The 7 Best Income Stocks to Buy in January

Following a volatile year, investors may want to consider the best income stocks to buy in Jan. As the name suggests, these publicly traded securities offer regular passive income payouts with dividends (typically on a quarterly basis). Fundamentally, this financial category enables market participants to have their money work for them rather than the other way around.

In addition, unlike risk-on growth-oriented enterprises, the price action for shares of passive income providers tends to be more resilient to fluctuations. Of course, this framework prevents truly outstanding upside potential. But in an ecosystem that might turn deflationary because of frequent interest rate hikes, stability commands a premium. With so many variables to account for the in the post-pandemic new normal, it’s wise to own established enterprises. Below are the best income stocks to buy in Jan.

Fastenal (FAST)

Fastenal (NASDAQ:FAST) provides fasteners such as screws, threaded rods and nuts typically used in construction and manufacturing applications. As well, the company offers various services, including inventory management. Admittedly boring, Fastenal benefits from an established business, providing seemingly mundane equipment for various industrial needs. Thus, it makes an ideal play for best income stocks to buy.

Currently, Fastenal enjoys solid financials across the board. For instance, the company’s Altman Z-Score hits 15.23, reflecting extremely low bankruptcy risk over the next two years. As well, its equity-to-asset ratio stands at 0.68 times, well above the sector median of 0.46 times. Operationally, Fastenal’s three-year revenue growth rate (on a per-share basis) pings at 6.4%, above nearly 62% of its rivals. More impressively, the company’s net margin is 15.7%, ranked better than 96% of sector players.

Finally, Fastenal carries a forward yield of 2.86%. Combined with its 24 years of consecutive dividend increases, FAST represents one of the best income stocks to buy.

Johnson & Johnson (JNJ)

Healthcare and consumer products stalwart Johnson & Johnson (NYSE:JNJ) needs no introduction. Though it courted various controversies over the past few years, the brand carries tremendous global recognition. Further, during these difficult times, investors may view JNJ as a reliable canvas. Therefore, it’s worth consideration as one of the best income stocks to buy this month.

Mainly, Johnson & Johnson enjoys solid all-around financials. On the balance sheet, the company’s Altman Z-Score of 4.78 reflects a business enterprise safe from bankruptcy risk. But JNJ really comes alive in the bottom line. From gross to operating to net margins, each of these metrics rank among the industry’s top echelon. Moreover, the healthcare giant’s return on equity (ROE) of 25.9% reflects superior capacity to convert equity financing into profits.

Notably, Wall Street analysts rate JNJ as a consensus moderate buy. Their average price target also implies potential upside of over 12%. Finally, JNJ carries a forward yield of 2.68%, higher than the healthcare sector’s average yield of 1.58%.

Cisco (CSCO)

A multinational technology conglomerate, Cisco (NASDAQ:CSCO) is another powerful name that needs no introduction. Undergirding the communication and security networks of some of the biggest enterprises in the world, Cisco represents a mature business. In that sense, it’s an ideal candidate for best income stocks to buy. It’s entrenched in high-barrier-to-competition arena, allowing it to focus on its shareholders.

That’s exactly what Cisco does. At the moment, the company carries a forward yield of 3.25%, conspicuously above the technology sector’s average yield of 1.37%. Notably, its payout ratio sits at 39.79%, which is fairly low. This metric provides confidence that the company can continue offering passive income to stakeholders without a glitch. As well, it enjoys 12 years of consecutive dividend increases.

Fiscally, Cisco benefits from a stable balance sheet (strong cash-to-debt ratio) and excellent profitability margins. Moreover, bargain hunters will appreciate that the market prices CSCO at 13.2-times forward earnings. In contrast, the sector median is 15.1 times.

Texas Instruments (TXN)

On the riskier side of the spectrum regarding best income stocks to buy, Texas Instruments (NASDAQ:TXN) designs and manufactures semiconductors and various integrated circuits. Of course, because of the global supply chain crisis imposing severe disruption to the tech space, TXN incurred slow price action following the culmination of its post-pandemic bull rally.

Still, for the adventurous type, TXN might be worth a look for best income stocks to buy. Primarily, the company provides decent passive income with a forward yield of 2.87%. As well, it commands 19 years of consecutive annual dividend increases, a status management won’t give up too cheaply. And while the payout ratio of 57.69% is elevated, it’s not to the point of raising serious sustainability concerns.

Financially, investors have a lot to love about Texas Instruments. First, its Altman Z-Score hits 13.33, reflecting extremely low bankruptcy risk. On the bottom line, the company enjoys outstanding profitability metrics, along with a stratospheric ROE.

United Parcel Service (UPS)

On surface level, United Parcel Service (NYSE:UPS) represents a significant risk. While shares did lose nearly 12% of equity value in the trailing year, that’s just part of the anxieties. Perhaps most notably, UPS faces competition from certain e-commerce firms. As well, when you’re dealing with courier services, you must factor in consumer sentiment. Well, this stat stinks, to put it bluntly.

So, why mention UPS as one of the best income stocks to buy? When you consider the company objectively, it’s difficult to ignore the holistic value proposition. First, it features a decent balance sheet with an Altman Z-Score rating up in the safe zone. Operationally, the company’s three-year revenue growth rate (per share) stands at 10.3%, well above the sector median of 1%. And it also enjoys a solid 11% net margin.

In terms of passive income, UPS offers a forward yield of 3.41%, well above the industrials sector’s average yield of 2.36%. As well, it features a decently reliable payout ratio of 48.53%.

Robert Half (RHI)

With the last two entries for best income stocks to buy, we’re going to dial up the risk-reward profile, beginning with employment services agency Robert Half (NYSE:RHI). Before anyone gets any strange ideas, RHI presents significant risks. In the trailing year, shares stumbled over 28%. However, in the year so far, Robert Half gained over 6% of equity value.

Fundamentally, it’s possible that RHI may benefit (cynically, I might add) from mass layoffs. While the baseline unemployment rate may be low relative to the devastation of the coronavirus pandemic, many companies axed their high-paying jobs. Therefore, if broader economic challenges persist, more folks may take up Robert Half’s employment services.

While waiting for this narrative to pan out, investors may enjoy its passive income. Currently, the company carries a forward yield of 2.2%. Also, it features a low payout ratio of 28.84%, suggesting that you can depend on this income source.

T. Rowe Price (TROW)

Based on outside fundamentals, T. Rowe Price (NASDAQ:TROW) arguably represents the riskiest of best income stocks to buy. As a global investment management firm, T. Rowe does well when the markets do well. Unfortunately, that’s not substantively the case at this juncture, hurting the enterprise. In the trailing year, TROW lost over 26% of equity value.

Still, some hope endures for T. Rowe. In the year so far, TROW gained 8%. Some of this upside may be due to the underlying company’s relevance. Essentially, T. Rowe hires some of the brightest (and certified) financial advisors in the game. If anybody can navigate the uncertainties of this market environment, it would be these folks.

For those that are interested, T. Rowe also offers the highest payout on this list of best income stocks to buy. Currently, its forward yield stands at 4.07%. As well, the company enjoys 37 years of consecutive annual dividend increases.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.