In this article, we discuss 10 best January dividend stocks to buy. You can skip our detailed analysis of dividend stocks and their performance over the years, and go directly to read 5 Best January Dividend Stocks To Buy.
During 2023, dividends didn't hold much appeal for investors as compared to previous times. Instead, the spotlight returned to the renowned tech stocks that had underperformed the year before. The Nasdaq index, which leans heavily towards tech companies, stole the show by delivering exceptional results, surging by 43% throughout the year. This marked a remarkable comeback for the index, showcasing its most impressive performance since 2020. Investors were drawn to the resurgence of these tech stocks, eclipsing the allure of dividends for many during this period.
Despite the shifting investor preferences towards tech stocks, companies in the US remained committed to rewarding their shareholders through dividends. As per a report from S&P Dow Jones Indices, in 2023, the S&P 500 companies didn't hold back when it came to dividends, setting a new milestone by paying an annual record of $70.30 per share to their investors. This marked a significant increase from the previous year's figure of $66.92 per share. Moreover, the collective sum distributed to shareholders reached an all-time high of $588.2 billion, showcasing a notable rise from the previous year's $564.6 billion. This commitment to distributing dividends illustrates the ongoing dedication of US companies to share profits and value with their shareholders, despite the fluctuating trends in investor preferences. The report also mentioned that in the fourth quarter of 2023, companies took a notably careful stance regarding their dividend payments. That said, analysts are positive about dividend stocks in 2024.
Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indices, expressed his perspective on this matter within the S&P report. Here are some of his comments:
“For 2024, the dollar aggregate of dividends is expected to increase once again. Absent an economic or geopolitical event, S&P 500 large caps appear to be weathering volatility better, as the index is expected to post its 15th consecutive year of dividend increases. In addition, the index is also expected to log its 13th consecutive record year, with a 4.5% - 5% increase in payments for 2024, compared to its 5.1% increase in 2023 and its 10.8% increase in 2022.”
Dividends have consistently held a significant place within the realm of stock market returns. In his book "The Future for Investors," Jeremy Siegel emphasized the substantial impact of reinvesting dividends on total stock accumulation. He highlighted that 97% of the actual accumulation from stocks stems from the continuous reinvestment of dividends, while only 3% results from capital gains. This underscores the long-term benefits of dividends in building wealth through investments. For this reason, investors focus on companies that consistently grow their dividends. Walmart Inc. (NYSE:WMT), Johnson & Johnson (NYSE:JNJ), and AbbVie Inc. (NYSE:ABBV) are some of the best dividend stocks that have consistently increased their dividend payouts for several decades, earning them a revered status among investors.
Investing in dividend stocks involves a deeper level of analysis and understanding. While dividends are commonly associated with long-term gains, some investors pursue short-term profits through a tactic called dividend capture. This strategy revolves around taking advantage of dividend payments from a stock. Essentially, investors employing this method aim to purchase shares of a company right before it issues its dividend and then sell those shares shortly after receiving the dividend payout. To know more about this strategy, have a look at our article Dividend Capture Strategy: 10 High Yield Stocks To Buy in November. In this article, we will take a look at 11 prominent stocks that are trading ex-dividend in January.
Best January Dividend Stocks To Buy
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Our Methodology:
The following list provides details on the dividend capture strategy, focusing on the selection of prominent dividend-paying stocks set to go ex-dividend in January 2024. The ex-dividend date marks the final day to buy a stock and qualify for its upcoming dividend. The list is ranked chronologically, with earlier dates appearing first and later dates following in order.
Insider Monkey is an investing website that tracks the movements of corporate insiders and hedge funds. By using a similar consensus approach, we identify the best stock picks of more than 900 hedge funds investing in US stocks. The top 10 consensus stock picks of hedge funds outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). Whether you are a beginner investor or a professional one looking for the best stocks to buy, you can benefit from the wisdom of hedge funds and corporate insiders.
AT&T Inc. (NYSE:T) is an American multinational conglomerate that provides wireless and wireline telecommunications services to consumers, businesses, and government agencies. In the third quarter of 2023, the company posted an operating cash flow of over $10.3 billion and its free cash flow for the period amounted to $1.3 billion.
AT&T Inc. (NYSE:T) is one of the best dividend stocks on our list as the company has been paying regular dividends to shareholders since 1995. The company offers a quarterly dividend of $0.2775 per share and has a dividend yield of 6.44%, as reported on January 4. The stock will trade ex-dividend on January 9.
At the end of Q3 2023, 52 hedge funds tracked by Insider Monkey reported having stakes in AT&T Inc. (NYSE:T), down slightly from 56 in the previous quarter. These stakes are collectively valued at over $1.7 billion. With over 22.6 million shares, Two Sigma Advisors was the company's leading stakeholder in Q3.
Darden Restaurants, Inc. (NYSE:DRI) is a company that operates and owns several casual dining restaurant brands. They're known for their diverse portfolio of restaurants. The company has been raising its payouts every year since reinstating its dividends in September 2020. On December 15, the company declared a quarterly dividend of $1.31 per share, which was in line with its previous dividend. As of January 4, the stock offers a dividend yield of 3.27%.
In its recently announced fiscal Q2 2024 earnings, Darden Restaurants, Inc. (NYSE:DRI) posted revenue of $2.73 billion, which showed a 9.6% growth from the same period last year. For six months that ended in November 2023, the company generated nearly $610 million in operating cash flow.
As of the close of Q3 2023, 31 hedge funds in Insider Monkey's database held stakes in Darden Restaurants, Inc. (NYSE:DRI), which remained unchanged from the previous quarter. The consolidated value of these stakes is over $227.2 million.
Verizon Communications Inc. (NYSE:VZ) is a prominent American multinational telecommunications company that is known for its wireless services, providing cellular network services to consumers, businesses, and government agencies. The company offers a quarterly dividend of $0.665 per share and has an attractive dividend yield of 6.79%, as of January 4. It is one of the best dividend stocks on our list as the company maintains a 17-year streak of consistent dividend growth. The stock will be trading ex-dividend on January 9.
Verizon Communications Inc. (NYSE:VZ) reported a strong cash position this year so far. The company's operating cash flow came in at $28.8 billion year-to-date, up from $28.2 billion during the same period last year. Its free cash flow for the period stood at $14.6 billion, growing from $12.4 billion in the prior-year period.
The number of hedge funds in Insider Monkey's database owning stakes in Verizon Communications Inc. (NYSE:VZ) grew to 61 in Q3 2023, from 53 a quarter earlier. The collective value of stakes owned by these hedge funds is roughly $1.4 billion.
Ariel Investments mentioned Verizon Communications Inc. (NYSE:VZ) in its Q3 2023 investor letter. Here is what the firm has to say:
“By comparison, global communications and technology leader, Verizon Communications Inc. (NYSE:VZ), continued to weigh on performance following an article in the Wall Street Journal outlining concerns on lead cable lines posing a significant public health threat. Although the lead covered cable lines remain an overhang on shares, we find Verizon’s valuation to be compelling. The company delivered a solid earnings report, with subscriber and financial metrics in-line or ahead of consensus. Management also reiterated full year guidance and noted it may exceed its outlook for free-cash-flow. From a competitive and financial standpoint, we view Verizon to be among one of the best positioned telecoms in the world. Looking forward, we expect free cash flow to grow significantly in the years ahead as the company moves past the secular peak in 5G capital spending.”
Oracle Corporation (NYSE:ORCL) is a Texas-based computer software company that is primarily known for its offerings in database software and enterprise software solutions. In its fiscal Q2 2024 earnings, the company reported a revenue of roughly $13 billion, which showed a 5.4% growth from the same period last year. Over the past 12 months, the company's operating cash flow was $17 billion and its free cash flow amounted to $10.1 billion.
Oracle Corporation (NYSE:ORCL), one of the best dividend stocks on our list, has been growing its dividends for the past eight years. The company offers a quarterly dividend of $0.40 per share and has a dividend yield of 1.56%, as recorded on January 4. The stock will go ex-dividend on January 9.
As of the end of the September quarter of 2023, 88 hedge funds reported having stakes in Oracle Corporation (NYSE:ORCL), up from 84 in the previous quarter. These stakes have a consolidated value of nearly $4.7 billion. Among these hedge funds, Fisher Asset Management was the company's leading stakeholder in Q3.
Abbott Laboratories (NYSE:ABT) is a global healthcare company that operates in various areas within the medical and health technology sectors. On December 15, the company reported a 7.8% hike in its quarterly dividend to $0.55 per share. Through this increase, the company took its dividend growth streak to 52 years, which makes ABT one of the best dividend stocks on our list. As of January 4, the stock offers a dividend yield of 2.01%.
Abbott Laboratories (NYSE:ABT) was a part of 69 hedge fund portfolios at the end of Q3 2023, up from 62 in the previous quarter, as per Insider Monkey's database. The overall value of these stakes is more than $2.2 billion.
