10 Best January Dividend Stocks to Buy
In this article, we take a look at 10 best January dividend stocks to buy. If you want to see more best January dividend stocks to buy, go directly to 5 Best January Dividend Stocks to Buy.
While January might be over, many dividend stocks aren't done paying their dividends for 2023.
Considering many dividend stocks pay dividends quarterly, many of the same companies that paid a dividend in January will pay another dividend in April.
If the company has the profits or the financial resources to do so, some of those companies might even raise their quarterly dividends during that time. Some of the same companies could also buy back stock as another form of return of excess capital in the mean time too.
Good dividend stocks are not necessarily the ones that have a lot of upside, as many stocks that have a lot of upside also have a lot of downside. In terms of January, the S&P 500 rallied 6.6% for the month as fourth quarter U.S. GDP was slightly stronger than expected and as the Federal Reserve indicated that the "disinflationary process has started" after 2022's substantial interest rate increases.
While macroeconomic conditions are looking better than they did before, economic data can always miss estimates. If inflation increases more than expected, growth slows more than expected, the Federal Reserve tightens more than expected, or a number of other things, the market could always decline and individual stocks could always decline.
Instead good dividend stocks have relatively more stability, substantial competitive advantages, and considerable normalized earnings power. With competitive advantages and substantial normalized earnings power, those companies are more likely to maintain or even increase their dividends over time if they maintain their market shares. While the best dividend stocks also have downside, the hope is that those companies' strong competitive advantages and dividend returns will limit the downside in the long term.
Given 2023 could also be a volatile year, it could be a good idea for long term investors to own a well diversified portfolio of leading stocks across many different sectors.
For our list of 10 Best January Dividend Stocks to Buy, we took all the stocks that had ex-dividend dates in January and filtered for only leading consumer staples stocks with substantial competitive advantages or leading companies with considerable scale.
We then ranked each stock based on the number of hedge funds in our database that held shares of the same stock at the end of the third quarter.
In terms of record date and ex-dividend dates, Investor.gov writes,
"When a company declares a dividend, it sets a record date when you must be on the company's books as a shareholder to receive the dividend. Companies also use this date to determine who is sent proxy statements, financial reports, and other information. Once the company sets the record date, the ex-dividend date is set based on stock exchange rules. The ex-dividend date for stocks is usually set one business day before the record date. If you purchase a stock on its ex-dividend date or after, you will not receive the next dividend payment. Instead, the seller gets the dividend. If you purchase before the ex-dividend date, you get the dividend."
Every company is different so investors should always check to see company specific circumstances for every dividend payment.
10 Best January Dividend Stocks to Buy
10. The Bank of Nova Scotia (NYSE:BNS)
Number of Hedge Fund Holders: 15
Dividend Yield as of 2/3: 5.51%
The Bank of Nova Scotia (NYSE:BNS) is Canada's third largest bank by assets that offers personal and commercial banking, wealth management, and corporate and investment banking. In terms of scale, the bank serves over 21 million customers in more than 55 countries around the world. In fiscal 2021, the bank generated nearly a third of its earnings outside of Canada. As of 2/3, the stock has a dividend yield of 5.51%.
Alongside American Express Company (NYSE:AXP), JPMorgan Chase & Co. (NYSE:JPM), and Mastercard Incorporated (NYSE:MA), The Bank of Nova Scotia (NYSE:BNS) is a January dividend stock owned by many of the hedge funds in our database at the end of Q3.
9. Keurig Dr Pepper Inc. (NASDAQ:KDP)
Number of Hedge Fund Holders: 23
Dividend Yield as of 2/3: 2.28%
Keurig Dr Pepper Inc. (NASDAQ:KDP) is a leading consumer staple that makes coffee systems and beverages such as Dr Pepper. In terms of stock performance, Keurig Dr Pepper Inc. (NASDAQ:KDP) has done well since 2013 with the stock more than tripling thanks to substantial growth. Although fast growth might be harder in the future given Keurig Dr Pepper Inc. (NASDAQ:KDP) is now a substantially larger company, the stock nevertheless trades for a reasonable forward P/E of 19.48 and analysts expect the company's EPS to continue to grow in the future. As of 2/3, Keurig Dr Pepper Inc. (NASDAQ:KDP) had a dividend yield of 2.28%.
8. The Clorox Company (NYSE:CLX)
Number of Hedge Fund Holders: 27
Dividend Yield as of 2/3: 3.05%
The Clorox Company (NYSE:CLX) is a leading maker of household products that rallied substantially in 2020 given the early part of the pandemic. With demand having normalized somewhat from 2020, The Clorox Company (NYSE:CLX) shares have declined from 2020 and they are now around 2019 levels which was before the pandemic.
Although shares trade for a forward P/E of 29.22, analysts do expect earnings growth in the leading consumer staple's next few years. According to consensus estimates, analysts see the company earning $4.10 per share in 2022, $4.19 per share in 2023, $5.29 per share in 2024, and $6.14 per share in 2025. While the company's valuation still seems a little high given 2024 earnings estimates and the company's stock price of nearly $155, The Clorox Company (NYSE:CLX) also has a dividend yield of 3.05%.
Of the companies on our list, The Clorox Company (NYSE:CLX) might be a little riskier given its premium valuation. If the company doesn't grow as the market expects, there is a chance that The Clorox Company (NYSE:CLX) could decline as its premium valuation might decline.
7. Campbell Soup Company (NYSE:CPB)
Number of Hedge Fund Holders: 29
Dividend Yield as of 2/3: 2.91%
Food, snack, and beverage maker Campbell Soup Company (NYSE:CPB) has a pretty fair forward P/E ratio of 16.12 and the stock has a dividend yield of 2.91% as of 2/3. While the stock is down 10.34% year to date, Campbell Soup Company (NYSE:CPB) shares are still up 14.23% in the last year.
If the company maintains its leading brands and their market share, Campbell Soup Company (NYSE:CPB) has earnings growth potential in the future. For Q1, FY23, the company's organic sales rose 15% year over year and its adjusted EPS also increased 15% year over year to $1.02 per share. Of the 920 hedge funds in our database, 29 owned shares of Campbell Soup Company (NYSE:CPB) at the end of Q3, ranking the stock #7 on our list of 10 Best January Dividend Stocks to Buy.
6. The Bank of New York Mellon Corporation (NYSE:BK)
Number of Hedge Fund Holders: 50
Dividend Yield as of 2/3: 2.95%
The Bank of New York Mellon Corporation (NYSE:BK) is a leading bank with a dividend yield of 2.95% as of February 3. Although it isn't one of the four biggest banks in the United States, The Bank of New York Mellon Corporation (NYSE:BK) nevertheless has considerable scale. At the end of Q4 2022, the company had $1.8 trillion in AUM and total sales of $3.9 billion. In addition to its dividend, The Bank of New York Mellon Corporation (NYSE:BK)'s board of directors also authorized a $5 billion common equity share repurchase program effective January 2023.
Like The Bank of New York Mellon Corporation (NYSE:BK), American Express Company (NYSE:AXP), JPMorgan Chase & Co. (NYSE:JPM), and Mastercard Incorporated (NYSE:MA) are January dividend stocks owned by many hedge funds in our database at the end of the third quarter.
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Disclosure: None. 10 Best January Dividend Stocks to Buy is originally published on Insider Monkey.