The 5 Best-Performing Dividend Stocks In 2023

best dividend stocks 2023

The dividend yield is the percentage of the share price you bought the stock for, paid in dividends annually. That’s far more relevant than the dollar amount of dividends per share. Mark Roussin is an active Certified Public Accountant (CPA) in the state of California.

A high dividend yield can also indicate many things, and not all of them are good. As stated previously, falling stock prices can increase dividend yields, and some companies go into debt by overspending on their dividend. The over-spenders may eventually be forced to cut their dividends if they become unsustainably expensive. The final members of our list of dividend stocks to buy and hold in 2023 span multiple sectors.

Some of them could also have significant upside potential over the next 12 months. To get qualified tax treatment for dividends, the stock must be unhedged. That means the shares were not involved in any puts, calls or short sales during the holding period. So-called qualified dividends must meet special requirements issued by the IRS. The qualified dividend rates are the same as the long-term capital gains rate.

How Do Dividend Stocks Work?

Meanwhile, NextEra Energy Partners sees significant growth ahead. The company currently expects to grow its dividend by a 12% to 15% annual rate through at least 2024. That’s the fastest rate among dividend-focused clean energy infrastructure companies.

The company has seen impressive growth, including nearly 24% yearly EPS over the last five years, and 12% expected yearly EPS growth over the next five years. It has grown earnings more than 10.4% over the last five years, and analysts expect 9.4% yearly EPS growth going forward. When you reinvest dividend income, the magic of compounding turbocharges your returns. Over the last century, dividend payments account for about 40% of the total return of the S&P 500. When the going gets rough on Wall Street, smart investors turn to dividend stocks.

Analysts commonly compare ROIC to a company’s weighted average cost of capital. ROIC should be the higher of the two numbers—that means the company is creating value. 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. The FINAL stock in my list of 10, is by far the most popular, and that is Microsoft.

How to Compare Dividend Stocks

From there, it’s a natural next step to define personalized parameters for acceptable dividend stocks. The tech retailer has made some sizable increases to its shareholder payout over the last few years. Best Buy shareholders collected a cumulative $2.20 per share in 2020, $2.80 in 2021 and $3.52 in 2022.

best dividend stocks 2023

But this doesn’t mean large-scale telecom companies are devoid of catalysts or needle-moving events. To begin with, it’s an international player with a presence in more than 180 countries. © 2023 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions. Information is provided ‘as-is’ and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use please see Barchart’s disclaimer.

Essex Property Trust (ESS), which was added to the Dividend Aristocrats in 2020, is a real estate investment trust (REIT) that invests in apartments primarily on the West Coast. The utility company was added to the elite group of dividend growers in January 2021. J.M. Smucker (SJM) is a well-known consumer staples stock thanks to the company’s wide range of popular brands. Folgers and Dunkin’ coffee, Jif peanut butter and Smucker’s eponymous jams and jellies represent just a few of its offerings. A Fidelity Investments report touts opportunities among residential property owner REITs in the U.S. Rising mortgage rates have helped make renting more popular than home owning for many people.

Top 9 Best-Performing Stocks: September 2023

PEP’s business remains fundamentally strong, and that should keep its dividend-growth streak intact. PepsiCo declared its 51st straight annual increase in February 2023 with a 10% bump in the annnualized dividend to $5.06 per share. That sort of flexibility helps the company maintain the free cash flow required to keep the dividend increases coming. All told, MDT returned $4 billion in cash to shareholders in fiscal 2023. The company has pledged to return a minimum of 50% of its free cash flow to shareholders, primarily through dividends.

  • IBM is an information technology company that has been around since 1911 and has a solid income stream.
  • Berry is an upstream energy firm that explores oil properties in the U.S.
  • Our artificial intelligence scours the markets for the best investments for all manner of risk tolerances and economic situations.
  • Defense contractor General Dynamics (GD) was added to the elite list of best dividend stocks for dividend growth in 2017.
  • Philip Morris’ IQOS heated tobacco system increased its share of the heated tobacco markets it operates in to 7.6% through the first nine months of the year.
  • Atmos Energy (ATO), which distributes and stores natural gas, was added to the Dividend Aristocrats in January 2020.

PPG’s last raise came in July 2022 with a 4.8% bump in the quarterly distribution to 65 cents per share. Dividend yield, calculated by dividing the annual dividend by the current share price, is a useful measure to consider. Similarly, dividend payout ratio (DPR), the percentage of earnings paid out as dividends, helps investors to determine how sustainable a dividend program may be. But there are many other factors to consider, including an increase in the size of dividend payments, consistency of dividend payments, and more.

Dividend Stock #4 – Costco Wholesale (COST)

The stock’s 15-year annualized total return beats the broader market’s performance by a couple of percentage points. For investors with taxable accounts and in high income brackets, dividends stock might not be as tax efficient as other options. In general, a good rule of thumb is to invest the bulk of your portfolio in index funds, for the above reasons.

Medtronic’s dividend per share has grown by 38% over the past 5 years and by 146% over the past 10 years. As a result, the five-year compound annual growth rate of AOS’ dividend now stands at more than 15%. Brown & Brown (BRO), which offers insurance brokerage services to both businesses and consumers, has been in operation since 1939, but its stock wasn’t added to the S&P 500 until 2021. Using NerdWallet’s investment calculator, we can see that a $5,000 investment that grows at 6% annually for 20 years could grow to over $16,000. Bump that up to 8% growth to include dividends, and that $5,000 could grow to over $24,000.

How To Pick High Yield Dividend Stocks

The reason I’m lumping these highly profitable companies together is because they share many of the same catalysts and headwinds, yet both deliver inflation-fighting yields of 6% and 7%. When it comes to the safety of their payouts and the size of their trading of commodities distributions, these are five of the safest high-yield dividend stocks to buy for 2023. However, income investors should be able to depend on the utility company’s steady dividend. Duke has paid a dividend uninterrupted for 95 consecutive years.

And the company’s scale really came in handy during the pandemic, when it had to weather the closure of restaurants, bars and other food-service venues. The world’s largest hamburger chain also happens to be a dividend stalwart. Changing consumer tastes will always be a risk, but McDonald’s (MCD) dividend dates back to 1976 and has gone up every year since. That’s the power of being a consumer giant that has been able to adjust itself to changing consumer tastes without losing its core. Thanks to its 2017 acquisition of Valspar, Sherwin-Williams (SHW) is one of the largest paints, coatings and home-improvement companies in the world. Ecolab’s fortunes can wane as industrial needs fluctuate, though; for instance, when energy companies pare spending, ECL will feel the burn.

Dividend Stock #8 – Lowe’s Companies (LOW)

The company invests in, acquires, and operates renewables facilities, selling the power on long-term contracts — think decades, not years — to utility companies and very large power consumers. That’s a credit to its high-quality lending standards and its focus on higher-income credit customers who are less likely to default on their debts during weak economic periods. That makes American Express very appealing to investors who like owning a top financial services company but who are also concerned about economic conditions. This is a great stock to buy during broad market downturns and a solid hold for a bull market recovery.

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