In this article, we discuss 5 best January dividend stocks to buy. If you want to see more best January dividend stocks to buy, the risk/reward, and methodology of this list, go directly to 10 Best January Dividend Stocks to Buy.
5. Colgate-Palmolive Company (NYSE:CL)
Number of Hedge Fund Holders: 57
Dividend Yield as of 2/3: 2.53%
Colgate-Palmolive Company (NYSE:CL) is a consumer staple that has raised its annual dividend for 60 consecutive years through multiple recessions. Considering its dividend raises, the company has a dividend yield of 2.53% as of February 3 and a forward P/E ratio of 21.43. Although analysts don’t see Colgate-Palmolive Company (NYSE:CL) growing its EPS very much over the next five years, the company has leading brands and decent normalized earnings power.
4. Lowe’s Companies, Inc. (NYSE:LOW)
Number of Hedge Fund Holders: 61
Dividend Yield as of 2/3: 1.94%
Lowe’s Companies, Inc. (NYSE:LOW) is one of the leading home improvement retailers with a dividend yield of 1.94% as of 2/3. Given earnings growth over time, the company has raised its annual dividend for 49 consecutive years. Considering management has had excess capital in addition to its dividend, Lowe’s Companies, Inc. (NYSE:LOW)’s board of directors authorized a new $15 billion stock repurchase program in December of 2022. 61 hedge funds in our database owned shares of Lowe’s Companies, Inc. (NYSE:LOW) at the end of Q3, ranking the stock #4 on our list of 10 Best January Dividend Stocks to Buy.
3. American Express Company (NYSE:AXP)
Number of Hedge Fund Holders: 68
Dividend Yield as of 2/3: 1.16%
American Express Company (NYSE:AXP) is a globally integrated payments company whose platform includes card issuing merchant acquiring and card network businesses. For 2022, American Express Company (NYSE:AXP) earned $9.85 per share and its sales rose 25% year over year. For full year 2023, American Express Company (NYSE:AXP) expects sales to grow 15% to 17%. As of 2/3, American Express Company (NYSE:AXP) has a dividend yield of 1.16%.
2. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 110
Dividend Yield as of 2/3: 2.84%
JPMorgan Chase & Co. (NYSE:JPM) is one of the four biggest banks in the United States with one of the best CEOs in the industry with Jamie Dimon. As a result, the company has considerable earnings power in normal economic conditions if it makes the right loans. In terms of capital returns, JPMorgan Chase & Co. (NYSE:JPM) has a pretty attractive dividend yield of 2.84% as of 2/3. The bank may also potentially restart its stock buyback program this year if economic conditions don’t worsen too much.
Vltava Fund commented on JPMorgan Chase & Co. (NYSE:JPM) in a Q3 2022 investor letter,
We regard JPM to be the strongest and best- managed bank in the world. It is a leader in investment banking, commercial banking, credit cards, and asset management. Its size (the largest bank in the USA, with nearly USD 4,000 billion in assets) and diversification give it a strong competitive advantage that is compounded by its cost advantages and the high costs to clients associated with switching banks. JPM’s management prides itself on running the only large bank to avoid major instability over the long term.
JP Morgan’s quality and strength first became fully evident in 2008 under the leadership of its CEO Jamie Dimon. Not only did JP Morgan help to stabilize the market by taking over the failing Bear Stearns in the spring of that year, but throughout the Great Financial Crisis it was the only big US bank that did not require government assistance and it was highly profitable even in the difficult year of 2008.
A well-functioning and efficient bank can be a very good long-term investment, because the interest compounding effect works well here. JPM’s return on equity (ROE) is well into the double digits and this puts it in a good position to continue producing better long-term returns than does the market. JPM has been very profitable even during years when interest rates were close to zero. The current – and perhaps not temporary – return to somewhat more normal, higher interest rates should have a significantly positive impact on the bank’s interest income and overall profitability.
1. Mastercard Incorporated (NYSE:MA)
Number of Hedge Fund Holders: 146
Dividend Yield as of 2/3: 0.61%
Mastercard Incorporated (NYSE:MA) ranks #1 on our list of 10 Best January Dividend Stocks to Buy given 146 hedge funds in our database owned shares of the company at the end of Q3. In Q4 2022, the leading payment leader’s net sales rose 12% year over year and its adjusted diluted EPS increased 13% year over year. In terms of its dividend, Mastercard Incorporated (NYSE:MA) has raised its annual dividend for 11 consecutive years. As of 2/3, the company had a dividend yield of 0.61%.
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