In this article, we discuss the 15 best safe dividend stocks for 2023. You can skip our detailed analysis of dividend stocks and their performance over the years, and go directly to read the 5 Best Safe Dividend Stocks For 2023.
When things get rough for Wall Street, many smart investors turn towards safe dividend stocks. Such companies, known to have experience in navigating market downturns, pay regular dividends. A market report provided by ProShares stated that the S&P 500 declined by over 18%, while the Russell 2000 Index fell by more than 20% this past year. On the other hand, dividend stocks remained much more favorable and rewarded investors with strong, stable returns, outperforming both non-dividend stocks and bonds.
Additionally, Hartford Funds states that dividends have played a significant role in the returns investors have received during the past half century, as 84% of the total return of the S&P 500 Index can be attributed to reinvested dividends since 1960, while the contribution of dividend incomes to the total return of the S&P 500 Index averaged 40% till 2021.
Companies with long histories of annual dividend growth are known to have positive performance over time. When a firm manages to raise its dividend year after year, through recession, war, market crashes and more, it’s making a powerful statement about both its financial resilience and its commitment to shareholders. In that regard, companies that have consistently raised their dividends, including AbbVie Inc. (NYSE:ABBV), The Coca-Cola Company (NYSE:KO), and Becton, Dickinson, and Company (NYSE:BDX), can provide investors some peace of mind.
Our Methodology
We scoured the lists of Dividend Aristocrats and Dividend Kings stocks and picked the ones that have the highest number of hedge fund investors. These stocks enjoy strong market visibility, display decades of consistent consecutive dividend growth, and have a prominent history of surviving market downturns. This qualifies the following companies as safe investments in a volatile economic environment. We have assessed the hedge fund sentiment from Insider Monkey’s database of 920 elite hedge funds tracked as of the end of the third quarter of 2022.
Best Safe Dividend Stocks For 2023
15. SYSCO Corporation (NYSE:SYY)
Dividend Yield as of February 14: 2.52%
Number of Hedge Fund Holders: 40
The largest wholesale food distributor in the U.S., Sysco Corporation (NYSE:SYY) is an American multinational corporation involved in marketing and distributing food products, smallwares, kitchen equipment and tabletop items to restaurants, healthcare and educational institutes. For the full fiscal year 2022, Sysco Corporation (NYSE:SYY) saw sales increase 36.9% compared to 2021 and 14.2% compared to 2019, while its adjusted earnings-per-share increased from $1.44 in 2021 to $3.25 in 2022.
A reliable Divided King, the company has a history of consecutively increasing annual dividends for the last 53 years. On November 17, Sysco Corporation (NYSE:SYY) declared a quarterly dividend of $0.49 per share, in line with the previous. The dividend was paid on January 27, 2023 to shareholders of record on January 6. The company’s dividend yield on February 14 came in at 2.52%.
Earlier this January, Stephens analyst Joshua Long maintained his Overweight rating and $90 price target on Sysco Corporation (NYSE:SYY), stating that while the company’s Q2 earnings missed expectations, its January volumes are “off to solid start”. He views the company as well-positioned to drive accelerating growth and share gains as the company leverages its size and scale.
According to Insider Monkey’s data, 40 hedge funds were bullish on Sysco Corporation (NYSE:SYY) at the end of Q3 2022, compared to 32 funds in the prior quarter. Nelson Peltz’s Trian Partners held the biggest stake in the company, comprising 7.17 million shares worth about $507.52 million.
Much like AbbVie Inc. (NYSE:ABBV), The Coca-Cola Company (NYSE:KO), and Becton, Dickinson and Company (NYSE:BDX), Sysco Corporation (NYSE:SYY) can provide investors with a degree of safety with regards to their investments.
14. Altria Group, Inc. (NYSE:MO)
Dividend Yield as of February 14: 7.93%
Number of Hedge Fund Holders: 47
Altria Group, Inc. (NYSE:MO) is an American corporation and one of the world’s largest producers and marketers of tobacco, cigarettes and related products. Operating worldwide, the company is headquartered in Henrico County, Virginia. With 53-year dividend increase streak, few companies are as experienced in navigating market downturns as Altria Group, Inc. (NYSE:MO)
Altria Group, Inc. (NYSE:MO) beat earnings and revenue estimates in the fourth quarter and announced a new $1 billion share buyback plan, which is expected to conclude by December 31, 2023. On February 1, the tobacco maker also announced that it plans to pay off approximately $1.3 billion in outstanding notes using its readily available cash.
According to Insider Monkey’s data, 47 hedge funds were long Altria Group, Inc. (NYSE:MO) at the end of the third quarter of 2022, compared to 48 funds in the last quarter. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital held the largest stake in the company, with 9.5 million shares worth $382.6 million.
13. Devon Energy Corporation (NYSE:DVN)
Dividend Yield as of February 14: 9.75%
Number of Hedge Fund Holders: 51
Devon Energy Corporation (NYSE:DVN) is an energy company that specializes in the exploration, development, and production of oil, natural gas, and natural gas liquids. A notable Dividend Aristocrat, the company currently pays a quarterly dividend of $0.20 per share for a dividend yield of 9.75%, as of February 14.
Earlier this January, Mizuho analyst Nitin Kumar assumed coverage of Devon Energy Corporation (NYSE:DVN) with a Buy rating with a price target of $82, down from $86. Although the analyst admits that the stock is trading at a slight premium to its large-cap peers, he believes that the company’s “fixed plus variable” dividend is both “sustainable and differentiated, which merits the premium valuation.”
According to hedge fund sentiment, Devon Energy Corporation (NYSE:DVN) is one of the safest dividend stocks to invest in. In the third quarter of 2022, 51 hedge funds were long Devon Energy Corporation (NYSE:DVN), compared to 57 funds in the prior quarter. Rajiv Jain’s GQG Partners is the biggest stakeholder of the company, with 10.6 million shares worth $642 million.
In its Q2 2022 investor letter, GoodHeaven Capital Management, an asset management firm, highlighted a few stocks and Devon Energy Corporation (NYSE:DVN) was one of them. Here is what the fund said:
“Our biggest dollar gainer within this period was Devon Energy Corporation (NYSE:DVN), a position which emanated from a takeover in early 2021 of our long-time holding WPX Energy. We are sitting on a material (unrealized) gain from our cost and are now receiving material dividends thanks to Devon’s thoughtful fixed/variable dividend policy. Energy is now a hot sector for investors but we have had material exposure for a long time. We remember a bit too well $40 oil, NEGATIVELY PRICED front-month oil contract, and what it’s like to own a company with leverage and negative free cash flow during such periods. Our desire to have our biggest portfolio exposures be high-return, growing, reasonably predictable and moderately levered companies led us to reduce our Devon exposure in the past. When the recent facts and circumstances for the industry changed and appeared supportive of healthy oil prices, we decided to maintain a sizable holding and more recently added to the position. At Devon’s Q1 dividend rate, which is most variable in nature, the shares now yield approximately 10% and our yield on our average cost is materially higher. In addition, we maintain additional energy exposure through our long-term (and successful) holding in Hess Midstream and less directly through TerraVest and Berkshire Hathaway’s energy investments.”
12. Becton, Dickinson and Company (NYSE:BDX)
Dividend Yield as of February 14: 1.50%
Number of Hedge Fund Holders: 52
Becton, Dickinson and Company (NYSE:BDX), also known simply as BD, is an American multinational medical technology company that manufactures and sells medical devices, instrument systems, and reagents. The company also provides consulting and analytics services in certain geographies.
On January 24, Becton, Dickinson and Company (NYSE:BDX) declared a quarterly dividend of $0.91 per share, the same as the previous dividend. Another Dividend King on our list, the company has raised its payouts for 51 years in a row. The stock’s dividend yield on February 14 came in at 1.50%.
BofA analyst Travis Steed upgraded Becton, Dickinson and Company (NYSE:BDX) to Buy from Neutral with a price target of $290 on January 3, up from $250. According to Steed, the company has been executing in an environment where “quality will continue to matter,” and he sees it having a path for multi-year double digit EPS growth. Additionally, Steed states that he feels much better about the company’s litigation risk.
Becton, Dickinson and Company (NYSE:BDX) was a part of 52 hedge fund portfolios in Q3 2022, up from 42 a quarter earlier, as per Insider Monkey’s database. The stakes owned by these funds have a total value of over $2.1 billion. David Blood and Al Gore’s Generation Investment Management was the company’s leading stakeholder for the quarter.
11. McDonald’s Corporation (NYSE:MCD)
Dividend Yield as of February 14: 2.27%
Number of Hedge Fund Holders: 53
McDonald’s Corporation (NYSE:MCD) is an American multinational fast food chain, founded in 1940 as a restaurant operated by Richard and Maurice McDonald. The company’s systemwide sales rose 5% on a year-over-year basis, while its global comparable sales rose 10.9% year-over-year in 2022. The fast-food company maintains a 46-year streak of dividend growth, and currently pays a quarterly dividend of $1.52 per share for a dividend yield of 2.27%, as of February 14.
On February 3, RBC Capital analyst Christopher Carril lowered the price target on McDonald’s Corporation (NYSE:MCD) to $283 from $296 and kept an Outperform rating on the shares following the company’s Q4 results. While the analyst admits that McDonald’s recent management change and macro pressures have created some near-term questions, he remains adamant that the stock is attractive at current levels given the substantial investments made behind its domestic business.
At the end of Q3 2022, 53 hedge funds tracked by Insider Monkey owned stakes in McDonald’s Corporation (NYSE:MCD), compared with 50 in the previous quarter. The collective value of these stakes is $1.8 billion. With over 2 million shares, Bridgewater Associates was the company’s leading stakeholder in Q3.
10. Colgate-Palmolive Company (NYSE:CL)
Dividend Yield as of February 14: 2.55%
Number of Hedge Fund Holders: 57
Colgate-Palmolive Company (NYSE:CL) is an American multinational consumer products company that specializes in the production, distribution, and provision of household, health care, personal care, and veterinary products. Colgate-Palmolive Company (NYSE:CL) has paid uninterrupted dividends on its common stock since 1895 and has increased payments to common shareholders every year for 60 years.
On January 30, Morgan Stanley analyst Dara Mohsenian upgraded Colgate-Palmolive Company (NYSE:CL) to Overweight from Equal Weight with an unchanged price target of $82. The top household products pick at Morgan Stanley on account of its robust pricing power, strong pet trends and positive corporate strategy changes, Mohsenian states that the near 10% pullback in shares over the last month offers a buying opportunity “into a structurally attractive name.” Additionally, he believes that the company’s conservative 2023 earnings guidance should allow it to beat lowered consensus forecasts.
According to our Q3 2022 data, 57 of the 920 hedge funds surveyed by Insider Monkey had invested in the company. Dan Loeb’s Third Point is Colgate-Palmolive Company (NYSE:CL)’s largest investor. It owns 11.5 million shares that are worth $811 million.
Third Point made the following comment about Colgate-Palmolive Company (NYSE:CL) in its Q4 2022 investor letter:
“Colgate-Palmolive Company (NYSE:CL) remains one of the firm’s largest equity positions. The company offers defensive growth at a reasonable valuation, and we continue to see the potential for shares to deliver attractive risk adjusted returns over the next several years.
Fourth Quarter results were disappointing. The company missed on gross margins, guided 2023 well below the Street, and took another large impairment charge on its portfolio of skin care brands. The price action on the day of the print (down 5%) was extreme and perhaps reflective of growing investor frustration that the company has failed to sustainably grow earnings over the past decade.
We believe some of this “miss” was beyond the company’s control and that Colgate is on the road to delivering more predictable results. Organic growth remains strong and we expect it to start translating into earnings growth as execution improves, margins recover, and external pressures calm down…” (Click here to read the full text)
9. The Coca-Cola Company (NYSE:KO)
Dividend Yield as of February 14: 2.90%
Number of Hedge Fund Holders: 59
The Coca-Cola Company (NYSE:KO) is an American multinational beverage corporation founded in 1892, best known as the producer of Coca-Cola. The company also manufactures, sells, and markets other non-alcoholic beverage concentrates and syrups, and alcoholic beverages. The beverage company has been raising its dividends consistently for the past 61 years. It currently offers a per-share dividend of $0.46 every quarter with a dividend yield of 2.90%, as of February 14.
Morgan Stanley analyst Dara Mohsenian raised the price target on The Coca-Cola Company (NYSE:KO) to $70 from $68 and kept an Overweight rating on the shares. According to the analyst, the company’s “robust” 11% organic sales growth in Q4 in terms of unit cases represents its strong pricing power, limited demand elasticity, and solid execution. Mohsenian points to the company’s 7-8% organic sales growth guidance for FY23 as evidence of strong topline growth.
Warren Buffett’s Berkshire Hathaway was the leading stakeholder of The Coca-Cola Company (NYSE:KO) in Q3 2022. Overall, 59 hedge funds in Insider Monkey’s database owned investments in the company in Q3, worth over $25 billion.
Rowan Street Capital mentioned The Coca-Cola Company (NYSE:KO) in its Q4 2022 investor letter. Here is what the firm has to say:
“Let’s take The Coca-Cola Company (NYSE:KO) for example. Its dividend yield is 2.8%, earnings are estimated to grow at only 3.6% rate per year over next 4 years, and its earnings multiple is currently at 24x (based on next years forecasted earnings). KO has an anemic growth, so we can argue that paying 24x earnings is not very attractive. Let’s assume that the multiple will stay constant over the next 3-5 years, thus our expected annual returns will be 2.8%+3.6% = 6.4% (that is below the current reported inflation rate and only slightly above the risk-free rate of 4%).”
8. Blackstone Inc. (NYSE:BX)
Dividend Yield as of February 14: 4.75%
Number of Hedge Fund Holders: 61
Blackstone Inc. (NYSE:BX) is an American alternative investment management company based in New York City whose private equity business has been one of the largest investors in leveraged buyouts in the last three decades. Blackstone, Inc. (NYSE:BX) currently pays a quarterly dividend of $0.91 per share and has a dividend yield of 4.75%, as recorded on February 14.
On January 27, BMO Capital analyst Rufus Hone raised the price target on Blackstone Inc. (NYSE:BX) to $92 from $85 but maintained a Market Perform rating on the shares. The analyst cited the company’s Q4 earnings beat and noted that Blackstone is incrementally positive around the outlook for Retail inflows recovering, and should benefit from any “soft landing” economic outcome.
According to Insider Monkey’s Q3 data, 61 hedge funds were bullish on Blackstone Inc. (NYSE:BX), and Thomas Steyer’s Farallon Capital is the leading position holder in the company, with 3.11 million shares worth $260.7 million.
Baron Funds made the following comment about Blackstone Inc. (NYSE:BX) in its Q4 2022 investor letter:
“Blackstone Inc. (NYSE:BX) was a detractor in the fourth quarter as shares sold off sharply in December after the company announced that it received redemption requests above monthly and quarterly caps in its non-traded REIT fund (BREIT) and would be limiting investor withdrawals. BREIT was one of Blackstone’s fastest-growing flagship retail fund vehicles and hence received outsized investor attention and media coverage. While redemptions themselves aren’t surprising given the stark performance dispersion between BREIT and publicly listed real estate, investors grew concerned that the decision to limit withdrawals would create a cascading effect, eventually force BREIT to liquidate assets and perhaps impair the growth of additional retail fund vehicles. Subsequently, Blackstone increased liquidity through the sale of a JV interest in Las Vegas casino assets at attractive prices and received a $4 billion investment from the University of California. While acknowledging the step back and near-term headwinds, we believe BREIT has plenty of runway to meet redemptions without being forced to liquidate assets
We recently reduced the size of the Fund’s investment in Blackstone Inc. because of our expectation of a slowdown in its growth outlook. We remain bullish, however, about the company’s long-term prospects. Blackstone is the world’s largest alternative asset manager with $1 trillion in assets under management and the largest real estate manager in the world. Blackstone has a premier brand, a global franchise, loyal customers, an exceptional balance sheet, and an excellent management team.
Following a 36% correction in its shares in 2022, we believe Blackstone’s valuation has become more compelling and may look for opportunities to acquire additional shares in the future.”
7. Abbott Laboratories (NYSE:ABT)
Dividend Yield as of February 14: 1.92%
Number of Hedge Fund Holders: 62
Abbott Laboratories (NYSE:ABT) is an American multinational medical devices and health care company with headquarters in Abbott Park, Illinois, United States. The company is known for its diagnostics, medical devices, nutrition products, and branded generic pharmaceuticals. Among Abbott’s most well-known brands are Pedialyte, Ensure, Similac, and Glucerna.
On January 26, Stifel analyst Rick Wise raised his price target on Abbott Laboratories (NYSE:ABT) to $125 from $110 and kept a Buy rating on the shares, telling investors that the company’s management had “an encouragingly positive tone to start 2023” on its earnings call. He adds that, with Abbott starting off with high-single-digit organic sales growth guidance and $4.30-$4.50 EPS guidance that “basically brackets current consensus,” the 2023 setup “also appears encouraging.”
Abbott Laboratories (NYSE:ABT) currently pays a quarterly dividend of $0.51 per share and has a dividend yield of 1.92%, as of February 14. The company has a run of 51 years of consistent dividend growth.
At the end of September, 62 hedge funds tracked by Insider Monkey reported having stakes in Abbott Laboratories (NYSE:ABT), up from 61 in the previous quarter. The collective value of these stakes is over $3 billion.
Vulcan Value Partners mentioned Abbott Laboratories (NYSE:ABT) in its Q4 2022 investor letter. Here is what the firm has to say:
“Abbott Laboratories (NYSE:ABT) is one of the largest and most diversified health care companies in the world. It operates in four segments: diagnostics, medical devices, nutritional products and established pharmaceuticals. The company quickly established itself as a global leader in the development and deployment of COVID-19 rapid diagnostic tests. Consequently, its revenue and profit growth accelerated during the pandemic. As demand for testing slowed to a more sustainable level, the company is facing difficult earnings comparisons. In addition, Abbott voluntarily recalled certain infant formula products and shut down a plant in Michigan where the products were manufactured, which put more pressure on its earnings comparisons. The plant has resumed production, and Abbott is regaining lost market share. We believe that these events, one positive and one negative, have distorted Abbott’s sustainable earning power and has given us an opportunity to purchase it with a margin of safety.”
6. Walmart Inc. (NYSE:WMT)
Dividend Yield as of February 14: 1.54%
Number of Hedge Fund Holders: 68
Walmart Inc. (NYSE:WMT) is an American multinational retail corporation that operates a chain of hypermarkets, discount department stores, and grocery stores in the United States, headquartered in Bentonville, Arkansas.
On February 15, Cowen analyst Oliver Chen raised the price target on Walmart Inc. (NYSE:WMT) to $180 from $175 and maintained an Outperform rating on the shares. The analyst raised his estimates on prospects of better sales trends and the likelihood of solid store traffic trends, particularly in January.
Walmart Inc. (NYSE:WMT) currently pays a quarterly dividend of $0.56 per share for a dividend yield of 1.54%. A household name in the world of finance, the company is one of safest dividend stocks as it maintains a 49-year streak of consistent dividend growth.
As of the end of Q3 2022, 68 hedge funds tracked by Insider Monkey were bullish on Walmart Inc. (NYSE:WMT), compared with 67 in the previous quarter. The collective value of stakes owned by these hedge funds is over $4.08 billion.
With decades of consistent dividend growth, Walmart Inc. (NYSE:WMT) joins the likes of AbbVie Inc. (NYSE:ABBV), The Coca-Cola Company (NYSE:KO), and Becton, Dickinson and Company (NYSE:BDX) on our list of the safest dividend stocks for 2023.
Leaven Partners mentioned Walmart Inc. (NYSE:WMT) in its Q3 2022 investor letter. Here is what the firm has to say:
“In our last quarterly letter, I briefly mentioned that the consensus estimates for corporate profits appeared to be a bit too sanguine. I referenced a Reuters article that reported, as of June 17, Wall Street expected S&P 500 earnings to grow by 9.6% in 2022, which was up from 8.8% in April and from 8.4% in January. That tune began to change at the end of July and accelerated in August and September, as major players, such as Walmart (NYSE:WMT), has recently issued profit warnings and/or have withdrawn guidance. In response, Wall Street has altered its outlook: lowering third-quarter profit growth to 4.6%[2] from 7.2% in early August and slashing full-year profit growth to 4.5%.”
Click to continue reading and see 5 Best Safe Dividend Stocks For 2023.
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Disclosure. None. 15 Best Safe Dividend Stocks For 2023 is originally published on Insider Monkey.
