The top dividend stock picks for 2023 are surefire ways for investors to protect themselves against several current issues.
Their dividends provide extra returns for portfolios that have been battered in a very difficult 2022. Further, they provide income that can be used to offset the effects of stubbornly-high inflation that continues to eat into finances.
In short, dividend-bearing stocks are one of the smartest approaches stock investors have available currently. The same is true in strong economies as well. Dividend stocks tend to perform strongly in all markets which is why a long-term investment perspective benefits considerably from such shares.
Reliable, established companies tend to pay dividends as well, meaning they simply have better business models. And that’s where investors should place their capital.
|PG||Procter & Gamble||$150.92|
VF Corp (VFC)
VF Corp (NYSE:VFC) stock has had a difficult time in 2022. In fact, it has shed more than 61% of its value year-to-date. That shouldn’t normally inspire much optimism but VF Corp oversees a portfolio of apparel brands that should perform well this holiday season.
The company’s brand portfolio includes North Face, Vans, Timberland, Dickies, Supreme and others. Although the company’s earnings have fallen its revenues remain on firm footing for the remainder of the fiscal year. The company anticipates revenues increasing 5-6% this year as long as consumer sentiment doesn’t worsen.
So far, that looks to be the case. The National Retail Federation anticipates a healthy holiday season with spending levels 6-8% higher than those in 2021.
Its North Face brand has performed well in the first half, with revenues increasing 15% year over year. It stands to reason that North Face products will sell well in the colder months of this holiday season. Yes, VFC has fallen substantially and that is indicative of risk. However, it comes with a 6.03% dividend and could do very well in the next few months.
Sin stocks like Altria (NYSE:MO) tend to do well in difficult economic periods. That means the cigarette maker should be experiencing a boost sooner or later.
Yet, smoking rates continue to decline after experiencing a dramatic decrease over the last decade. That indicates that Altria, which depends on cigarettes for 90% of revenues, more than its competitors, needs to pivot to remain relevant. It can, and while it does it’ll pay investors a high-yield dividend.
In fact, that dividend is the highest on this list, at 8.03%. Investors should be interested in Altria for that dividend and then hope that it can develop products to diversify its revenue.
Diversification costs money, thus depending upon resources being directed to such efforts. Fortunately, Altria has options.
In 2024, the company will receive a $2.7 billion payment from Phillip Morris (NYSE:PMI) for a product tie-up. It also owns 10% of Anheuser-Busch Inbev (NYSE:BUD). It can sell that to fund the development of smokeless products. So, hope for the pivot and take advantage of the dividend.
Procter & Gamble (PG)
Procter & Gamble (NYSE:PG) is a consumer packaged goods giant proving that certain stocks reliably fare better than others. Case in point: PG shares are down 7% year to date. Meanwhile, the S&P 500 has fallen more than 15% during the same period.
Procter & Gamble’s performance becomes even more appealing when its dividend is considered.
In 2022, Procter & Gamble paid dividends of $3.61 for each share of its stock held. So, when that is considered, PG stock has only fallen by 6% this year, again, much better when compared to the 15% S&P 500 declines.
Procter & Gamble’s dividend is ultra-reliable, last having been reduced in 1957.
Whatever happens in 2023, investors should understand that Procter & Gamble performs well in any weather. During its most recent financial reporting period, sales increased a modest 1% while EPS declined 2%. That may not sound particularly appealing to investors, but it is far better than many other firms, particularly those in growth sectors like tech.
Purchasing McDonald’s (NYSE:MCD) stock might put off some investors since discretionary spending tends to fall in weaker economic periods.
Consumers spend less where they can and restaurant performance tends to do worse as a result. Inflation tends to get passed on to consumers as well, driving food prices higher. Resulting in yet another reason to dismiss restaurant stocks whether they have a dividend or not.
However, McDonald’s operates a franchising business system that makes it somewhat different from the average restaurant stock.
McDonald’s profits are padded by franchisee rents and royalties that are calculated from sales. That means McDonald’s can rely on a heavy rental income while also deriving high royalties from its best-performing locations. It’s a clever business model that serves the corporation very well.
That means the company will remain well insulated from broad issues into 2023 and beyond. MCD stock is up this year, making it a rare performer. In addition, it pays a 2.22% dividend.
Chevron (NYSE:CVX) has been among the very best-performing stocks in 2022. Volatile energy prices have greatly benefited the oil & gas major resulting in exceptional earnings, especially in the last two quarters.
In Q3, Chevron reported $11.2 billion in earnings as higher energy prices positively affected the firm. That represented a significant increase over the $6.1 billion in earnings Chevron reported a year earlier.
The strong performance has resulted in share prices that have made a lot of investors a lot of money this year. In short, CVX stock started 2022 at $103 and it now trades above $180. The good news is that analysts believe, by consensus, that CVX stock should trade at $192 moving forward.
The good times aren’t over for the company based on EPS projections for Q4. 3 months ago it was expected that Chevron would post EPS figures of $4.48 in Q4. That has steadily risen and now sits at $4.51. Chevron’s dividend pays 3.12% on a forward basis and its 0.32 payout ratio is extremely sustainable for the firm meaning it will pay investors.
Kimberly-Clark (NYSE:KMB) stock has fallen a modest 4.4% throughout 2022, proving that non-durable consumer staples continue to be a wise investment. Including Kimberly-Clark’s dividend, the stock has declined less than 1% throughout the year.
Back to the notion that non-durable consumer staples make for good investments. Consumer staples are goods that can be considered essential products for consumers. The category includes food and drinks, household goods, and hygiene products like those that Kimberly-Clark sells.
Kimberly-Clark sells leading paper towel brands including Cottonelle, Scott and Viva. It also sells hygiene products under leading names including Huggies, Kleenex and Depends. Consumer demand for such goods remains stable no matter the economic conditions. Consumers do trade down, however, Kimberly-Clark has value offerings to address that fluctuation.
The first nine months of 2022 saw revenues increase 5% to $15.211 billion. And despite rising costs across the board, net income only declined a modest 2%.
Public Storage (PSA)
Public Storage (NYSE:PSA) stock benefits from a potential tailwind in 2023 that isn’t nice to consider but may happen nonetheless. That scenario is worth considering and makes it attractive in addition to its 2.7% dividend which hasn’t been reduced since 1992.
Public Storage operates more than 200 million square feet of self-storage space across the U.S. Let’s assume a 2023 recession occurs as the majority of economists expect. That will lead to increased rates of homelessness as rents become untenable.
People will move their belongings into storage units while they look to improve their situations. That hypothetical situation benefits Public Storage.
Even without such an unfortunate tailwind, Public Storage is doing well. Rental income increased 15.2% in the third quarter, reaching $795.7 million. Total revenue increased by a similar 15.4% during the same period. Share prices have fallen from $365 to begin 2022.
The company increased its footprint by 25% during the most recent quarter and maintains the highest operating margins in the self-storage industry making 2023 look strong.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.