In this article, we will take a look at some of the best dividend stocks to buy in January.
In 2024, dividend stocks fell short of investor expectations, largely due to the continuing AI boom and a heightened interest in technology stocks. The Dividend Aristocrats index lagged behind the broader market during the year. However, analysts remain optimistic about the future of dividend equities. This positive sentiment is driven by the fact that many US companies have ample cash reserves to sustain their dividend payments. The Wells Fargo Investment Institute reported that large-cap US companies have amassed over $2.4 trillion in cash, which could be used to either start or enhance dividend payouts.
Also read: 10 Best Performing Dividend ETFs In 2024
Despite the lack of enthusiasm for dividend stocks, analysts believe they still offer attractive entry points for investors. Capital Group suggested seeking opportunities in dividend-paying companies that the market has overlooked. This includes pharmaceutical firms that have been neglected due to the current focus on weight loss treatments, as well as utilities and certain banks. Within the dividend space, investors are increasingly drawn toward dividend growth stocks that offer consistent yields. Stocks that pay dividends and boast solid balance sheets with attractive yields can provide reliable income, protect against market declines, and support healthy investment growth. A report by ProShares highlighted that since its inception, the Dividend Aristocrats Index has outperformed the broader market with less volatility. For instance, a $10,000 investment in May 2005 could have grown to over $61,000 by March 2023.
The report also mentioned that the index has demonstrated strong performance in both up and down markets, with an upside capture of 91% and a downside capture of 80%. It has shown notable resilience during market downturns, outperforming the wider market by more than 12% in 2022. In addition, the Dividend Aristocrats Index has outpaced the market in eight of the 10 worst quarterly declines since 2005.
Since the start of 2025, the broader market has only seen a modest increase of 0.66%. In this environment, UBS has identified stocks that are considered high quality compared to their peers and are unlikely to reduce their current dividend payouts. The firm estimates a 22.9% chance of dividend cuts across various regions and sectors, noting that the US remains the most secure region for dividends, with only a 6.2% likelihood of cuts. Moreover, most sectors in the US appear relatively stable. Japan stands out as the most favorable region for dividend growth, with a projected growth rate of 9.9%.
That said, investing in dividend stocks can be more complex than it seems, requiring thorough analysis. Although dividends are often linked to long-term returns, some investors employ a short-term strategy known as dividend capture. This approach involves purchasing shares just before a company pays its dividend and selling them soon after the dividend is received. The objective is to collect the dividend income while possibly benefiting from a rise in the stock’s price leading up to the dividend announcement. In this article, we will take a look at some of the best dividend stocks to buy in January.
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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 2025. 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. We also considered hedge fund sentiment around each stock using Insider Monkey’s data for Q3 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
10. Edison International (NYSE:EIX)
Ex-Dividend Date: January 7
Edison International (NYSE:EIX) is a California-based public utility holding company. The company generates electricity using a range of sources such as natural gas, nuclear power, and renewable energy. In addition, it offers consulting services to organizations looking to lower their energy expenses by improving the efficiency of their power consumption. In the past 12 months, the stock has surged by nearly 10%.
Edison International (NYSE:EIX) declared a 6.1% hike in its quarterly dividend to $0.8275 per share on December 12. Through this increase, the company stretched its dividend growth streak to 21 years, which makes EIX one of the best dividend stocks on our list. The stock offers a dividend yield of 4.15%, as of January 5.
Edison International (NYSE:EIX)’s strong cash position has enabled this dividend growth. As of the most recent quarter, the company had approximately $200 million available in cash and cash equivalents. In the first nine months of the year, its operating cash flow grew to $3.8 billion, from $2.5 billion in the same period last year.
In the third quarter of 2024, Edison International (NYSE:EIX) generated $5.2 billion in revenues, which showed a 10.6% growth from the same quarter last year. This figure surpassed analysts’ expectations by $192.4 million. The company is optimistic about refining its 2024 core EPS guidance due to its strong performance so far this year. In recent years, the company has successfully navigated significant climate challenges, strengthened its operational resilience, and set itself up for future growth.
ClearBridge Investments also highlighted the company’s strong business in its Q3 2024 investor letter. Here is what the firm has to say:
“From a sector perspective, meanwhile, our utilities overweight was positive, with Edison International (NYSE:EIX) our top individual contributor. The company reached a tentative deal to recoup $1.7 billion of wildfire and mudslide expenses in California, bolstering its balance sheet, increasing earnings and demonstrating the favorable regulatory environment in California, benefiting both Edison as well as Sempra, our largest utility holding. Another rate-sensitive area — real estate — was the second-best sector performer as rate cuts boosted valuations in this area. Our REITs underweight, however, was a headwind during the period.”
At the end of Q3 2024, 29 hedge funds tracked by Insider Monkey held stakes in Edison International (NYSE:EIX), compared with 32 in the previous quarter. These stakes have a total value of nearly $1.4 billion.
9. Mastercard Incorporated (NYSE:MA)
Ex-Dividend Date: January 9
Mastercard Incorporated (NYSE:MA) is an American credit card company that offers a wide range of payment processing and related services to its consumers. In the past 12 months, the stock has surged by over 24%. The payment processing giant has impressed investors with its strong growth, significant competitive advantage, and resilience against economic challenges. The company primarily earns revenue through swipe fees, averaging just over 2% for each transaction processed from co-branded cards. This straightforward business model is consistently reliable, thriving during economic upturns and protecting the company from credit risks during downturns.
In the third quarter of 2024, Mastercard Incorporated (NYSE:MA) reported revenue of $7.37 billion, which saw a 13% growth from the same period last year. The results reflect strong consumer spending and sustained demand for the company’s value-added services and solutions. The company’s cash position also remained very strong. It ended the quarter with over $11 billion available in cash and cash equivalents, up from $8.6 billion at the end of December 2023. In addition, the company’s operating cash flow came in at nearly $10 billion, growing from $7.8 billion in the prior-year period.
Montaka Global Investments made the following comment about MA in its Q3 2024 investor letter:
“Montaka owns several duopolists in the financial services industry, including Visa and Mastercard Incorporated (NYSE:MA) in payments; and S&P Global in credit ratings and financial data services. These businesses have competitively protected and reliably growing core businesses. But they also have newer, high-probability adjacent opportunities. The market, however, is underappreciating this powerful combination, in our view.
For Visa and Mastercard, their core businesses in global payment processing are being complemented by significant growth in two areas: New processing opportunities in peer-to-peer, business-to-business, business-to-consumer, and government-to-consumer payments; and Value-added services, including risk, fraud-detection, issuance, acceptance, and open banking.”
On December 17, Mastercard Incorporated (NYSE:MA) declared a 15% hike in its quarterly dividend to $0.76 per share. This marked the company’s 13th consecutive year of dividend growth. As of January 5, the stock has a dividend yield of 0.58%.
As of the close of Q3 2024, 131 hedge funds held investments in Mastercard Incorporated (NYSE:MA), down from 142 in the previous quarter, as per Insider Monkey’s database. The stakes owned by these hedge funds have a total value of more than $17 billion. With over 4.1 million shares, Fisher Asset Management was the company’s leading stakeholder in Q3.
8. AT&T Inc. (NYSE:T)
Ex-Dividend Date: January 10
AT&T Inc. (NYSE:T) is an American telecommunications services company that provides a wide range of related services to its consumers. By offering both wireless and broadband services, the telecom giant aims to establish itself as the preferred provider of dependable, high-speed internet access, especially as online connectivity becomes increasingly crucial. The company plans to extend its fiber internet network to over 50 million locations by 2029, up from about 28 million today. In a CNBC interview, CEO John Stankey mentioned that customers who subscribe to both fiber and wireless services generally report higher satisfaction and lower churn rates. These favorable outcomes enhance the long-term value of these customers for AT&T. In the past 12 months, the stock has surged by nearly 30%.
In the third quarter of 2024, AT&T Inc. (NYSE:T) reported revenue of $30.2 billion, showing a slight 0.5% decrease compared to the same period last year. Despite facing challenges like severe weather and a workforce stoppage in the Southeast, the company achieved its 19th consecutive quarter of adding over 200,000 new AT&T Fiber customers. AT&T continues to expand its largest segment, Mobility, and is on track to lead the industry in postpaid phone churn for the 13th time in 15 quarters. The company remains focused on making strategic investments, reducing debt, and increasing its free cash flow for the year.
AT&T Inc. (NYSE:T)’s cash position makes it one of the best dividend stocks for income investors. The company’s operating cash flow in the most recent quarter came in at $10.2 billion and its free cash flow amounted to $5.1 billion. Currently, it offers a quarterly dividend of $0.2775 per share and has a dividend yield of 4.9%, as of January 5.
Insider Monkey’s database of Q3 2024 showed that 59 hedge funds owned stakes in AT&T Inc. (NYSE:T), compared with 71 in the previous quarter. These stakes are valued at over $5.6 billion. Among these hedge funds, Arrowstreet Capital owned the largest stake in the company.
7. Abbott Laboratories (NYSE:ABT)
Ex-Dividend Date: January 15
Abbott Laboratories (NYSE:ABT) ranks seventh on our list of the best dividend stocks to buy in January. The Illinois-based medical device company also offers services and products in diagnostics, nutrition, and established pharmaceuticals. The company’s diverse operations allow it to offset challenges in one area with strength in others. Recently, this has been evident as diagnostics revenue declined due to a drop in COVID testing sales, while medical device sales saw double-digit growth.
Abbott Laboratories (NYSE:ABT) is well-regarded for its stability, built on years of experience in navigating the tightly regulated healthcare sector. The company has earned a solid reputation within its field, as healthcare professionals, like most consumers, prefer to trust products that are known to be effective, particularly in critical health situations. Moreover, it benefits from a robust portfolio of patents that protect its innovative products.
Abbott Laboratories (NYSE:ABT) is a strong dividend payer, having raised its payouts by about 60% since 2020. In addition, the company holds a 52-year streak of consistent dividend growth. It currently pays a quarterly dividend of $0.55 per share and has a dividend yield of 2.07%, as of January 5.
According to Insider Monkey’s database of Q3 2024, 63 hedge funds held stakes in Abbott Laboratories (NYSE:ABT), compared with 69 in the previous quarter. These stakes are collectively valued at approximately $4 billion.
6. Accenture plc (NYSE:ACN)
Ex-Dividend Date: January 16
Accenture plc (NYSE:ACN) is a multinational professional services company that deals in information technology services and management consulting. In fiscal Q1 2025, the company posted revenue of $17.7 billion, up 9% from the same period last year. Its consulting revenues came in at $9 billion. The company has revised its business outlook for fiscal 2025, raising its full-year revenue growth forecast to 4% to 7% in local currency. The company now anticipates a foreign exchange impact of negative 0.5%. Additionally, it has updated its GAAP EPS outlook to fall between $12.43 and $12.79, reflecting the revised revenue growth projection and updated foreign exchange assumptions.
Two key highlights from the quarter include the company’s new bookings totaling $18.7 billion, with 30 client bookings exceeding $100 million, and $1.2 billion in bookings related to generative artificial intelligence (AI). Investors have been closely monitoring Accenture plc (NYSE:ACN)’s growing AI services, which assist businesses with areas such as analytics, chatbots, and customer support.
Diamond Hill Capital highlighted ACN in its Q3 2024 investor letter. Here is what the firm has to say:
“We continue finding compelling new ideas, even as the bull market proceeds. In Q3, we initiated three new positions in Aon, Accenture plc (NYSE:ACN) and Builders FirstSource. Accenture is a leading global IT services and consultancy business. We think the services it provides — which are differentiated and in specialty areas relative to many of its peers — are critical and will be in high demand in the technology ecosystem for years to come. This should contribute to stable prices and margins. We believe the market is undervaluing Accenture relative to the opportunity ahead of it and, consequently, were able to initiate a position in the quarter at a discounted share price.”
Accenture plc (NYSE:ACN) also reported a strong cash position for the quarter. Its operating cash flow came in at $1.02 billion, up from $499 million in the prior year period. In addition, its free cash flow for the quarter was $870 million, growing from $430 million in the same quarter last year. The company remained committed to its shareholder obligation, returning $926 million to investors through dividends.
Accenture plc (NYSE:ACN), one of the best dividend stocks, has been making regular dividend payments to shareholders since 2005. Currently, it offers a quarterly dividend of $1.48 per share for a dividend yield of 1.67%, as of January 5.
Accenture plc (NYSE:ACN) was a part of 60 hedge fund portfolios at the end of Q3 2024, compared with 68 in the previous quarter, as per Insider Monkey’s database. The stakes held by these hedge funds have a total value of over $4.3 billion.
5. Williams-Sonoma, Inc. (NYSE:WSM)
Ex-Dividend Date: January 17
Williams-Sonoma, Inc. (NYSE:WSM) is an American retail company that owns a portfolio of premium home goods brands, such as its flagship Williams-Sonoma, Pottery Barn, Pottery Barn Kids, West Elm, and Rejuvenation. the stock emerged as a winner last year, surging by over 95% and outperforming the market by a wide margin. That said, similar to other retailers in the discretionary and home goods sectors, the company has seen a drop in sales due to inflation in the post-pandemic period, following the increased demand for home goods during the pandemic.
Williams-Sonoma, Inc. (NYSE:WSM) reported $1.8 billion in revenue for the third quarter of 2024, a 3% decline year-over-year, though it exceeded analysts’ expectations by $16 million. The company is drawing investor interest as it raises its full-year forecast. It now expects full-year revenue to decline by 3% to 1.5% and has increased its operating margin guidance by 40 basis points, projecting a range of 17.8% to 18.2%.
From a dividend perspective, Williams-Sonoma, Inc. (NYSE:WSM) demonstrates strong cash generation. In Q3 2024, the company reported an operating cash flow of $254 million and returned $73 million to shareholders via dividends. In addition, it has been growing its payouts for 15 consecutive years, which makes WSM one of the best dividend stocks on our list. The company currently pays a quarterly dividend of $0.57 per share and has a dividend yield of 1.18%, as of January 5.
With a collective stake value of over $968 million, 35 hedge funds tracked by Insider Monkey held positions in Williams-Sonoma, Inc. (NYSE:WSM) at the end of Q3 2024. Among these hedge funds, Leonard Green & Partners was the company’s leading stakeholder in Q3.
4. Colgate-Palmolive Company (NYSE:CL)
Ex-Dividend Date: January 21
Colgate-Palmolive Company (NYSE:CL) is an American manufacturing company that specializes in a wide range of consumer products. The company is a recognized name in the consumer goods sector, offering products in Oral Care, Personal Care, Home Care, and Pet Nutrition. Recently, it has focused heavily on sustainability and broadening its product offerings. Its goal to make all packaging recyclable by 2025 highlights the increasing environmental concerns of consumers and regulators. Through efforts such as partnerships for renewable energy, the company is aligning its operations with future market needs and regulatory expectations. The stock has delivered a return of nearly 13% in the past year.
In the third quarter of 2024, Colgate-Palmolive Company (NYSE:CL) reported revenue of $5.03 billion, reflecting a 2.4% increase from the same period the previous year. This figure surpassed analysts’ expectations by $27.2 million. The company has retained its leadership in the toothpaste market, with a global market share of 41.6% year to date. Additionally, it has maintained its position as the leader in the manual toothbrush segment, holding a global market share of 32.3% during the same period.
In the first nine months of the year, Colgate-Palmolive Company (NYSE:CL) reported an operating cash flow of almost $3 billion. On December 11, the company announced a quarterly dividend of $0.50 per share, consistent with the previous payout. With a history of increasing its dividends for 62 consecutive years, CL is one of the best dividend stocks to buy in January. The stock supports a dividend yield of 2.22%, as of January 5.
The number of hedge funds tracked by Insider Monkey reported owning stakes in Colgate-Palmolive Company (NYSE:CL) grew to 54 in Q3 2024, from 52 in the previous quarter. The collective value of these stakes is more than $3.4 billion. Rajiv Jain’s GQG Partners owned the largest stake in the company in Q3.
3. CVS Health Corporation (NYSE:CVS)
Ex-Dividend Date: January 23
CVS Health Corporation (NYSE:CVS) ranks third on our list of the best dividend stocks. The American healthcare company operates a retail pharmacy chain. It leverages its vast retail network to offer a comprehensive range of health services and pharmacy benefits, bolstered by its Aetna health insurance division, which covers more than 27 million members. Despite the goal of this vertically integrated model to achieve cost savings and improve efficiency across the healthcare supply chain, recent performance has not met expectations. Increased enrollment in its health plans, particularly among seniors in Medicare Advantage programs, along with high service utilization and ongoing cost pressures, has impacted profitability.
That said, CVS Health Corporation (NYSE:CVS) delivered strong earnings in the third quarter of 2024, with revenue reaching $95.4 billion, reflecting a year-over-year growth of over 6.3%. The results highlighted solid performance in the Health Services and Pharmacy & Consumer Wellness segments. However, they also underscored the need for a collaborative effort across the company to tackle the macroeconomic challenges affecting the Health Care Benefits segment.
In addition, CVS Health Corporation (NYSE:CVS) reported a strong cash position in the most recent quarter. In the first nine months of the year, the company reported an operating cash flow of $7.2 billion. By the end of the quarter, the company had $6.9 billion in cash and cash equivalents. While CVS does not have a record of consecutive dividend increases, it has consistently paid dividends to shareholders since 1997. Its quarterly dividend sits at $0.665 per share for a dividend yield of 5.81%, as of January 5.
Of the 900 hedge funds tracked by Insider Monkey at the end of Q3 2024, 63 hedge funds held stakes in CVS Health Corporation (NYSE:CVS), up from 60 in the preceding quarter. These stakes are worth over $4.2 billion in total. With more than 13 million shares, Pzena Investment Management was the company’s leading stakeholder in Q3.
2. Pfizer Inc. (NYSE:PFE)
Ex-Dividend Date: January 24
Pfizer Inc. (NYSE:PFE) is a multinational pharmaceutical industry company. It is garnering investor interest after management reaffirmed its annual revenue and earnings forecast from October and offered guidance for the upcoming year. In response to the updated guidance, BMO Capital analyst Evan Seigerman maintained an Outperform rating with a price target of $36 per share. If Pfizer’s stock reaches Seigerman’s target, investors buying at current prices could potentially see a 37% return over the next year. The stock is down by nearly 10% in the past 12 months.
In the third quarter of 2024, Pfizer Inc. (NYSE:PFE) reported revenue of $17.7 billion, marking a significant 32% increase from the same quarter the previous year. The company’s Oncology portfolio showed strong performance, driven by key products like Padcev, Xtandi, Lorbrena, and Braftovi/Mektovi. Pfizer also successfully addressed the heightened demand for Paxlovid during the recent surge in COVID-19 cases.
Pfizer Inc. (NYSE:PFE) remains financially stable, bolstered by a strong cash position. Over the first nine months of 2024, the company distributed $7.1 billion to shareholders through dividends. On December 13, the company announced a 2.4% increase in its quarterly dividend, raising it to $0.43 per share. This marks the 15th consecutive year of dividend growth for the company, which makes it one of the best dividend stocks on our list. The stock has a dividend yield of 6.47%, as recorded on January 5.
Parnassus Investments highlighted Pfizer Inc. (NYSE:PFE) in its Q1 2024 investor letter. Here is what the firm has to say:
“During the quarter, we added new positions in Pfizer Inc. (NYSE:PFE), NICE and Charter Communications. We purchased Pfizer to capture the potential upside from any turnaround following the COVID-induced boom-bust cycle of the last few years. Pfizer’s stock price sank by more than 40% in 2023 as COVID-19 vaccine revenues rolled off, providing an attractive entry point for us. The company completed its acquisition of Seagen, which should strengthen Pfizer’s pipeline in antibody-drug conjugates (ADC). Pfizer also offers an attractive dividend yield.”
As of the close of Q3 2024, 80 hedge funds tracked by Insider Monkey owned stakes in Pfizer Inc. (NYSE:PFE), compared with 84 in the previous quarter. These stakes are collectively worth over $3 billion in total. With nearly 17 million shares, Two Sigma Advisors was the company’s leading stakeholder in Q3.
1. Pentair plc (NYSE:PNR)
Ex-Dividend Date: January 24
Pentair plc (NYSE:PNR) is an American water treatment company. The company is drawing heightened investor attention due to the growing demand for water solutions. Its business model aligns with worldwide initiatives to tackle environmental issues and move towards achieving carbon neutrality. In the past 12 months, the stock has delivered a 47% return to shareholders.
In the third quarter of 2024, Pentair plc (NYSE:PNR) posted revenue of $993.4 million, a slight decrease of 1.5% compared to the same period the previous year. Despite this decline, the revenue surpassed analysts’ expectations by $5.02 million. The company’s operating income for the quarter remained steady at $180 million year-over-year. Pentair has updated its full-year 2024 GAAP EPS forecast to about $3.70 and increased its adjusted EPS guidance to approximately $4.27.
Pentair plc (NYSE:PNR) reported a strong cash position in Q3 2024. The company generated an operating cash flow of $249 million, up from $162 million in the same quarter last year. Its free cash flow also grew to $234 million, compared to $143 million in the previous year’s quarter. On December 17, the company announced an 8.7% increase in its quarterly dividend to $0.25 per share, extending its streak of dividend growth to 49 consecutive years. The stock offers a dividend yield of 0.99%, as of January 5.
The number of hedge funds tracked by Insider Monkey owning stakes in Pentair plc (NYSE:PNR) grew to 47 in Q3 2024, from 40 in the previous quarter. These stakes are worth over $1.7 billion in total. Among these hedge funds, Impax Asset Management was the company’s leading stakeholder in Q3.
Overall, Pentair plc (NYSE:PNR) ranks first on our list of the best dividend stocks to buy in January. While we acknowledge the potential for PNR to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than PNR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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