15 Best Dividend Stocks to Buy Now

You can still bank at least a 3% yield with these income stocks.

The stock market is off to a good start this year. There are some signs of life, particularly in the industries that were hardest hit in 2022. That said, plenty of economic uncertainty remains. The Federal Reserve has more work left to go in its ongoing fight against inflation. Meanwhile, geopolitical concerns continue to present meaningful risk to the markets. A potential standoff over the government’s debt ceiling is also approaching. With these concerning factors, investors are looking for quality dividend stocks to provide income regardless of where the market goes in the near term. These 15 dividend stocks have improving prospects for 2023 despite the current economic jitters, and they all yield at least 3%.

BP PLC (ticker: BP)

BP is one of Europe’s large integrated energy companies. The firm has been a leading player in the oil and gas industry dating back to the early 1900s. In recent years, BP has been one of quickest movers in transitioning its business model toward more low-carbon energy generation sources. However, management seems to be having some doubts on that front. A recent Wall Street Journal report noted that BP plans to trim its green energy investments. Investors may appreciate that move, as it will allow the company to return more cash to current shareholders. That, in turn, is good news for dividend investors. BP just announced a 10% increase to its dividend and is also buying back mountains of stock right now. In addition, BP shares are going for just six times forward earnings, making shares a value buy.

Dividend yield: 3.8%

Verizon Communications Inc. (VZ)

Verizon is one of the three primary U.S. wireless carriers. Income investors have long counted on telecom companies to offer stable, reliable performance. But both Verizon and AT&T Inc. (T) have disappointed investors in recent years. AT&T cut its dividend after its unsuccessful Time Warner acquisition bid. More broadly, the telecom industry has seen its growth taper off following a burst in demand during the pandemic. Meanwhile, operating costs remain elevated, thanks to pricey 5G rollouts and expensive purchases of wireless spectrum. Sentiment may be too negative at this point, however. Phone service is still an essential good that people will keep paying for even during an economic downturn. Meanwhile, Verizon shares sell for about 8.5 times forward earnings while offering a great yield.

Dividend yield: 6.4%

Toronto-Dominion Bank (TD)

Toronto-Dominion Bank is one of Canada’s largest banks. It has extensive operations in both retail and investment banking, along with a significant franchise in the U.S. Canadian banks have historically outperformed most other developed countries’ banks due to the limited competition and favorable regulatory environment in that country. Despite the industry’s long-term performance, Canadian banking shares fell out of favor in 2022. This came amid fears of a housing market slump. Bears have been predicting a major Canadian housing bust for the past 15 years now. One of these years, they may be right, but generally investors have been well served to stick the course with the Canadian banks. And TD, in particular, benefits from its broad diversification across geography and business lines.

Dividend yield: 4.1%

International Business Machines Corp. (IBM)

For many years, IBM didn’t look like one of the best dividend stocks to buy. After all, newer software and cloud companies were soaring, while IBM appeared to be left behind. The tides turned in 2022. IBM managed to deliver a positive total return last year, even as most tech stocks sold off sharply. What explains the change in sentiment? For one thing, after years of declining revenues, IBM has returned to growth. The firm’s bold Red Hat acquisition has given life to its cloud business. At the same time, investors are now focusing on companies with strong profitability and cash flow generation, instead of prioritizing future growth. While IBM is not growing too quickly, it checks the right boxes for investors focused more on current profitability. The stock has some upside if IBM can keep nibbling at the market shares of bigger cloud computing providers.

Dividend yield: 4.9%

Citigroup Inc. (C)

Citigroup is one of America’s largest banks, with operations spanning investment banking, retail operations and an extensive international footprint. The company has had its share of problems over the years, including operational blunders and some strategic missteps. Arguably, investors have overly punished Citigroup for this poor reputation. Shares are trading for about 7.6 times forward earnings while selling for just 55% of book value. Citigroup should enjoy rising profitability thanks to the sharp increase in interest rates, which is a tailwind for its retail banking operations. In addition, Warren Buffett’s Berkshire Hathaway Inc. (BRK.A, BRK.B) invested heavily in Citigroup shares in 2022. Given Buffett’s great reputation with banking stocks, other investors might want to follow his lead.

Dividend yield: 4%

U.S. Bancorp (USB)

U.S. Bancorp is another of America’s large banks that has a particular focus on retail consumer banking. Historically, that has been an advantage and has given U.S. Bancorp higher-than-average profitability metrics. However, U.S. Bancorp has underperformed over the past decade. Its retail focused banking didn’t fare as well in the recent zero interest-rate environment. With interest rates surging now, however, U.S. Bancorp should enjoy a much more favorable outlook going forward. That’s especially true as it just closed its acquisition of Union Bank, which it bought from Mitsubishi UFJ Financial Group Inc. (MUFG) in December. This expands the bank’s footprint across the attractive West Coast market. This growing branch network combined with rising margins on lending should drive outperformance going forward.

Dividend yield: 3.9%

Amgen Inc. (AMGN)

Amgen is a large biotech company with an extensive array of Food and Drug Administration-approved drugs. The company has focused on treatments relating to cancer, inflammatory issues and renal disease, among other conditions. Amgen has started to run into headwinds with some of its leading products approaching the end of their patent protection period, but the company has addressed this by bringing in new products via acquisitions. Its Onyx Pharmaceuticals purchase added to Amgen’s oncology lineup, while the planned Horizon Therapeutics PLC (HZNP) deal should bolster its position in products for the immune system. Amgen shares have pulled back from more than $290 in November to close at $240.20 on Feb. 8. With this decline, shares are now going for just 12.3 times forward earnings while offering a solid dividend.

Dividend yield: 3.5%

Digital Realty Trust Inc. (DLR)

Digital Realty Trust is a real estate investment trust, or REIT, focused on data centers and communications equipment. Over the years, Digital Realty has enjoyed tremendous growth as companies have had exponentially more data to store. The company faces some risk, as some large tech firms have built their own data centers rather than outsourcing to a third-party owner like Digital Realty. That, plus the surge in interest rates, have investors being more nervous toward Digital Realty and other data center owners. However, that is arguably more than priced into Digital Realty shares now, as the stock has pulled back by roughly a third from its all-time high. At this price, the company offers a solid yield and should enjoy a rebound in share price as sentiment picks back up for data centers.

Dividend yield: 4.3%

AvalonBay Communities Inc. (AVB)

AvalonBay Communities is a REIT focused on apartment buildings. The company operates more than 82,000 units and has another 5,000 in its development pipeline. AvalonBay has concentrated on high-quality markets such as New York, Washington D.C. and California. While rent prices can fluctuate widely from place to place, AvalonBay’s focus on markets with high incomes should lead to more operational stability. AvalonBay’s revenues surged in recent years as rents increased dramatically in many markets. Despite that, AVB stock sold off significantly over the past year as investors fretted over rising interest rates and a slumping housing market. Those are valid concerns, but rent prices aren’t unlikely to dip too much, particularly as demographics continue to suggest that the country has a shortage of housing units in numerous markets.

Dividend yield: 3.5%

Realty Income Corp. (O)

Realty Income has made a name for itself with dividend investors. The company smartly labeled itself “The Monthly Dividend Company” and has increased its dividend every year for more than 25 years in a row. That not only makes the company a smart buy, but it also proves its stability within the sometimes volatile world of commercial real estate. This stability comes because Realty Income is a triple net lease operator, meaning that its tenants pay for key expenses such as utilities. Particularly with the surge in inflation as of late, this contractual protection puts Realty Income on firmer ground. Investors may be nervous amid higher interest rates and a potential slowdown in the demand for retail real estate. But given Realty Income’s strong track record, investors should give it the benefit of the doubt.

Dividend yield: 4.4%

Tyson Foods Inc. (TSN)

Tyson Foods is a consumer staples company that produces meat products. That made for a tough 2022. The price of proteins went up considerably amid last year’s inflationary commodity market conditions. Meanwhile, as Tyson primarily is a low-margin commodity meat seller, rather than having higher value-added branded goods, it wasn’t able to fully pass along these higher prices to consumers. Amid slumping profit margins, Tyson’s stock price sank. However, these cycles in the meat industry are common and pass with time. Tyson’s profitability should recover as the economy stabilizes. While earnings are expected to be down sharply in 2023, Tyson is trading at just 9 times forward earnings. In addition to the dividend, Tyson shares also offer considerable value on a share price basis. Morningstar’s Erin Lash sees fair value at $106 per share, versus the stock’s closing price of just $59.98 on Feb. 8.

Dividend yield: 3.1%

Stanley Black & Decker Inc. (SWK)

Stanley Black & Decker is a leading maker of power tools, outdoor machinery and industrial fasteners. The company enjoyed unprecedented prosperity in 2020 and 2021, as people renovated their homes and improved their gardens during the pandemic. Demand has fallen sharply since then. Power tools are durable goods, meaning that once people purchase equipment, they tend to be set for awhile. As such, Stanley Black & Decker faces a considerable lag before earnings return to normal. Over the longer term, however, profits should normalize, as home repair and maintenance tends to be a reliable category of goods. Stanley Black & Decker typically earned an average of about $6.50 per share in the years prior to 2020. Put a modest price-earnings ratio of 17 on Stanley Black & Decker’s normal earnings, and that gets to a $110.50 stock price, a far cry from its closing price of $87.77 on Feb. 8.

Dividend yield: 3.7%

Clorox Co. (CLX)

Like Stanley Black & Decker, Clorox had a unique experience over the past couple of years. In 2020, Clorox saw a tremendous surge in sales. Folks stocked up on cleaning supplies for their pantries, while businesses focused on keeping surfaces clean to fight the spread of the pandemic. By mid-2021, however, people were done with their cleaning spree and Clorox sales fell. Throw in supply chain issues and surging costs of raw materials and by 2022, Clorox saw earnings drop to far below where they were prior to the onset of the pandemic. Thankfully, Clorox is turning a corner. The company recently beat earnings and raised its forward guidance. Analysts now expect Clorox to return to its peak sales level in 2024. As the company picks up steam, shares should rally. Today, they still sell for about what they did in 2019.

Dividend yield: 3.1%

Kimberly-Clark Corp. (KMB)

Kimberly-Clark is another consumer products company that got caught up in the recent economic disruption. The company saw sales of toilet paper and other essential personal care products rise in 2020 and then peter out in 2021. Throw in rising wood pulp costs, among other inflationary factors, and Kimberly-Clark’s profit surge quickly abated. However, the company shouldn’t have issues over the long term. Toiletries are in consistent demand regardless of economic factors. And Kimberly-Clark should see a long-term growth driver in its incontinence products as the population gets older. In the short term, Kimberly-Clark’s operations are back on the upswing, with recent quarterly results topping expectations for both revenues and profits. The worst of the inflation squeeze seems to have passed, Kimberly-Clark’s operations are now trending in the right direction.

Dividend yield: 3.6%

Grupo Aeroportuario del Pacífico SAB de CV (PAC)

Pacific Airport Group, as the name translates, is a Mexican airport operator. It holds concessions for 12 airports in Mexico and two in Jamaica. Concessions for the Mexican airports run through 2048 and include automatic inflation adjustments. Key concessions include the large city of Guadalajara, the industrial hub of Tijuana and various tourist destinations, including Puerto Vallarta and Cabos. The company initially saw tourist traffic surge in 2021, as Mexico had a more lenient COVID-19 travel policy than most other regional destinations. While analysts expect tourist traffic growth to slow down, Pacifico is now benefiting from reshoring and the surge in Mexican manufacturing activity. To that point, Pacifico reported 33% year-over-year traffic growth for January 2023. The company has a variable dividend policy and pays out the vast majority of its free cash flow generation as dividends in any given year.

Dividend yield: 4%

15 best dividend stocks to buy now:

— BP PLC (BP)

— Verizon Communications Inc. (VZ)

— Toronto-Dominion Bank (TD)

— International Business Machines Corp. (IBM)

— Citigroup Inc. (C)

— U.S. Bancorp (USB)

— Amgen Inc. (AMGN)

— Digital Realty Trust Inc. (DLR)

— AvalonBay Communities Inc. (AVB)

— Realty Income Corp. (O)