3 Unbeatable Dividend Stocks to Buy in February


Will the stock market rise or fall in 2023? Income investors can win both ways. Anytime is a good time to buy solid dividend stocks.

We asked three Motley Fool contributors to identify irresistible dividend stocks to buy in February. Here’s why they chose it Abbott Laboratories (Abt -0.41%), AbbVie (ABBV 0.25%)And Johnson & Johnson (JNJ -0.56%).

Even a bad year in 2022 can’t stop Abbott’s dividend growth

David Zagielski (Abbott Laboratories): One dividend stock that should be attractive to long-term investors is Abbott Laboratories. The company’s versatility and broad range of businesses make it a strong dividend investment. Abbott’s recent quarterly results are a good example of that.

For the period ending December 31, 2022, the healthcare company’s quarterly net sales totaled $10 billion and were down 12%. And that was accompanied by some significant declines in COVID-19 testing as diagnostic revenue was down 26% from the year-ago period, while nutrition revenue fell 11%. But better performance in Abbott’s medical-device and pharmaceutical segments helped offset some of those weak numbers.

Abbott’s earnings per share (EPS) fell 47% year over year to $0.59. But when one-time items are factored in, the company’s adjusted per-share profit was $1.03, suggesting that Abbott’s recent financials have had plenty of noise. Despite production disruptions impacting its infant formula sales, recall-related costs, restructuring charges and other non-recurring expenses, the company is still coming off a profitable quarter. The great thing for dividend investors is that despite such odds, Abbott can still post a strong profit margin of over 10%.

Confident about finances, the company raised its quarterly dividend by 8.5% last year. That means Abbott has now raised its dividend for 51 years. While its yield may seem overwhelming at just 1.9% for long-term investors, it’s likely payouts will continue to grow in the coming years.

Last year was a brutal one for Abbott, and yet the company’s full-year EPS was still far higher than the annual dividend it’s now paying ($3.91 vs. $2.04) per share. The pay ratio of the company is relatively low. With a strong and diversified business, Abbott invests an overwhelming amount of money to buy and hold for the long term.

Five decades of dividend growth and counting

Prosper Junior Bikini (AbbVie): In October, pharmaceutical giant AbbVie announced a 5% dividend hike that will kick in in the first quarter of this year, pushing its dividend yield above 4%. And so, AbbVie enters the 51st year of its dividend growth streak that includes its time as a division of the aforementioned company — Abbott. This stellar record makes AbbVie a dividend king. Investors have every reason to think its future could look like its past.

AbbVie markets a long list of drugs in various therapeutic areas. The company consistently generates revenue and earnings for its lineup. With a rich pipeline that boasts dozens of products, AbbVie regularly adds brand-new products or acquires label extensions for existing products.

It is true that the company is now facing the impact of losing exclusivity to its long-time best-selling product, the rheumatoid arthritis medicine Humira. But AbbVie has planned ahead and finally seems to be able to put this problem in the rearview mirror.

The company’s other immunology products, Skyrizi and Rinvoc, will help smooth losses from biosimilar competition with Humira in its Botox franchise, migraine treatment Culipta, and cancer drug Venclaxta. And although AbbVie expects short-term revenue declines, growth will pick up once its business adjusts.

In the meantime, AbbVie will likely continue to reward shareholders with dividend increases. Since becoming a standalone company in 2013, the company has prioritized paying dividends, increasing its payout by 270% since then. AbbVie won’t risk losing its status as the dividend king. That’s why AbbVie remains a top pick for dividend investors to buy this month and beyond.

Add another king to your hand

Keith Speights (Johnson & Johnson): Like Abbott and AbbVie, Johnson & Johnson belongs to an elite group of stocks known as the Dividend Kings. The healthcare giant has increased its dividend for an impressive 60 years.

After the beating S&P 500 Last year, Johnson & Johnson got off to a relatively poor start in 2023. The company’s shares fell nearly 6% in late January despite reporting better-than-expected fourth-quarter results.

I think, though, that J&J has what it takes to rebound in the near term. Year-over-year comparisons should become less problematic over time as sales of the company’s COVID-19 vaccine decline. Johnson & Johnson’s business could also be helped by lower inflation.

The biggest milestone to look forward to this year, however, is the upcoming spin-off of J&J’s consumer health unit. The demerger will leave the company with its fast-growing pharmaceutical and medtech businesses.

In the long term, I expect Johnson & Johnson to continue to be what it has been for decades — a reliable winner. Look for the company to continue its dividend growth streak for years to come.


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