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Dividends can be a great way to give your investment portfolio a boost of income, which is something many people are looking for during periods of high inflation and amid talk of a possible recession. Dividend stocks or dividend funds can help you earn regular passive income from some of the strongest companies in the economy.
Devon Energy is a producer of oil and natural gas and holds a portfolio of oil and gas properties in the U.S. The Oklahoma City-based company is focused on earning a competitive shareholder return within its peer group.
Verizon is a leader in communication and technology services. Along with AT&T and T-Mobile, they provide the majority of mobile-phone services in the U.S. Verizon generated more than $135 billion in revenue in 2022.
Prudential Financial is a global financial services company with various products including life insurance, annuities, retirement services, mutual funds and investment management. The company had nearly $1.4 trillion of assets under management at the end of 2022.
3M manufactures a variety of products that are used by businesses and consumers alike. The St. Paul, Minnesota-based company makes everything from building materials, electronics components and orthodontics to perhaps its best-known product: Scotch tape. 3M has paid a dividend to shareholders without interruption for more than 100 years.
The stock market is off to a good start this year. There are some signs of life, particularly in the industries that were hardest hit in 2022. That said, plenty of economic uncertainty remains. The Federal Reserve has more work left to go in its ongoing fight against inflation. Meanwhile, geopolitical concerns continue to present meaningful risk to the markets. A potential standoff over the government's debt ceiling is also approaching. With these concerning factors, investors are looking for quality dividend stocks to provide income regardless of where the market goes in the near term. These 15 dividend stocks have improving prospects for 2023 despite the current economic jitters, and they all yield at least 3%.
Long-term investing can seem like a challenging endeavor. After all, the world changes quickly. Over the past three years alone, the world has been hit by one of the worst pandemics in modern history, an unprecedented supply-chain and inflation crisis, and a war in Ukraine. Then, 2023 kicked off with the failure of several prominent banks. So what's an investor to do?
Focusing on companies with long track records of stable profits and cash flows can be a great answer. Companies that successfully navigated past economic crises are more likely to prosper through future volatility, as well. Diversifying across sectors and industries also helps to ensure that an investor will receive steady and rising dividends in the years to come.
Coca-Cola rarely dazzles in any single year, as it's not a tremendous growth stock. But its formula is a proven winner. It sells a product that delights consumers at a low price point, meaning that people can afford to buy Coca-Cola products dozens of times every year. Due to the low cost, Coca-Cola can also raise prices frequently, helping it handle inflationary conditions without too much hassle. There is little store brand competition to worry about either, as most people don't want a generic cola, they want the real thing.
Medtronic is a medical device company with products serving a wide range of medical conditions. The firm is known for pacemakers and other cardiac equipment, but has diversified broadly in recent years. While headquartered in Ireland, the firm primarily operates in the United States and has more than 90,000 employees around the world. Medical devices are an attractive industry for long-term investors thanks to demographics. Populations are aging rapidly in many developed countries which will lead to higher spending on health care in coming decades.
Medtronic, with its broad product line, will be a natural beneficiary as demand for life-sustaining devices increases. Medtronic shares sold off in recent years due to industry disruptions during the pandemic and ensuing supply-chain problems. As these issues clear up, shares should recover. The firm also has an enviable dividend growth track record, having increased its payout 46 years in a row.
When in doubt, large financials with shrewd management teams tend to be the best options. JPMorgan Chase scores highly in both categories. The firm navigated 2008 with excellence and made it through the COVID-19 shock without any major damage. And now, the current banking crisis is causing deposits to flee smaller regional banks while running to the likes of JPMorgan Chase for safekeeping. Long story short, JPMorgan Chase is likely to gain more business, and thus more profitability, due to the current industry shake-up. And, in the broader picture, JPMorgan Chase remains highly profitable and set for dividend increases in the years to come.
Verizon, and other telecom stocks, have slumped in recent years amid a heavy investment cycle in 5G and other costly infrastructure assets. However, these should start to bear fruit in coming years, leading to a rise in profitability while ensuring the safety of Verizon's dividend for many years to come.
BP is one of Europe's largest energy companies. The firm has been out of favor with many investors for the past 13 years. First, it was the 2010 Deepwater Horizon disaster, which damaged BP's reputation and also cost it billions in legal and remediation costs. More recently, BP had invested heavily in renewable energy products which ultimately failed to reach the company's projected profit targets. However, change is coming.
BP's CEO announced earlier this year that the firm will sharply curtail its renewable energy investments while putting more focus on its traditional energy investments. That should encourage investors. And BP remains exceptionally profitable within its core business. Shares trade at less than six times forward earnings and have sizable upside as they regain ground versus their other energy industry peers.
For example, let's say you buy a $100 stock that pays three bucks a year in dividends. That makes your dividend yield 3.0%. OK, that's not too shabby, but it's hardly anything to write home about when risk-free Treasury debt is yielding more than 4% (opens in new tab).
And after 25 years of dividend hikes? Your original $100 will generate $32.50 in annual income, or a yield of 32.5%. (We're talking returns from dividends alone in this example. Barring disaster, the value of your $100 equity investment will appreciate in price as well.)
Companies with long histories of annual dividend growth also offer some peace of mind. When a firm manages to raise its dividend year after year, through recession, war, market crashes and more, it's making a powerful statement about both its financial resilience and its commitment to shareholders.
The Dividend Aristocrats are companies in the S&P 500 Index that have raised their payouts annually for at least 25 consecutive years. This list of the S&P 500's best dividend stocks is a mix of household names and more obscure firms, but they all play key roles in the American economy. And although they're scattered across pretty much every sector of the market, they do all share one thing in common: a commitment to reliable and long-term dividend growth.
Here are the 67 S&P 500 Dividend Aristocrats. The following names have been among the best dividend stocks for income growth over the past few decades, and they're a great place to start if you're looking to add dividend battleships to your long-term portfolios.
Consumer-staples (opens in new tab) company Church & Dwight (CHD (opens in new tab)) might not ring a bell with many retail investors, but they're certainly familiar with many of its wares. Arm & Hammer, OxiClean and Waterpik are just a few examples among dozens of its household brands.
In April 2022, IBM raised the quarterly dividend by a penny to $1.65 per share, marking its 27th consecutive year of increases. IBM has paid consecutive quarterly dividends since 1916. Importantly, the company has the resources to keep the growth streak alive, which is a characteristic you expect to see among the best dividend stocks.
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.
Through it all, however, EXPD remained committed to its semiannual dividend, which it has hiked every year for more than a quarter-century. A consistently low payout ratio should help ensure that Expeditors has ample resources to keep the streak alive and maintain its place on a list of the best dividend stocks.
The company has two principal businesses: Florida Power & Light (FPL) is Florida's largest electric utility, while NextEra Energy Resources is a major player in wind and solar energy. Analysts like this combination of a successful regulated utility with a faster-growing renewables business. Population growth and the Biden administration's focus on renewable energy generation should serve the company well. 781b155fdc