It was hard to find big winners on the stock market in 2022. But dividend-paying stocks were among the best performers. Dividend-paying stocks offer investors a reward for simply holding the stock. This money can be used to reinvest in the stock. This can either add to your winnings or help offset your losses.
As many dividend-focused investors will tell you, one of the keys to profiting from dividend-paying stocks is to hold them for a long time. It’s a strategy used by no less than Warren Buffett, who has many dividend-paying stocks among the “eternal” stocks in his portfolio.
But dividend-paying stocks may become less attractive in a risky market. Indeed, even with a dividend payout, these stocks do not generate enough capital gains to compete with high-flying growth stocks.
However, in 2023, investors still face an uncertain market. Many economists still believe that a recession is inevitable, or at the very least likely, by the end of 2023 or the beginning of 2024. And, despite generally positive results in the first quarter, many companies have reduced their outlook revenue and profit for the rest of the year. the year.
This means that there is always a favorable outlook for dividend-paying stocks. Here are three that seem to be strong performers no matter what’s going on in the economy.
Price power puts this stock in the buy zone
General Mills, Inc. (NYSE: GIS) posted mixed profits in late June that sent its shares tumbling. GIS stock is now down about 8% for the year. The sell off also means the stock has been virtually flat over the past year.
But this is a time when you need to look at the stock through a broader lens and know what you own. Over the past five years, GIS stock has rewarded investors with a gain of around 32%, and this comes with a dividend that has increased by an average of 2.8% over the past three years and currently yields about 3%.
Additionally, General Mills is a consumer staples company. That means it offers products that consumers keep buying even when cash is tight, as it has been as inflation eats away at paychecks.
And General Mills has not been immune to this pressure. The company reported a decline in sales volume in its latest quarter. But that was offset by price increases that resulted in better-than-expected margins.
Consumers may despise companies with pricing power, but investors should like them. And that’s why General Mills is a solid dividend stock to have in your portfolio.
Undervalued dividend king seeks to retain his crown
Next on this list of dividend stocks to own in 2023 is AbbVie, Inc. (NYSE: ABBV). The stock suffered a sharp sell-off in 2022 that continued into 2023. As of this writing, ABBV stock is down around 26% in 2023 and 17% in the last 12 months.
The big issue riling AbbVie investors is the patent expiration of its cash cow drug, Humira. And the company is seeing a drop in sales of the drug. However, the decline was not as steep as expected. Additionally, AbbVie is seeing an increase in revenue from recently launched Skyrizi and Rinvoq. It should also be noted that Abbvie continues to have a patent thicket around Humira which protects it for certain indications for several years to come.
Put it all together, and you have a stock that seems to have plenty of upside price to go with a dividend that currently yields 4.3% and has posted three-year average growth of around 9%. AbbVie is also a dividend king, meaning it has increased its dividend for at least 50 consecutive years.
In AbbVie’s case, that streak is 51 years. And if history is any indication, investors can expect a dividend increase at the end of this year.
A Buffett favorite that looks very refreshing
Coca-Cola (NYSE: KO) is one of Warren Buffett’s favorite stocks. In fact, when you see Buffett make public appearances, you’ll rarely see him without a can of the iconic soft drink. But many investors will argue that 15% growth in stock prices over the past five years isn’t enough incentive to hold knockout stocks.
But that 15% growth doesn’t include the roughly 3% gain investors received on the company’s dividend. And that dividend is about as solid as it gets. Coca-Cola is another dividend kingpin that has raised its dividend in each of the past 62 consecutive years.
And as MarketBeat staff recently wrote, the company expects high-single-digit earnings growth on top of mid-single-digit revenue growth. This is based on the company’s expanded non-carbonated beverage portfolio and its push into emerging markets.
In all honesty, I can understand if you prefer PepsiCo, Inc. (NASDAQ: PEP) in this cola war. But this is a case where you really can’t go wrong with either stock. The KO stock is a good play for investors just looking to keep it in the fairway.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.