In this article, we discuss 12 best February dividend stocks to buy now. You can skip our detailed analysis of dividend stocks and dividend capture strategy, and go directly to read 5 Best February Dividend Stocks To Buy.
As 2023 came to an end, investors had many reasons to celebrate. The S&P 500 concluded the year with a substantial gain of over 24%, and the Dow ended close to its all-time high. The positive momentum was fueled by decreasing inflation, a robust economy, and the promise of lower interest rates. These factors boosted investor confidence, especially during the final two months of the year. Despite the overall strong performance of the stock market in 2023, dividend stocks didn't fare as well. In contrast to the previous year, when exchange-traded funds (ETFs) emphasizing dividend strategies attracted over $60 billion from cautious investors, 2023 saw a notable decline. Dividend-focused ETFs garnered only $1.5 billion throughout the year, marking one of the lowest collection figures on record. This lackluster outcome was primarily attributed to the fact that most of these funds didn't fully participate in the technology-driven market surge, resulting in underperformance compared to the broader S&P 500 index.
Despite the less-than-stellar performance of dividend stocks in the previous year, their significance for income investors remains intact. Analysts are optimistic about the comeback of dividend equities in 2024. A report from Capital Group suggested that as economic growth is anticipated to slow down in 2024, and the possibility of a recession looms, dividends might play a more crucial role in enhancing total returns for investors. Diana Wagner, an equity portfolio manager for Washington Mutual Investors Fund, shared insights on dividend stocks in the report and stated:
“It is difficult to know when a cycle will turn, so investors may want to look for companies with growth potential as well as businesses that pay dividends, which can help mitigate market volatility. Valuation is important, but it is essential to distinguish between real values and companies with deteriorating business prospects.”
This performance of dividend stocks in 2023 suggested that these stocks may offer valuable benefits to investors in the long term. Historical analysis further reinforces this viewpoint. Examining the average stock performance over an extended period offers a more detailed perspective. In the period from 1930 to 2022, the contribution of dividend income to the total return of the S&P 500 Index averaged 41%. However, savvy investors don't necessarily subscribe to the notion of long-term benefits from dividend stocks. Instead, they actively engage in short-term investments using a strategy known as Dividend Capture. This approach focuses on exploiting the periodic dividend payouts of stocks without committing to a long-term hold. Investors employing Dividend Capture aim to capture the dividend income by strategically buying and selling stocks around the ex-dividend date, optimizing their returns in the short term. To learn about this strategy, have a look at our previous article titled Dividend Capture Strategy: 10 High Yield Stocks To Buy in November.
Even when engaging in short-term investments, investors consistently prioritize companies that have a track record of consistently raising their dividends. Walmart Inc. (NYSE:WMT), Johnson & Johnson (NYSE:JNJ), and AbbVie Inc. (NYSE:ABBV) are some of the best dividend stocks that have proven to be among the best in offering decades of sustained dividend growth to investors. In this article, we will discuss dividend stocks that will trade ex-dividend in February 2024.
For this list, we selected dividend stocks that will trade ex-dividend in February 2024. Ex-dividend date indicates the cutoff day to buy a stock to receive its upcoming dividend payment. These stocks have dividend yields above 2%, as of January 28. We also measured hedge fund sentiment around each stock, according to Insider Monkey’s Q3 2023 data of 910 elite funds. The list is ranked in ascending order of their ex-dividend dates. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here).
Wells Fargo & Company (NYSE:WFC) is an American diversified financial services company that provides a wide range of banking services to individuals, businesses, and institutions. On January 23, the company declared a quarterly dividend of $0.35 per share, which was consistent with its previous dividend. The stock offers a dividend yield of 2.78%, as of January 28.
In the fourth quarter of 2023, Wells Fargo & Company (NYSE:WFC) reported revenue of $20.4 billion, which showed a 2.2% growth from the same period last year. The company's net income for the period came in at $3.4 billion, up from $3.1 billion in the prior-year period.
At the end of Q3 2023, 77 hedge funds tracked by Insider Monkey reported having stakes in Wells Fargo & Company (NYSE:WFC), up from 75 in the previous quarter. The collective value of these stakes is over $4.32 billion.
Ethan Allen Interiors Inc. (NYSE:ETD) is a Connecticut-based company that specializes in the design, manufacturing, and retailing of home furnishings and decor. The company offers a quarterly dividend of $0.36 per share and has a dividend yield of 4.74%, as of January 28. It is one of the best dividend stocks on our list as the company returned $9.2 million to shareholders through dividends in the fourth quarter of 2023.
As of the end of Q3 2023, 15 hedge funds in Insider Monkey's database owned stakes in Ethan Allen Interiors Inc. (NYSE:ETD), compared with 14 in the previous quarter. The consolidated value of these stakes is more than $22.4 million. Among these hedge funds, Royce & Associates was the company's leading stakeholder in Q3.
Energy Transfer LP (NYSE:ET) is an American midstream energy company that is involved in the transportation and storage of natural gas. On January 25, the company declared a 0.8% hike in its quarterly dividend to $0.315 per share. Through this increase, the company achieved a ninth consecutive quarter of dividend growth, which makes ET one of the best dividend stocks on our list. As of January 28, the stock has a dividend yield of 8.64%.
At the end of September 2023, 34 hedge funds in Insider Monkey reported having stakes in Energy Transfer LP (NYSE:ET), which remained unchanged from the previous quarter. The overall value of these stakes is over $803.2 million.
Archer-Daniels-Midland Company (NYSE:ADM) is a major player in the processing of agricultural commodities. The company produces and sells a wide range of food ingredients and additives. The company announced an 11.1% hike in its quarterly dividend to $0.50 per share on January 26. This marked its 51st consecutive annual dividend growth, which makes ADM one of the best dividend stocks on our list. The stock has a dividend yield of 3.46%, as of January 28 and it will trade ex-dividend on March 7.
The number of hedge funds tracked by Insider Monkey owning stakes in Archer-Daniels-Midland Company (NYSE:ADM) grew to 37 in Q3 2023, from 32 in the previous quarter. The collective value of these stakes is nearly $770 million. With roughly 3 million shares, AQR Capital Management was the company's leading stakeholder in Q3.
An American utility company, Entergy Corporation (NYSE:ETR) is next on our list of the best dividend stocks. The stock will be going ex-dividend on March 8. It currently offers a quarterly dividend of $1.13 per share and has a dividend yield of 4.55%, as of January 28.
Insider Monkey's database of Q3 2023 indicated that 33 hedge funds owned stakes in Entergy Corporation (NYSE:ETR), which remained the same as in the previous quarter. The total value of these stakes is over $747.5 million.
7. American Electric Power Company, Inc. (NASDAQ:AEP)
Ex-Dividend Date: February 8
American Electric Power Company, Inc. (NASDAQ:AEP) is one of the largest electric utility companies in the US. The company is primarily involved in the generation and distribution of electricity. The company currently offers a quarterly dividend of $0.88 per share and has a dividend yield of 4.52%, as of January 28. It is one of the best dividend stocks on our list as the company maintains a 14-year streak of consistent dividend growth.
American Electric Power Company, Inc. (NASDAQ:AEP) was a part of 39 hedge fund portfolios at the end of Q3 2023, up from 33 in the previous quarter, according to Insider Monkey’s database. The stakes owned by these hedge funds have a collective value of more than $545.4 million.
California Water Service Group (NYSE:CWT) is an American integrated energy company that operates in the electric power industry. The company operates a diverse portfolio of power plants, including nuclear, natural gas, coal, and renewable energy facilities. It is one of the best dividend stocks on our list as the company is a Dividend King with 56 consecutive years of dividend growth under its belt. The company currently offers a quarterly dividend of $0.26 per share and has a dividend yield of 2.29%, as of January 28.
As of the end of the September quarter of 2023, 8 hedge funds tracked by Insider Monkey held stakes in California Water Service Group (NYSE:CWT), worth collectively over $90 million. With over 1.5 million shares, Impax Asset Management was the company's leading stakeholder in Q3.
