5 Best Safe Dividend Stocks For 2023

In this article, we discuss the 5 best safe dividend stocks for 2023. To see our detailed analysis of dividend stocks and their performance over the years, you can go directly to read the 15 Best Safe Dividend Stocks For 2023.

5. The Procter & Gamble Company (NYSE:PG)

Dividend Yield as of February 14: 2.64%

Number of Hedge Fund Holders: 69

The Procter & Gamble Company (NYSE:PG) is an American multinational corporation that operates as a manufacturer and marketer of fast-moving consumer goods. The FMCG giant has remained consistently profitable for decades and has raised its dividends for 66 years consecutively.

This past December, Deutsche Bank analyst Steve Powers raised the price target on The Procter & Gamble Company (NYSE:PG) to $162 from $156 and kept a Buy rating on the shares. Although the analyst stated that data points are “choppy,” he believes that there have been several positive developments for the markets over the past weeks, including lower-than-expected inflation in November, the Federal Reserve signaling a move to a more deliberate pace of hikes, and signs of progress away from China’s Zero COVID policy.

As of the close of Q3 2022, 69 hedge funds tracked by Insider Monkey reported owning stakes in The Procter & Gamble Company (NYSE:PG), down from 71 in the previous quarter. The collective value of these stakes is over $4.08 billion.

Rowan Street Capital mentioned The Procter & Gamble Company (NYSE:PG) in its Q4 2022 investor letter. Here is what the firm has to say:

“Let’s look at The Procter & Gamble Company (NYSE:PG). Dividend yield is 2.4%. Earnings are forecasted to grow at 5.9%, and its current earnings multiple is at 25x. Now, lets say over the next 3-5 years the market loses interest in the “safe”, mature companies that grow at anemic rates and gets an appetite for growth again. It’s very unlikely that Mr. Market will be paying 25x for 5.9% earnings growth. Lets assume that multiple declines to the market average of 18x — that would be ~6.9% drag per year on the total expected return over next 3-5 years. If we get 2.4% (dividend) + 5.9% (earnings growth) – 6.9% (decrease in earnings multiple) = 1.4% (annual return we can expect on average from this stock).”

4. PepsiCo, Inc. (NASDAQ:PEP)

Dividend Yield as of February 14: 2.63%

Number of Hedge Fund Holders: 72

PepsiCo, Inc. (NASDAQ:PEP) is an American multinational food, snack, and beverage corporation headquartered in Harrison, New York, in the hamlet of Purchase.  Overseeing the manufacturing, distribution, and marketing of its products, PepsiCo, Inc. (NASDAQ:PEP)’s business encompasses all aspects of the food and beverage market.

The company holds a 50-year track record of consistent dividend growth, and it currently pays a quarterly dividend of $1.15 per share. As of February 14, its dividend yield came in at 2.63%.

On February 13, Barclays analyst Lauren Lieberman lowered the price target on PepsiCo, Inc. (NASDAQ:PEP) to $187 from $197 and kept an Overweight rating on the shares. The analyst stated that PepsiCo, Inc. (NASDAQ:PEP)’s 2023 guidance includes organic sales growth at the high end of its medium term algorithm. However, the profit outlook came in below consensus.

PepsiCo, Inc. (NASDAQ:PEP) is a popular dividend stock among hedge funds, as 72 funds in Insider Monkey’s database owned stakes in the company in Q3 2022, compared with 65 in the previous quarter. These stakes are valued at over $4.8 billion collectively.

Lindsell Train mentioned PepsiCo, Inc. (NASDAQ:PEP) in its Q3 2022 investor letter. Here is what the firm has to say:

“At this point, it may help to give a further example of these self-reinforcing moats to illustrate the idea, drawing from the consumer franchises side of our portfolio. In our view, strong consumer brands can similarly exhibit Lindycompatible anti-ageing properties. Consider, that the longer a company invests in its brands through advertising and R&D, the stronger and more resonant they may get. When successful, a self-sustaining feedback loop is established, whereby it becomes ever harder to recreate a heritage-rich brand from scratch, raising barriers to entry, and proportionately increasing its likely lifespan. There are plenty of long-lived portfolio franchises I could reference here, but I’ve gone with PepsiCo (NYSE:PEP); partly because we have good time-series stats on it (beware data bias!) but also, as I hope will become evident, because Pepsi over its 129 years has succeeded in creating some wonderfully deep moats.

With Pepsi Cola you get the flagship soft drinks brand, which is both global and generational, but you also get the Frito-Lay salty snacks portfolio assembled alongside it, claiming nearly 40% of the global market. That’s ten-times greater than the nearest competitor and likely higher than the next 65 competitors combined. These are exceptionally strong global bands with market shares to match; the long-term empirical result being Pepsi’s dividend record which over the past 66 years (as far back as we’ve been able to go) has compounded at an annualised rate of 10%. Pepsi is no ‘in at the ground floor’ start-up today, but it wasn’t six decades ago either. Early growth investor Philip Fisher put it well when in 1958 (two years into Pepsi’s current winning streak) he wrote of “companies which in spite of outstanding prospects of major further growth are so financially strong, with roots going so deep into the economic soil, that they qualify under the general classification of ‘institutional stocks’”. PepsiCo fits this description well…” (Click here to see the full text)

3. AbbVie Inc. (NYSE:ABBV)

Dividend Yield as of February 14: 3.94%

Number of Hedge Fund Holders: 80

AbbVie Inc. (NYSE:ABBV) is an American publicly traded pharmaceutical company founded in 2013. Originated as a spin-off of Abbott Laboratories, it is one of the world’s largest pharmaceutical companies, frequently ranking in the global top three by revenue. On February 16, AbbVie Inc. (NYSE:ABBV) declared a $1.48 per share quarterly dividend, the same as its prior dividend. The dividend is payable on May 15, to shareholders of record on April 14.

On February 10, SVB Securities analyst David Risinger upgraded AbbVie Inc. (NYSE:ABBV) to Market Perform from Underperform with a price target of $153, up from $135, following management’s issuance of 2024 minimum trough earnings-per-share guidance of $10.70. The analyst believes AbbVie should exceed its conservative 2023 guidance.

According to Insider Monkey’s Q3 data, 80 hedge funds were long AbbVie Inc. (NYSE:ABBV), compared to 71 funds in the earlier quarter. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital is a prominent stakeholder of the company, with 3.2 million shares worth $431.60 million.

Alger Capital made the following comment about AbbVie Inc. (NYSE:ABBV) in its Q4 2022 investor letter:

“AbbVie Inc. (NYSE:ABBV) is a global biopharmaceutical company that develops and markets drugs in areas such as immunology. virology and oncology. Recently, the company expanded through the acquisition of Allergan, which added robust growth assets to help offset the loss of U.S. patent protection for Humira, a leading treatment used for rheumatology, dermatology. gastroenterology, and ophthalmology. While AbbVie reported weak third quarter revenues across the board, the U.S. Food and Drug Administration (FDA) approved Vraylar (an antipsychotic treatment) in December. Despite concerns around Humira’s loss of patent protection, we believe AbbVie has significantly diversified its revenue and that its launch of Rinvog for psoriatic arthritis and atopic dermatitis could be promising.”

2. Johnson & Johnson (NYSE:JNJ)

Dividend Yield as of February 14: 2.84%

Number of Hedge Fund Holders: 85

Johnson & Johnson (NYSE:JNJ) is an American multinational corporation founded in 1886 that develops medical devices, pharmaceuticals, and consumer packaged goods. The company has been raising its payouts for the past 61 years consistently and currently pays a quarterly dividend of $1.13 per share. The stock’s dividend yield on February 14 came in at 2.84%.

Earlier this December, Citi analyst Joanne Wuensch raised her price target on Johnson & Johnson (NYSE:JNJ) to $205 from $198 and maintained a Buy rating on the shares. The analyst states that “many headwinds remain” for the North America medical supplies and technology group in 2023, but these should ease in the second half of next year, alleviating operating margin pressures. Thus, she is moving her focus on stocks “that will swim past the pandemic.” Johnson & Johnson (NYSE:JNJ) ranks among these stocks.

At the end of Q3 2022, 85 hedge funds in Insider Monkey’s database owned stakes in Johnson & Johnson (NYSE:JNJ), up from 83 in the previous quarter. The collective value of these stakes is over $5.4 billion. Among these hedge funds, Fisher Asset Management was the company’s leading stakeholder in Q3.

Here’s what Distillate Capital Partners LLC said about Johnson & Johnson (NYSE:JNJ) in its Q2 2022 investor letter:

“Johnson & Johnson was among the 2 largest trims at around 1% each. Each stock was up 1% in the quarter compared to the 16% price decline for the S&P 500 and the positions were reduced as the valuations became somewhat less appealing, though still attractive enough to warrant inclusion.”

1. UnitedHealth Group Incorporated (NYSE:UNH)

Dividend Yield as of February 14: 1.34%

Number of Hedge Fund Holders: 110

UnitedHealth Group Incorporated (NYSE:UNH) is an American multinational managed healthcare and insurance company based in Minnetonka, Minnesota. One of the best dividend stocks on our list, UnitedHealth Group Incorporated (NYSE:UNH) began paying annual dividends in 1990, and moved to a quarterly dividend in June 2010. Its current quarterly payment of $1.65 per share is nearly eight times the $0.2125 per share that it paid shareholders 10 years ago.

Deutsche Bank analyst George Hill raised the price target on UnitedHealth Group Incorporated (NYSE:UNH) to $617 from $615 and kept a Buy rating on the shares post the Q4 results. Although Hill recognizes uncertainties in Medicare and Medicaid on the policy front and in commercial due to the economic pressure, he believes that UnitedHealth is “prudent in the guidance and has multiple levers to pull to deliver upside.”

UnitedHealth Group Incorporated (NYSE:UNH) was one of the most popular stocks among hedge funds in Q3 2022, as 110 funds tracked by Insider Monkey had positions in the company, up from 91 in the previous quarter. These stakes are collectively valued at over $10.3 billion.

Stewart Asset Management mentioned UnitedHealth Group Incorporated (NYSE:UNH) in its Q3 2022 investor letter. Here is what the firm has to say:

“Looking at the Great Recession which began at year-end 2007 and lasted to mid-year 2009 is helpful too. Our four largest current holdings in the portfolio weathered that period well. UnitedHealth’s (NYSE:UNH) earnings were resilient. While it reported modestly down earnings in 2008, its earnings rebounded quickly to record highs in 2010 and the shares responded strongly in anticipation of this.”

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