In the long run, dividend investing provides investors with a steady source of income. At the same time, reinvesting your “after tax dividend income,” can dramatically increase your returns — thanks to compounding. Reinvested dividends have accounted for 40% of long-term US equity returns.
But, 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.
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)
Coca-Cola (KO)
AbbVie (ABBV)
Broadcom (AVGO)
Cisco Systems (CSCO)
Chevron (CVX)
Past performance is not an indication of future results
- Chevron is an integrated energy company that operates in exploration, production, and refining around the world and ranks as the second-largest US oil company.
- Based on its last four quarterly dividend payments of $1.42 per share and at its current stock price, the dividend yield is 3.29%. This is nearly double the 1.7% dividend yield for the S&P 500 Index.
- Taking its long track record into account, it is very likely that Chevron will increase its dividend for the next quarter. Its dividend has steadily increased from $0.40 per share in 2004 to $1.42 per share in 2022.
- 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.
| 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 |
*Yields correct as of December 15, 2022
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Coca-Cola (KO)
Past performance is not an indication of future results
- Coca-Cola is the world’s largest non-alcoholic beverage company, with a portfolio of 200 brands covering 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 company’s quarterly dividend 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 is in comparison to the 1.7% dividend yield for the S&P 500 Index.
- Coca Cola’s payout ratio is 76.86% based on its TTM EPS and annualised dividend payments in 2022. Consensus analyst expectations (IBES Refinitiv) is for earnings to rise 14% in 2023, helped by the company’s strong pricing power, and for dividend payments to rise over 4%.
- Dividends have rarely been cut by the company since it started distributing them back in 1964. The last cut was over a decade ago in 2012.
- The stock is up 8.14% in 2022.
- As of December 15, 2022, Coca Cola has not declared its next dividend payment. When Coca Cola releases its next quarterly results, for Q4 2022, in mid February, we will learn more.
| 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 |
*Yields correct as of December 15, 2022
Your capital is at risk.
Past performance is not an indication of future results
- AbbVie is a pharmaceutical company that was spun off from Abbott in early 2013. It has a strong exposure to immunology and oncology; and with operations in 70 countries, it is the second-largest pharma stock in the S&P 500 Index.
- Based on its forward annualised dividend of $5.92 per share and its current stock price, the dividend yield is 3.59% in comparison to 1.7% for the S&P 500 Index.
- The company’s quarterly dividend has steadily increased from $0.40 per share in 2013 to its latest announced payment of $1.48 per share due to be paid in January 2023.
- Based on the TTM EPS the company generated and its 2022 annualised dividend payments, its payout ratio is 75.30%. Consensus analyst expectations (IBES Refinitiv) is for earnings to fall 14% in 2023, as best-selling drug Humira loses its patent protection, but for 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.
- Its stock has increased by 19.34% in 2022.
- AbbVie recently declared a $1.48 per share quarterly dividend, which implies a 5% increase from the latest dividend payment of $1.41.
| 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 |
Yields correct as of December 15, 2022
Your capital is at risk.
Broadcom (AVGO)
Past performance is not an indication of future results
- Broadcom manufactures various semiconductor devices with a focus on digital and mixed signal complementary metal oxide semiconductor (CMOS) devices, as well as analog III-V based devices. It is the second-largest semiconductor stock in the S&P 500 Index, after NVIDIA.
- The dividend yield on its current stock price is 3.46% based on its forward annualised dividend of $4.60 per share. This is in comparison to 1.7% for the S&P 500 Index.
- Quarterly dividends paid by the company have increased from $0.07 per share in 2010 to $4.60 per share for 2023.
- Using the EPS (TTM) Broadcom generated and the dividend payments for 2022, its payout ratio came to 61.89%. Consensus analyst expectations (IBES Refinitiv) are for earnings to rise 14% in 2023, as the company continues to side-step the semiconductor industry slowdown, and for dividend payments to rise 10%.
- Since 2010, the company has been paying a dividend without reducing it.
- The stock has declined by 16.08% in 2022.
- 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. On December 19, the stock went ex-dividend.
| 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 |
*Yields correct as of December 15, 2022
Your capital is at risk.
Cisco Systems (CSCO)
Past performance is not an indication of future results
- Cisco is the largest provider of networking equipment in the world, offering networking hardware and software as well as cybersecurity software. Its near $200 billion market capitalisation places it within the top 40 stocks in the S&P 500 Index.
- Cisco’s dividend yield is 3.15% based on its $0.38 annualised dividend and current stock price. This is in comparison to 1.7% for the S&P 500 Index.
- With Cisco’s long track record, it is likely that it will increase its dividends 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.
- Cisco’s payout ratio is 54.51%, based on its 2022 dividend payments and its EPS (TTM). Consensus analyst expectations (IBES Refinitiv) are for earnings growth to rise 4% in 2023, helped by easing supply chain issues, and for dividend payments to rise 3%.
- Dividends have been paid since 2011, without any reductions.
- In 2022, its stock has decreased by 24.26%.
- Cisco recently declared a quarterly dividend of $0.38 per share, which will be paid on January 25. The ex-dividend date for the stock is January 4.
| 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 |
*Yields correct as of December 15, 2022
Your capital is at risk.
Conclusion
Dividend investing has long-term scope, so there is no reason for serious investors to worry about daily price fluctuations. However, it is essential to look for companies that have long track records of dividend payments, stable income streams, and excellent businesses.
If you are looking for more dividend stock ideas like these here, spend some time researching companies that offer attractive high dividend yielding and are financially sound enough to preserve and potentially increase their dividend payments.
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