In this article, we discuss 14 best annual dividend stocks to buy now. You can skip our detailed analysis of dividend stocks and their performance over the years, and go directly to read 5 Best Annual Dividend Stocks To Buy Now.
Dividend stocks are garnering investors’ attention in 2023 as the stock market recovers from its bear market lows seen last year. There are several studies showing the effectiveness of dividend investing. For example, Heartland Advisors conducted one such research which showed that from 1802 to 2002, dividends represented 5.8% of the full 7.9% total annualized return of the stock market, including dividend growth. The study also cited London Business School’s research, which showed that the average real return across 17 countries from 1900 to 2005 stood at 5%, while the average dividend yield of those countries came in at 4.5% during this period.
Dividend investing may seem a simple strategy on the surface, but there are many dimensions to consider in order to generate regular income through these stocks. Reinvesting dividends is one of the most popular ways to accelerate income through the power of compounding. Since 1960, reinvested dividends accounted for 69% of the S&P 500’s total returns, as we reported in our article titled 25 Things Every Dividend Investor Should Know. We further mentioned data in the article which showed that the broad market’s annual average return over the past 50 years came in at 7.58%, which grew to 10.51% by reinvesting dividends. Additionally, dividends can contribute to investors’ overall performance and reduce volatility because of their defensive nature. Sam Stovall, chief investment strategist at CFRA Research, spoke to CNBC last year about the importance of dividend stocks. Here are some comments from the analyst:
“Essentially, dividends can improve your performance by a third without doing anything. You can add octane to your performance just by owning dividend-paying stocks.”
This is to be noted that last year was one of the best years for dividend stocks as they outperformed the market by a wide margin. Moreover, companies in the S&P 500 paid a record amount to shareholders in dividends.
While dividend payment frequencies can vary among different companies, some of them choose to distribute dividends on an annual basis. The decision to pay annual dividends may be influenced by the respective company’s financial stability, profitability, and cash flow. In addition to this, businesses in certain industries or stages of growth may opt for annual dividends to provide a substantial return to shareholders while retaining more capital for reinvestment. While major companies such as The Procter & Gamble Company (NYSE:PG), Johnson & Johnson (NYSE:JNJ), and AbbVie Inc. (NYSE:ABBV) pay dividends on a quarterly basis, we will discuss some of the best dividend stocks that offer annual dividends.
Photo by nick chong on Unsplash
Our Methodology:
For this list, we selected dividend companies that pay dividends just once a year to shareholders. Most of these companies are traded on American exchanges, however, some foreign companies on our list are traded on the OTC market. We measured hedge fund sentiment around American stocks based on Insider Monkey’s database for Q1 2023. The stocks are ranked from the lowest dividend yield to the highest, as of May 26.
14 Best Annual Dividend Stocks To Buy Now
14. Churchill Downs Incorporated (NASDAQ:CHDN)
Dividend Yield as of May 26: 0.26%
Churchill Downs Incorporated (NASDAQ:CHDN) is a Kentucky-based horse racing company that also owns casinos and online wagering corporations. JMP Securities raised its price target on the stock in April to $326 and kept an Outperform rating on the shares. The firm mentioned that the company’s recent quarterly earnings were impressive.
On April 25, Churchill Downs Incorporated (NASDAQ:CHDN) declared an annual dividend of $1 per share for a dividend yield of 0.26%, as of May 26. The company has been making uninterrupted dividend payments to shareholders since 1993, which makes it one of the best dividend stocks on our list. Considering its regular payouts, it can be added to dividend portfolios alongside The Procter & Gamble Company (NYSE:PG), Johnson & Johnson (NYSE:JNJ), and AbbVie Inc. (NYSE:ABBV).
In the first quarter of 2023, Churchill Downs Incorporated (NASDAQ:CHDN) reported revenue of roughly $560 million, which beat analysts’ estimates by $22.9 million. The company’s operating cash flow came in at $216 million, up from $135.2 million during the same period last year.
The number of hedge funds tracked by Insider Monkey owning stakes in Churchill Downs Incorporated (NASDAQ:CHDN) grew to 26 in Q1 2023, from 23 in the previous quarter. These stakes have a collective value of nearly $330 million. Among these hedge funds, Nitorum Capital was the company’s leading stakeholder in Q1.
13. Balchem Corporation (NASDAQ:BCPC)
Dividend Yield as of May 26: 0.58%
Balchem Corporation (NASDAQ:BCPC) is an American company that specializes in customized ingredient systems and key minerals for food and pharmaceutical markets. It generated $232.5 million in revenue in the first quarter of 2023, which showed a 1.6% growth from the same period last year. During the quarter, the company returned $23 million to shareholders in dividends. With an operating cash flow of $34.8 million and free cash flow of $25.2 million, it becomes one of the best dividend stocks on our list.
Balchem Corporation (NASDAQ:BCPC) has been growing its dividends consistently since 2009. In December 2022, the company declared a 10.9% hike in its annual dividend to $0.71 per share. The stock’s dividend yield on May 26 came in at 0.58%.
Insider Monkey’s Q1 2023 database shows that 13 hedge funds owned stakes in the company, up from 12 in the previous quarter. These stakes are collectively valued at over $67.4 million.
12. American Equity Investment Life Holding Company (NYSE:AEL)
Dividend Yield as of May 26: 0.90%
American Equity Investment Life Holding Company (NYSE:AEL) is a life insurance company, headquartered in Iowa, US. The company mainly specializes in the sales of fixed index and fixed rate annuities. Piper Sandler raised its price target on the stock to $44 in May with a Neutral rating on the shares, highlighting the company’s improved results in the first quarter.
One of the best dividend stocks on our list, American Equity Investment Life Holding Company (NYSE:AEL) started paying dividends to shareholders in 2003 and has raised its payouts every year since then. It currently offers a dividend of $0.36 per share on an annual basis. The stock’s dividend yield on May 26 came in at 0.90%.
In the first quarter of 2023, American Equity Investment Life Holding Company (NYSE:AEL) reported revenue of $662.5 million, which beat Street estimates by $36.5 million. The revenue also saw a 348.6% growth from the prior-year period.
At the end of March 2023, 17 hedge funds tracked by Insider Monkey reported having stakes in American Equity Investment Life Holding Company (NYSE:AEL), worth collectively over $1.1 million.
First Pacific Advisors highlighted the outperformance of American Equity Investment Life Holding Company (NYSE:AEL) in its Q4 2022 investor letter:
“American Equity Investment Life Holding Company (NYSE:AEL) is a leading writer of fixed index annuities. The company is benefitting from an ambitious plan by CEO Anant Bhalla to diversify into alternatives and move assets off balance sheet, creating a fee income stream and freeing up capital for buybacks (AEL 2.0 Strategy). We are warily watching, but so far, results have been good. As of Q3 2022, AEL had 18% of its balance sheet in private assets.”
11. Century Next Financial Corporation (OTC:CTUY)
Dividend Yield as of May 26: 1.08%
Century Next Financial Corporation (OTC:CTUY) is a federally chartered bank, based in Louisiana, US. The company generated $6.3 million in revenues in Q1 2023, which showed a 2.8% growth from the same period last year. At the end of March 2023, it had roughly $696 million available in total assets, compared with $643.3 million in the prior-year period.
Century Next Financial Corporation (OTC:CTUY), one of the best dividend stocks on our list, has been rewarding shareholders with growing dividends since 2015. It currently pays an annual dividend of $0.32 per share for a dividend yield of 1.08%, as of May 26.
10. Flanigan’s Enterprises, Inc. (NYSE:BDL)
Dividend Yield as of May 26: 1.5%
Flanigan’s Enterprises, Inc. (NYSE:BDL) is a Florida-based company that owns and operates a chain of small cocktail lounges and package liquor stores. On May 25, the company declared an annual dividend of $0.45 per share for a dividend yield of 1.5%, as recorded on May 26. It has been making regular annual dividend payments to shareholders since 2016.
In the first quarter of 2023, Flanigan’s Enterprises, Inc. (NYSE:BDL) reported revenue of $43.8 million, up from $40.3 million during the same period last year. The company’s net income for the quarter came in at nearly $1.9 million.
At the end of Q1 2023, Jim Simon’s Renaissance Technologies was the only stakeholder of Flanigan’s Enterprises, Inc. (NYSE:BDL). The hedge fund owned stakes worth over $1.46 million.
9. Logitech International S.A. (NASDAQ:LOGI)
Dividend Yield as of May 26: 1.6%
Logitech International S.A. (NASDAQ:LOGI) is a Switzerland-based computer manufacturing company that mainly develops personal peripherals for PC navigation. The company also has headquarters in California, US. Following the company’s fiscal Q4 2023 earnings, Street analysts gave positive ratings to the stock. In May, both Citigroup and Barclays lifted their price targets on LOGI to $73 and $71, respectively.
Logitech International S.A. (NASDAQ:LOGI), one of the best dividend stocks on our list, currently offers an annual dividend of CHF 0.96 per share. It has been raising its dividends consistently since 2014. The stock has a dividend yield of 1.6%, as of May 26.
The number of hedge funds tracked by Insider Monkey holding stakes in Logitech International S.A. (NASDAQ:LOGI) grew to 14 in Q1 2023, from 10 in the preceding quarter. These stakes are valued at $142.8 million collectively.
8. Citizens Community Bancorp, Inc. (NASDAQ:CZWI)
Dividend Yield as of May 26: 3.42%
Citizens Community Bancorp, Inc. (NASDAQ:CZWI) is a Wisconsin-based bank holding company. It offers personal, business, and mortgage services to its consumers. In the first quarter of 2023, the company generated $15.08 million in revenues, which fell by 5% from the prior-year period. Its total assets increased to $1.86 billion, from $1.82 billion in March 2022.
Citizens Community Bancorp, Inc. (NASDAQ:CZWI) has been raising its annual dividends since 2019, which makes it one of the best dividend stocks on our list. Its annual dividend payout stands at $0.29 per share for a dividend yield of 3.42%, as of May 26.
As of the close of Q1 2023, 3 hedge funds in Insider Monkey’s database reported having stakes in Citizens Community Bancorp, Inc. (NASDAQ:CZWI), worth over $5.2 million collectively. Among these hedge funds, Royce & Associates was the company’s largest stakeholder in Q1.
7. Touchstone Bankshares, Inc. (OTC:TSBA)
Dividend Yield as of May 26: 3.69%
Touchstone Bankshares, Inc. (OTC:TSBA) is an American commercial banking company, based in Virginia. In December 2022, the company declared an annual dividend of $0.32 per share, raising it by 6.7% from its previous dividend. This marked the company’s third consecutive year of dividend growth. The stock’s dividend yield on May 26 came in at 3.69%.
Touchstone Bankshares, Inc. (OTC:TSBA) reported $6.2 million in revenues in Q1 2023, which saw a 14.2% growth from the same period last year. Its net interest income for the quarter came in at $5.4 million.
6. George Risk Industries, Inc. (OTC:RSKIA)
Dividend Yield as of May 26: 5.60%
George Risk Industries Inc. (OTC:RSKIA) is a Nebraska-based company that manufactures a wide range of security products for residential, commercial, and industrial customers. The company initiated its dividend policy in 2019 and has raised its dividends every year since then. It currently pays an annual dividend of $0.60 per share and has a dividend yield of 5.60%, as of May 26.
George Risk Industries Inc. (OTC:RSKIA) is a reliable investment option for investors who want to consider annual dividend stocks. It can be added to portfolios alongside some of the best dividend stocks like The Procter & Gamble Company (NYSE:PG), Johnson & Johnson (NYSE:JNJ), and AbbVie Inc. (NYSE:ABBV).
For the nine months that ended January 31, George Risk Industries, Inc. (OTC:RSKIA) reported an operating cash flow of $2.7 million, up from $1.8 million during the same period last year. The company’s net income for the period came in at over $3.6 million, compared with $3.5 million in the prior-year period.
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Disclosure. None. 14 Best Annual Dividend Stocks To Buy Now is originally published on Insider Monkey.
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