Our Predictions for the Top 7 Dividend Stocks for 2023

In this article, I’ll give you my dividend stock predictions for 2023.  Because let’s be honest, most investors can’t say goodbye to 2022 fast enough.

Of course, just because the year changes doesn’t mean the market will change course. Inflation, recession, and the Federal Reserve remain on the minds of every investor. As a result, the most important word in 2023 may very well be “patience.”

Because of the need for patience next year, I’d encourage you to consider dividend stocks, which pay investors to wait for gains by stocks.

Dividends can be a reliable source of income for investors. For investors who are in the wealth preservation stage, the stocks’ payouts can supplement other sources of retirement income. And for investors who are looking for growth stocks, reinvesting dividends gives you the ability to increase your total return.

But in a volatile market like this, it’s important to choose high-quality stocks. Many of the dividend stocks on this list are part of the elite group of equities known as dividend aristocrats or dividend kings. Those terms refer to companies that have increased their dividend for 25 and 50 consecutive years, respectively. That makes their dividends about safe as you can get.

So let’s get to it. Here are seven top dividend stocks for 2023.

Chevron (CVX)

Chevron (NYSE:CVX) stock was one of the market’s biggest winners, logging a gain of over 50% in 2022.

It’s unlikely that the stock will deliver a similar return in 2023. If the economy tips into recession, as it seems likely to do, the demand for oil and the price of oil may drop. On the other hand, China’s reopening will be a positive catalyst for oil prices.

But Chevron will also be affected by another catalyst. Specifically, the demand for natural gas is growing, and that’s increasing the demand for and the price of liquefied natural gas (LNG). LNG can be shipped across the nation and to overseas markets like Europe.

Through its shipping arm, Chevron Shipping Company, CVX is a leader in transporting LNG around the world.

And Chevron is a dividend aristocrat, as it has increased its dividend for 35 consecutive years. CVX currently has a dividend yield of 3.16% and pays out $5.68 per share.

Citigroup (C)

Early predictions for 2023 suggest that investors should look at banks’ stocks because interest rates are rising, increasing banks’ net interest income.

On the other hand, many analysts expect a recession to materialize next year, and that development is likely to increase defaults on loans and lower the demand for loans

Those fears dragged on bank stocks in 2022. And Citigroup (NYSE:C) has been no exception, as C stock is down over 26% in 2022.

However, Citigroup is starting to look more appetizing. One reason is that C has less exposure to consumer lending than the other big banks.

And when you pair that lower risk profile with a valuation of just over six times its earnings and a dividend that currently yields 4.6%, you can see why Warren Buffett is investing in Citigroup.

But does that mean that C stock can rise in 2023? Analysts seem to think that it can. Their average price target on the shares is $58.03 which is 30% above the stock’s current level.

3M (MMM)

Multiple lawsuits have weighed heavily on 3M (NYSE:MMM) stock in 2022. In fact, MMM stock is trading at levels that investors haven’t seen since 2014.

So it might be easy to say that the worst is over for the shares. But the reality is that MMM stock may continue to struggle. And InvestorPlace contributors have widely different opinions on the name.

Bulls note that the stock is trading for less than 11 times its earnings, while the company should benefit from the current “onshoring” trade in the U.S.

Bears say that the company can’t get investors excited even with its low valuation and its status as a dividend king. Indeed, despite the company’s declining stock price, it has increased its dividend for 64 consecutive years and has a yield of 4.96%.

I’ll throw my hat in with the bulls because, despite the company’s legal issues, its earnings have remained remaining steady. And that leads me to believe that the shares are undervalued.

Coca-Cola (KO)

Coca-Cola (NYSE:KO) is up about 8% in 2022. But that doesn’t mean it’s been a smooth ride for the stock. KO stock was down 8% for the year as recently as October 2022. But since then, the shares have rocketed 18% higher.

That puts KO stock near its 52-week high.  But how will the shares fare in 2023?

One criticism of Coca-Cola is that it isn’t as diversified as its competitor, PepsiCo (NASDAQ:PEP). But Coca-Cola’s earnings show why it is a legitimate defensive stock.

With a profit margin of over 23%, investors know that Coke has pricing power. That means there’s little danger of the company’s earnings falling meaningfully anytime soon. That also means the company will probably continue to raise its dividend.

AbbVie (ABBV)

Is the worst over for AbbVie (NYSE:ABBV)? For much of 2022, investors have been focused on the fact that the company’s patent on Humira, its flagship rheumatoid arthritis drug, was going to expire.

Their concerns are legitimate. Humira was responsible for 36% of the company’s total revenue in the first half of the year. But two of its new drugs– Skyrizi and Rinvoq — are expected to compensate for the loss of much of Humira’s sales, as analysts, on average, expect those two drugs to deliver $15 billion of annual revenue by 2025.

That should take care of any concerns about the company’s earnings. And earnings growth is one of the key predictors of stock prices. That explains why ABBV stock has risen 21% in 2022.

Plus with AbbVie, investors get a newly minted dividend king. AbbVie has increased its dividend in each of the last 50 consecutive years. It currently pays out an impressive $5.64 per share annually. And it has an equally impressive dividend yield of 3.64%.

Archer-Daniels-Midland (ADM)

Archer-Daniels-Midland’s (NYSE:ADM) shareholders have had a great year, but the stock has been somewhat volatile. Concerns about the global food supply sent ADM stock to an all-time high in April after Russia’s invasion of Ukraine.

However, worries about a global recession pushed the stock lower. And it wasn’t until October that the shares reclaimed their April levels. That kind of price movement is odd for a low beta stock. But with the stock near its 52-week high, it may become more stable next year.

Moreover, investors will be looking to own defensive stocks in 2023, and ADM stock fits that description very well.  Sadly, the war in Ukraine is likely to continue to disrupt the global food supply. That means that Archer-Daniels-Midland’s earnings will continue to rise at a time when many analysts are predicting that an earnings recession could materialize.

And the company is on the cusp of becoming a dividend king as it has increased its dividend for the last 49 years. ADM has a dividend yield of 1.67%.

Deere & Co. (DE)

Similar to Archer-Daniels-Midland, John Deere (NYSE:DE) stock soared early in 2022 on concerns about the global food supply.

But as attention turned to earnings, DE stock dropped as its bottom line fell even as its revenue continued to climb. However, in its most recent reported quarter, its bottom line resumed growing year-over-year. And that has pushed DE stock back to its all-time high. Moreover, the stock has recently consolidated into a bullish pattern that suggests a sharp move higher may be in the cards.

Nobody will ever confuse DE stock with a tech stock, but the company is a leader in autonomous farming equipment. The practical applications of that equipment make DE an intriguing choice as one of my dividend stock predictions in 2023.

On the date of publication, Chris Markoch had LONG positions in CVX and MMM. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.