Dividend payments are important to investors—especially with stock prices softening in the face of high interest rates. Many shareholders depend on the cash they get from dividend stocks for both income and just general portfolio buoyancy amid ongoing uncertainty.
Above-average dividends communicate that companies are committed to returning excess cash to shareholders. Many dividend hunting investors also seek companies that have a record of consistently increasing their dividend payouts. Companies that cut their dividends, such as Paramount Global (NASDAQ:PARA) and Icahn Enterprises (NASDAQ:IEP), often see their stocks tank as a result.
So if you’re looking for dividend stocks that are signaling health (and future payouts), look to companies that have raised their dividend payments in recent months. With that in mind, here are three top dividend stocks to buy in Q4 2023.
JPMorgan Chase (JPM)
JPMorgan Chase (NYSE:JPM) recently raised its quarterly dividend by 5% to $1.05 per share. JPMorgan, the largest lender in the world with $3 trillion of assets under management, said the new dividend is payable on Oct. 31 to shareholders of record at the close of business on Oct. 6.
The dividend increase was announced after the bank successfully completed the U.S. Federal Reserve’s latest stress test, ensuring that it is well capitalized and able to withstand any financial pressures that arise in the market.
Executives at JPMorgan have said that they intend to continue prioritizing the bank’s dividend payment and continue raising it going forward. JPMorgan now pays a quarterly dividend that yields nearly 3%. Additionally, JPM stock looks affordable right now, trading at just nine times future earnings, which is well below the average price-to-earnings (P/E) ratio in the S&P 500. Bank stocks are down right now, but can be expected to rise once interest rates peak. JPM stock has gained 7.5% so far in 2023.
British Petroleum (BP)
With crude oil prices back above $90 a barrel, now is a good time to consider energy stocks. And British Petroleum (NYSE:BP) is a solid choice. In August, BP hiked its quarterly dividend payment by 10% even as the oil major reported a 70% year-over-year decline in its second-quarter profit. Despite the earnings downturn, BP announced that it’s raising its quarterly dividend payout to 44 cents a share, giving it a yield of nearly 5%.
The oil major also said that it plans to repurchase $1.5 billion of its own stock in Q3. While the first half of this year was difficult due to slumping oil prices, BP is coming off an exceptionally strong year in 2022 when it reported a record annual profit of $27.7 billion as the price of crude oil peaked at $122 a barrel. Looking ahead, BP’s profits and free cash flow should improve now that crude prices are once again rising. This could lead to further dividend increases and stock buybacks. BP stock is up 9.5% year to date.
Starbucks (SBUX)
Another blue-chip name that recently hiked its quarterly dividend is retail coffee-chain Starbucks (NASDAQ:SBUX). The Seattle-based company known for its lattes and cappuccinos lifted its payout to shareholders by 7.5% following a strong earnings print for Q2. Starbucks said that, going forward, it will pay stockholders 57 cents a share, up from 53 cents previously. The latest dividend increase marks the 13th consecutive year that Starbucks has raised its payout.
Starbucks new dividend is payable on Nov. 24 of this year to shareholders of record on Nov. 10. The dividend increase comes after the company reported better-than-expected Q2 results and announced that its operating margin during Q2 expanded to 17.3% from 15.9% a year ago, driven by improvements in productivity and higher menu prices. The dividend boost also comes amid a management change. Howard Schultz, who ran Starbucks multiple times over the last 40 years, recently retired. Laxman Narasimhan is Starbucks’s new CEO.
SBUX stock is down 11% on the year. The company’s dividend now yields 2.55%.
On the date of publication, Joel Baglole 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.
