Investing in Dividend Stocks, when done correctly, provides investors with a consistent source of income. Simultaneously, reinvesting your “after-tax dividend income” can significantly boost your returns due to compounding. At the time of writing, dividend reinvestment has accounted for 40% of long-term US equity returns.
Just as importantly, good dividend stocks can help you offset rising costs through both the income they provide and their stock price appreciation. You get paid a dividend, but may also benefit from long-term capital appreciation in the share price, should the business continue to perform as it did in the past. So, it is not a surprise that investors like you are always searching for such stocks these days.
Top 5 Dividend Stocks for 2023
Top 5 Dividend Stocks for 2023
The purpose of this article is to highlight the 5 top dividend stocks across major sectors that you may want to research for Q1 2023. These stocks are:
Chevron (CVX)
Chevron is the second-largest US oil company and an integrated energy company that operates in exploration, production, and refining around the world. The dividend yield is 3.29% based on its last four quarterly dividend payments of $1.42 per share and the current stock price. This is nearly double the S&P 500 Index’s dividend yield of 1.7%. Taking its long track record into account, it is very likely that Chevron will increase its dividend for the next quarter. From $0.40 per share in 2004 to $1.42 per share in 2022, its dividend has steadily increased.
| Year | 2019 | 2020 | 2021 | 2022 |
| Dividend per share (USD) | 4.76 | 5.16 | 5.36 | 5.68 |
| Dividend yield (%) | 2.76 | 2.99 | 3.11 | 3.29 |
Based on the EPS (TTM) Chevron generated and its annualised 2022 dividend payments, its payout ratio is 32.12%. Consensus analyst expectations (IBES Refinitiv) are for earnings to fall 16% in 2023, with lower oil prices, but for dividend payments to rise 5%, cushioned by the low payout ratio. The company has been paying a dividend since 1989. The last time it reduced its dividend was in 2004, or 19 years ago.
Its stock has increased by 52.86% in 2022.
The company has not declared its next dividend payment yet. Interested investors will need to wait until Chevron releases its quarterly results, for Q4 2022, at the end of January.
Your capital is at risk. Other fees apply.
Coca-Cola (KO)
Coca-Cola is the world’s largest nonalcoholic beverage company, with 200 brands in key categories such as carbonated soft drinks, water, sports, energy, juice, and coffee.
In the next quarter, Coca-Cola is likely to pay a slightly higher dividend due to its long track record of increasing dividends year after year. The quarterly dividend of the company has steadily increased from $0.26 in 2012 to $0.44 in 2022. Based on its last four quarterly dividend payments and its current stock price, the dividend yield is 2.8%. This compares to the S&P 500 Index’s dividend yield of 1.7%.
| Year | 2019 | 2020 | 2021 | 2022 |
| Dividend per share (USD) | 1.6 | 1.64 | 1.68 | 1.76 |
| Dividend yield (%) | 2.5 | 2.56 | 2.62 | 2.75 |
Coca Cola’s payout ratio is 76.86% based on its TTM EPS and annualised dividend payments in 2022. Analyst consensus (IBES Refinitiv) forecasts earnings to rise 14% in 2023, aided by the company’s strong pricing power, and dividend payments to rise more than 4%.
Dividends have rarely been cut by the company since it started distributing them back in 1964. The last cut was in 2012, more than a decade ago. The stock is up 8.14% in 2022.
Coca-Cola has not declared its next dividend payment as of December 15, 2022. We will learn more when Coca-Cola releases its next quarterly results, for Q4 2022, in mid-February.
Your capital is at risk. Other fees apply.
AbbVie (ABBV)
In early 2013, Abbott spun off AbbVie, a pharmaceutical company. It has a strong exposure to immunology and oncology, and it is the second-largest pharma stock in the S&P 500 Index, with operations in 70 countries. The dividend yield is 3.59% based on its forward annualised dividend of $5.92 per share and its current stock price, compared to 1.7% for the S&P 500 Index.
The quarterly dividend paid by the company has steadily increased from $0.40 per share in 2013 to the most recent announced payment of $1.48 per share due in January 2023. AbbVie’s payout ratio is 75.30% based on the TTM EPS the company generated and its 2022 annualised dividend payments.
| Year | 2019 | 2020 | 2021 | 2022 |
| Dividend per share (USD) | 4.28 | 4.72 | 5.2 | 5.64 |
| Dividend yield (%) | 2.59 | 2.86 | 3.15 | 3.42 |
Analysts expect earnings to fall 14% in 2023 as the company’s best-selling drug Humira loses patent protection, but dividend payments to rise 5%. The company has been paying a dividend since its spin-off from Abbott Laboratories in 2013 and has not cut it at any point. In 2022, its stock increased by 19.34%.
AbbVie recently declared a quarterly dividend of $1.48 per share, a 5% increase over the previous dividend payment of $1.41.
Your capital is at risk. Other fees apply.
Broadcom (AVGO)
Broadcom manufactures a wide range of semiconductor devices, with a particular emphasis on digital and mixed signal complementary metal oxide semiconductor (CMOS) devices, as well as analogue III-V-based devices. It is the S&P 500 Index’s second-largest semiconductor stock, trailing only NVIDIA.
Based on its forward annualised dividend of $4.60 per share, the dividend yield on its current stock price is 3.46%. This compares to 1.7% for the S&P 500 Index.
The company’s quarterly dividends have increased from $0.07 per share in 2010 to $4.60 per share in 2023.
| Year | 2019 | 2020 | 2021 | 2022 |
| Dividend per share (USD) | 10.6 | 13 | 14.4 | 16.4 |
| Dividend yield (%) | 1.84 | 2.26 | 2.5 | 2.85 |
Using the EPS (TTM) Broadcom generated and the dividend payments for 2022, its payout ratio came to 61.89%. Analyst consensus (IBES Refinitiv) forecasts earnings to rise 14% in 2023 as the company continues to avoid the semiconductor industry slowdown, and dividend payments to rise 10%. Since 2010, the company has paid a dividend that has not been reduced. In 2022, the stock has dropped by 16.08%.
In a recent report, Broadcom declared a quarterly dividend of $4.6 per share, a 12.2% increase from its previous dividend payment of $4.1 per share. The stock went ex-dividend on December 19.
Your capital is at risk. Other fees apply.
Cisco Systems (CSCO)
Cisco is the world’s largest networking equipment provider, providing networking hardware and software as well as cybersecurity software. Its market capitalisation of nearly $200 billion places it among the top 40 stocks in the S&P 500 Index.
Based on its $0.38 annualised dividend and current stock price, Cisco’s dividend yield is 3.15%. This compares to 1.7% for the S&P 500 Index. Given Cisco’s long track record, dividends are likely to be increased in the near future. The company’s quarterly dividend has consistently increased from $0.06 per share in 2011 to $0.38 per share in 2022.
| Year | 2019 | 2020 | 2021 | 2022 |
| Dividend per share (USD) | 1.4 | 1.44 | 1.48 | 1.52 |
| Dividend yield (%) | 2.83 | 2.92 | 3 | 3.08 |
Based on dividend payments and EPS in 2022, Cisco’s payout ratio is 54.51%. (TTM). Consensus analyst expectations (IBES Refinitiv) are for earnings to rise 4% in 2023, helped by easing supply chain issues, and for dividend payments to rise 3%. Dividends have been paid without interruption since 2011. Its stock has dropped by 24.26% by 2022.
Cisco recently declared a $0.38 per share quarterly dividend, which will be paid on January 25. The ex-dividend date for the stock is January 4.
Your capital is at risk. Other fees apply.
