In this article, we take a look at 12 top performing dividend stocks in January 2023.
January has been a pretty good month for the S&P 500 as the index is up around 5% year to date as of January 30.
One reason for the good performance could be better than expected economic data.
In terms of the United States, U.S. GDP expanded by a 2.9% annualized pace in Q4 2022, slightly better than expected.
In terms of the world, the IMF said on January 30 it expected the global economy to expand 2.9% in 2023, or a 0.2 percentage point increase from the agency’s previous forecast in October. For those of you interested, check out Countries by GDP: 30 Largest Economies in the World.
In terms of inflation, it seems to have cooled from its previous 2022 highs given the rise in interest rates by the U.S. Federal Reserve and other central banks.
While the S&P 500 has done well this month, some dividend stocks have done even better with some of the top performing dividend stocks rising more than 13% year to date.
In terms of the stocks that have done really well in January, there could be various reasons for their out performance.
Some of the top performing dividend stocks in January 2023 are companies that have for various reasons fallen substantially in the past. With the change in market sentiment, their share prices have increased.
Other stocks like Citigroup Inc. (NYSE:C) are arguably value stocks that are likely trading below what it is worth in the long term if macroeconomic conditions normalize. In Citigroup Inc. (NYSE:C)’s case, it is trading for substantially below price to book value.
While the market is currently optimistic that interest rates might not rise as much as previously expected, the Federal Reserve and economic data will ultimately make that decision. If economic data doesn’t meet estimates or the Federal Reserve raises rates further than expected, the market and top performing dividend stocks could both decline. As a result, it could be a good idea for long term investors to own a well diversified portfolio of leading stocks across many different sectors.
Methodology
For our list of 12 Top Performing Dividend Stocks in January 2023, we selected stocks with a market capitalization of over $10 billion that had dividend yields of over 1% as of 1/30 according to Finviz.com.
We then filtered the stocks to ensure they exceeded the S&P 500’s January performance of 5% by a wide margin.
12 Top Performing Dividend Stocks in January 2023
12. Prologis, Inc. (NYSE:PLD)
Year to Date Performance as of 1/30: 13.36%
Dividend Yield as of 1/30: 2.47%
Number of Hedge Fund Holders: 59
Prologis, Inc. (NYSE:PLD) is an industrial REIT that declined around 16% in the last year given the rise in interest rates. Not only is the cost of new debt higher with higher interest rates, but also REIT dividend yields are less attractive if Treasury yields are higher. With inflation showing signs of potentially peaking, however, some investors have rotated back into leading REITs like Prologis, Inc. (NYSE:PLD) in January in anticipation of an eventual renormalization of interest rates. When interest rates will normalize is up for debate as many think it could be at least several years.
Alongside InterContinental Hotels Group PLC (NYSE:IHG), Capital One Financial Corporation (NYSE:COF), and Blackstone Inc. (NYSE:BX), Prologis, Inc. (NYSE:PLD) is a top performing dividend stock in January 2023.
11. Ventas, Inc. (NYSE:VTR)
Year to Date Performance as of 1/30: 13.83%
Dividend Yield as of 1/30: 3.51%
Number of Hedge Fund Holders: 24
Ventas, Inc. (NYSE:VTR) is a healthcare REIT that is close to flat in terms of its performance in the last year. Like many other REITs, Ventas, Inc. (NYSE:VTR) shares weakened in middle to late 2022 given the Federal Reserve’s interest rate increases which made REIT dividend yields less attractive, all else equal. In recent months, however, Ventas, Inc. (NYSE:VTR) shares have bounced back with the REIT up nearly 14% in January as of 1/30 as many leading sector names have also done well.
10. Citigroup Inc. (NYSE:C)
Year to Date Performance as of 1/30: 14.42%
Dividend Yield as of 1/30: 3.94%
Number of Hedge Fund Holders: 85
Citigroup Inc. (NYSE:C) is one of the big four American banks that’s trading for substantially below its book value. According to the bank, Citigroup Inc. (NYSE:C) ended 2022 with tangible book value per share of $81.65 and book value per share of $94.06. Over the course of 2022, Citigroup Inc. (NYSE:C) returned $7 billion back to shareholders through dividends and buybacks, which given the stock’s current market capitalization of around $100 billion indicates a capital return of around 7%. Although the bank might not trade for its book value any time soon, Citigroup Inc. (NYSE:C) stock could potentially narrow the gap between its stock price and its book value in the long term given share repurchases and if it increases its earnings.
9. State Street Corporation (NYSE:STT)
Year to Date Performance as of 1/30: 16.22%
Dividend Yield as of 1/30: 2.80%
Number of Hedge Fund Holders: 38
State Street Corporation (NYSE:STT) is a leading asset management company whose stock has more than doubled from 2012. Although shares are down around 2.5% in the last year, State Street Corporation (NYSE:STT) stock has rallied 16.22% in January as of 1/30 as capital has rotated back into many leading financial names. State Street Corporation (NYSE:STT) also has a dividend yield of 2.80% which is pretty decent combined with the company’s long term growth potential if it maintains its market share.
8. KKR & Co. Inc. (NYSE:KKR)
Year to Date Performance as of 1/30: 17.26%
Dividend Yield as of 1/30: 1.14%
Number of Hedge Fund Holders: 59
KKR & Co. Inc. (NYSE:KKR) is a leading asset management firm whose stock has surged 17.26% year to date as of 1/30, ranking #8 on our list of 12 Top Performing Dividend Stocks in January 2023. Capital could be rotating back into leading alternative asset managers in anticipation that the peak interest rates might not be as high as previously expected given the cooling inflation data. If interest rates don’t rise as much as expected, KKR & Co. Inc. (NYSE:KKR)’s earnings power could potentially increase with less cost of debt to finance purchases or new growth projects.
7. The Carlyle Group Inc. (NASDAQ:CG)
Year to Date Performance as of 1/30: 17.83%
Dividend Yield as of 1/30: 3.48%
Number of Hedge Fund Holders: 30
The Carlyle Group Inc. (NASDAQ:CG) is another leading asset management firm whose stock has done well in January. As of 1/30, The Carlyle Group Inc. (NASDAQ:CG) shares have increased by 17.83%, around the same as its peer, KKR & Co. Inc. (NYSE:KKR). If the economy doesn’t weaken as much as expected, The Carlyle Group Inc. (NASDAQ:CG)’s AUM could potentially increase faster than expected and its earnings power could be stronger than expected as well.
6. eBay Inc. (NASDAQ:EBAY)
Year to Date Performance as of 1/30: 17.89%
Dividend Yield as of 1/30: 1.80%
Number of Hedge Fund Holders: 42
Although it isn’t anywhere the size of its once peer Amazon.com, Inc. (NASDAQ:AMZN), internet retailer eBay Inc. (NASDAQ:EBAY)’s stock has surged by nearly 18% in January as other leading tech stocks have also rebounded thanks to improved sentiment. In the long term, eBay Inc. (NASDAQ:EBAY)’s stock has still more than doubled from its 2013 levels. Unlike some other leading tech names, eBay Inc. (NASDAQ:EBAY) also has a pretty decent dividend yield of 1.80% as of 1/30. At the end of Q3, 42 hedge funds in our database of 920 funds held shares in eBay Inc. (NASDAQ:EBAY).
Like eBay Inc. (NASDAQ:EBAY), InterContinental Hotels Group PLC (NYSE:IHG), Capital One Financial Corporation (NYSE:COF), and Blackstone Inc. (NYSE:BX) are top performing dividend stocks in January.
5. ASML Holding N.V. (NASDAQ:ASML)
Year to Date Performance as of 1/30: 19.02%
Dividend Yield as of 1/30: 1.25%
Number of Hedge Fund Holders: 51
Leading semiconductor equipment maker ASML Holding N.V. (NASDAQ:ASML) ranks #5 on our list of 12 Top Performing Dividend Stocks in January 2023 as its shares have soared over 19% in January as of 1/30 as capital has rotated back into many big tech names. If interest rates don’t rise that much further, leading big tech names could be more attractive as a sector as higher interest rates won’t weigh on the current value of big tech’s future profits as much. How far interest rates will rise will depend on the Federal Reserve and economic data rather than what the market currently expects, however.
Baron Opportunity Fund commented on ASML Holding N.V. (NASDAQ:ASML) in a Q2 2022 investor letter,
ASML Holding N.V. designs and manufactures semiconductor production equipment. It specializes in photolithography equipment, where light sources are used to photo-reactively create patterns on wafers that become printed circuits. ASML is the dominant leader across all types of lithography but, most importantly, is the only company selling equipment for extreme ultra-violet (EUV) lithography, the latest generation technology.
Indeed, because of the stalling out of Moore’s Law, advanced lithography of larger and multi-patterned silicon chips has been critical for leading-edge chip manufacturing and continued improvement in semiconductor chip performance over time. The company is well positioned to continue growing above industry rates as it rapidly adds capacity across its entire business to meet rising industry demand, especially from leading-edge customers continuing to invest to stay ahead of their competitors and drive chip performance forward.
Additionally, the introduction of high-NA EUV technology in the middle of the decade will add another leg to the growth opportunity.
4. QUALCOMM Incorporated (NASDAQ:QCOM)
Year to Date Performance as of 1/30: 19.73%
Dividend Yield as of 1/30: 2.28%
Number of Hedge Fund Holders: 80
QUALCOMM Incorporated (NASDAQ:QCOM) is another leading semiconductor company that has done well in January with shares rising almost 20% as of 1/30. In addition to the strong performance, QUALCOMM Incorporated (NASDAQ:QCOM) also has a dividend yield of 2.28%. Despite the rally, shares of QUALCOMM Incorporated (NASDAQ:QCOM) are still down around 20% in the last year given the sector and company headwinds. 80 hedge funds in our database owned shares of QUALCOMM Incorporated (NASDAQ:QCOM) at the end of Q3.
3. InterContinental Hotels Group PLC (NYSE:IHG)
Year to Date Performance as of 1/30: 20.98%
Dividend Yield as of 1/30: 1.84%
Number of Hedge Fund Holders: 9
InterContinental Hotels Group PLC (NYSE:IHG) is a leading hotel operator with a dividend yield of around 1.84% whose stock is up nearly 21% in January as of 1/30. If global growth is stronger than expected, travel demand could be stronger than expected. If there is more travel, demand for InterContinental Hotels Group PLC (NYSE:IHG)’s rooms could also be strong. How strong global growth eventually is will depend on economic factors however and not current market estimates of the future.
2. Capital One Financial Corporation (NYSE:COF)
Year to Date Performance as of 1/30: 23.71%
Dividend Yield as of 1/30: 2.09%
Number of Hedge Fund Holders: 52
Capital One Financial Corporation (NYSE:COF) is a leading financial services firm whose stock has rallied 23.71% in January as of 1/30 as capital has rotated back into many leading financial stocks. While its fourth quarter earnings per share for 2022 were weaker year over year than Q4 2021, the change in market sentiment to more bullish has really helped the stock, which also has a dividend yield of 2.09% as of 1/30. 52 hedge funds in our database owned shares of Capital One Financial Corporation (NYSE:COF) at the end of the third quarter.
1. Blackstone Inc. (NYSE:BX)
Year to Date Performance as of 1/30: 27.91%
Dividend Yield as of 1/30: 5.21%
Number of Hedge Fund Holders: 61
Blackstone Inc. (NYSE:BX) ranks #1 on our list of 12 Top Performing Dividend Stocks in January 2023 given its surge of nearly 27.91% in January as of 1/30. If interest rates don’t rise too much further and the economy doesn’t weaken as much as expected, Blackstone Inc. (NYSE:BX)’s real estate business could be stronger than expected and the company’s AUM growth could exceed estimates. As of 1/30, Blackstone Inc. (NYSE:BX) also has a dividend yield of 5.21% which is pretty attractive in the long term if the company grows earnings in the long term.
Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily enewsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below. You can also take a look at U.S. States’ GDP Compared to Countries and 25 Biggest New York Companies and Stocks.
Follow Insider Monkey on Twitter
Suggested articles:
- 15 Most Innovative Countries in the World
- 15 Most Valuable Silicon Valley Companies in the World
- 25 Highest Paid Athletes of All Time
Disclosure: None. 12 Top Performing Dividend Stocks in January 2023 is originally published on Insider Monkey.
