stiff competition, and its stock price has been on a downward trend in recent years.

Not only does this make dividend stocks a proven way for investors to build wealth. Mark Roussin is an active Certified Public Accountant (CPA) in the state of California. Mark has worked as a CPA, serving both public and private Real Estate corporations for over 10 years. Today, he provides his followers insights to both undervalued dividend stocks mixed with high-growth opportunities with a goal of them reaching financial freedom in the long-term.

BDX last raised its payout in November 2022 with a 4.6% raise to the quarterly dividend to 91 cents a share. Perhaps most important for income investors, CVX has more than three decades of uninterrupted dividend growth under its belt, and management has said it will protect the payout at all costs. Chevron’s last increase was announced in January 2023 with a 6% bump in the quarterly dividend to $1.51 per share. Additionally, CVX announced a new $75 billion share repurchase program. The last increase was announced in March 2023, when GD lifted the quarterly payout by 4.8% to $1.32 a share. With its below-average payout ratio of 34%, General Dynamics should have sufficient room for more dividend growth.

• However, if the Federal Reserve stabilizes interest rates later this year, the stocks could enjoy nice rebounds.
• Shares had a tough time as well, losing more than 60% of their value.
• Regardless of how the labor market is doing, Cintas is a stalwart when it comes to being one of the best dividend stocks.

The company’s strong dividend yield, unfortunately, is mainly a result of a falling stock price. VF trades for about $30 per share, down from about $65 per share in January 2022. You might look at the company’s debt service requirements relative to its cash flow

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When constructing your monthly dividend portfolio, you want to pick high-quality stocks with solid income streams. Additionally, they need to have strong financials so that the company can still pay out its dividend if bad times hit. An excellent reference to use for these companies is the Dividend Aristocrat list. These companies have paid and increased dividends yearly for at least 25 years straight. We think Comcast stock is a buy, as shares trade 37% below our $60 fair value estimate.

Focus first on business quality and a company’s ability to maintain — and increase — the payout. The S&P 500 beats out the Aristocrats by a hair over longer time frames. But it’s tough to keep pace with those strong dividend-payers during bear markets. The ongoing, rising dividend payments prop up the Aristocrats’ total return, even as share prices fall. The quarterly payments in 2022 added up to $5.64 per share vs. $5.20 per share in the prior year.

We disagree and, having perused more than 50 years of data, conclude that Applied is unquestionably a growth company trading at a value price. The green bars indicate that semiconductor manufacturers have grown industry revenue at 7.5% over the last decade, more than three times the growth of the U.S. economy over this same decade. The orange line indicates that the percentage of this revenue that the industry commits to capital spending has gradually risen from roughly 20% to 30%. Putting these two trends together, it should come as no surprise that Applied has grown revenue at a rate of 11%, and operating income at more than 19% over this same time period. Just when the stock market began recovering after suffering huge losses in 2022, the recent bank crisis drew the market into the vortex of uncertainty all over again. According to Federal Reserve’s March policy meeting, the Silicon Valley Bank fallout is likely to push the US economy into a mild recession later this year, as reported by CNBC.

• Duke Energy stock is modestly undervalued, trading just 5% below our $105 fair value estimate.
• We don’t think the market fully appreciates the pharmaceutical giant’s ability to offset major patent losses over the next five years, argues Morningstar director Damien Conover.
• The last hike – a 6.1% improvement to 95 cents per share quarterly – came in February 2023.
• And with a conservative payout ratio and four straight decades of dividend growth, that confidence is indeed well placed.

But as much as this Dow stock has been a disappointment in terms of price appreciation, there’s no questioning its value as a compounding source of income. Consolidated Edison (ED (opens in new tab)) is the largest utility company in New York State by number of customers. Founded in 1823, it provides electric, gas or steam services to roughly 3.5 million customers in New York City and Westchester County. ConEd also happens to be North America’s second-largest solar power provider, and is investing in electric vehicle charging programs and other green energy endeavors.

The yield is akin to the interest rate you earn on your savings account. So if you see a company paying a 3% dividend, you will earn a 3% return on your money from the dividend alone. Given ongoing economic uncertainty and stock market volatility, investors looking for the best dividend stocks today might consider adding undervalued, quality dividend stocks to their portfolios. JNJ’s diversification across mutiple segments adds fortitude to this defensive dividend stock, and that helps income investors sleep better at night. The healthcare giant has increased its payout for three decades and counting. The most recent hike came in April 2022 when JNJ increased the quarterly dividend by 6.6% to $1.13 per share.

Likewise, companies with extremely high payout ratios can also signal danger to investors. Meanwhile, the asset manager remains attractive as an income provider for investors looking for the best dividend stocks. It has raised its dividend annually since 1981, including a 3.4% hike to 30 cents per share quarterly announced in December 2022.

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