best dividend stocks 2023

3 Best Buy and Hold Dividend Stocks for 2023

Competition has heated more than ever in almost every sector. As a result, it has become challenging to identify the best buy-and-hold dividend stocks in 2023. However, some companies have a strong business model in place, and thus they enjoy a meaningful business moat. In addition, they have proved resilient to recessions. 

In this article, we will discuss the prospects of three blue chip stocks with these characteristics, namely Johnson & Johnson (JNJ), Realty Income (O), and Magellan Midstream Partners (MMP). These stocks have outstanding dividend growth records and are attractively valued right now. To quote Peter Lynch,

“A successful stock picker has the same relationship with a drop in the market as a Minnesotan has with freezing weather. You know it’s coming, and you’re ready to ride it out, and when your favorite stocks go down with the rest, you jump at the chance to buy more.”

best dividend stocks 2023
3 Best Buy and Hold Dividend Stocks for 2023

3 Best Buy and Hold Dividend Stocks for 2023


The Sure Dividend Newsletter for high-quality dividend growth stocks.

  • The monthly newsletter includes stock analyses, portfolio ideas, dividend risk scores, real money portfolio, etc.
  • Risk free 7-day free trial and $41 off only through Dividend Power for $158 per year.
  • Sure Dividend Coupon Code – DP41

Click here to try the Sure Dividend Newsletter (7-day free trial).

Johnson & Johnson

Johnson & Johnson is a diversified pharmaceutical giant. It was founded in 1886 and is well known for its consumer products, but the pharmaceutical segment is the most important one. The company generates 49% of its sales from its pharmaceutical segment, 34% from medical devices, and 17% from its popular consumer products. Management has announced that it will spin off the segment of consumer products, the latest in 2024.

Johnson & Johnson has 28 brands/pharmaceutical platforms that generate more than $1 billion in annual revenues. The company has a dominant market position, generating approximately 70% of its revenues from the No. 1 or No. 2 market share position. Thanks to its dominant position, Johnson & Johnson has proved resilient to the headwind from the surge of inflation to a 40-year high. It has been able to offset high-cost inflation with material price hikes, and thus, it is on track to report record earnings per share for 2022.

JNJ 2021 Fact Sheet
Source: Johnson & Johnson Investor Relations

Moreover, Johnson & Johnson is the fifth-largest company in the U.S. and the eighth-largest company in the world in the amount spent on Research & Development (R&D). Thanks to its exceptional R&D department, the company has exhibited an impressive performance record. For example, it grew its adjusted operating earnings per share for 36 consecutive years until 2020, when the coronavirus crisis caused a minor 7% decrease in its earnings per share. Moreover, Johnson & Johnson has recovered from the pandemic, with record earnings per share in 2021 and 2022.

Portfolio Insight - Earnings per Share JNJ
Source: Portfolio Insight*

Dividend Analysis

Johnson & Johnson has grown its dividend for 60 consecutive years thanks to its robust business model. It thus belongs to the best-of-breed group of Dividend Kings. The stock is currently offering a 2.6% dividend yield, which is lackluster on the surface. However, the company has grown its dividend by 6% per year on average over the last decade and the previous five years. Moreover, given the healthy payout ratio of 45%, the rock-solid balance sheet of Johnson & Johnson, and its proven resilience to recessions, investors should rest assured that the dividend will continue rising meaningfully for many more years.

Related Articles About Johnson & Johnson on Dividend Power

Realty Income

Realty Income is a retail REIT that has become famous for its exceptional dividend growth history. The trust owns more than 4,000 retail properties.

Other retail REITs are facing great pressure due to the secular shift of consumers from brick-and-mortar shopping to online purchases, but this is not the case for Realty Income, which continues to thrive. The REIT owns retail properties that are not part of a wider retail development, such as a mall but are standalone. As a result, its properties can attract several types of tenants; hence, the REIT is essentially immune to the secular decline of traditional retailers.

Realty Income Overview
Source: Realty Income Investor Relations

Realty Income has exemplary management which has great expertise in identifying high-return properties. The strength of the net lease business model of Realty Income and the quality of its management are clearly reflected in the exceptional performance record of the REIT. The trust has grown its FFO per unit yearly over the last decade at a 6.4% average annual rate. It has achieved such a consistent growth record thanks to the acquisition of high-return properties and reliable rent hikes using triple net leases year after year.

Even better, there is little sign of fatigue in the future. Instead, Realty Income has accelerated its performance lately thanks to massive acquisitions of new properties, including the purchase of VEREIT. As a result, the trust is poised to report 9% growth in its FFO per unit for 2022, to a new all-time high of about $3.90.

Dividend Analysis

Realty Income has achieved an exceptional dividend growth record thanks to its robust business performance. To be sure, the company has grown its dividend for 100 consecutive quarters, and is a Dividend Aristocrat and Dividend Champion. In the Great Recession, many REITs incurred a plunge in their FFO per unit and cut their dividends, but Realty Income proved resilient throughout that crisis.

Realty Income currently offers a nearly 10-year high dividend yield of 4.7%. The payout ratio stands at 76%, which may seem high to some investors. However, this payout ratio lies at the lower end of the 10-year range of the REIT. Given the reliable growth trajectory of Realty Income, investors can lock in a nearly 10-year high dividend yield and rest assured that the dividend will keep growing for many more years. Consequently, Realty Income is our second pick for best dividend stocks for 2023.

Portfolio Insight - Dividend Growth O
Source: Portfolio Insight*

Related Articles About Realty Income on Dividend Power


Subscribe to one of the Sure Dividend newsletters. They analyze 850+ income securities every quarter to find the best income securities for members. This is real research, not a quick computer screen.

  • The Sure Dividend Newsletter focuses on investing in high-quality dividend growth stocks with a focus on expected total returns. It is Sure Dividend’s flagship newsletter.
  • The Sure Retirement Newsletter focuses on investing in high yielding stocks, REITs, and MLPs. All recommendations must have a dividend yield of at least 4%.
  • The Sure Passive Income Newsletter focuses on investing in high-quality dividend growth stocks with a buy and hold forever approach.

Dividend Power readers can use the Sure Dividend coupon code DP41 for $41 off any newsletter, reducing your price from $199/year to just $158/year (7-day free trial). 

Magellan Midstream Partners

Magellan Midstream Partners has the longest pipeline system of refined products in the U.S. It has a pipeline network connected to nearly half of the total U.S. refining capacity. The transportation and storage of refined products generate approximately 65% of the total operating income of the MLP, while the transportation and storage of crude oil generate the remaining 35% of the operating income.

Most oil companies are highly cyclical due to the wide swings in the price of oil, and thus they are not suitable for dividend growth investors. However, while Magellan Midstream Partners is not immune to the cycles of the oil industry, it has proved to be one of the most resilient companies in the sector thanks to its defensive business model.

MMP Pipeline Infrastructure
Source: Magellan Midstream Partners Investor Relations

Growth and Resilience

The MLP charges its customers a fee proportional to the volumes transported and stored throughout its network. Even better, it has minimum-volume requirements in its contracts with its customers. In other words, if its customers transport and store lower volumes than usual, they still must pay high fees to Magellan Midstream Partners.

The resilience of Magellan Midstream Partners was evident in the turbulent downturn caused by the pandemic in 2020. Due to the unprecedented lockdowns imposed in response to the pandemic, most oil majors and all the refiners incurred excessive losses that year. On the contrary, Magellan Midstream Partners reported a benign 18% decrease in its distributable cash flow per unit in 2020.

Moreover, Magellan Midstream Partners enjoys strong tailwinds in its business. Thanks to the sanctions imposed by the U.S. and Europe on Russia for its invasion of Ukraine and the deep production cuts of OPEC, the U.S. is the only major oil producer in the world that can replace most of the lost barrels. As a result, U.S. oil production has recovered to pre-pandemic levels and will likely remain on the rise in the upcoming years. This means that higher volumes of oil and refined products will be transported and stored through the network of Magellan Midstream Partners.

Dividend Analysis

Because of the high cyclicality of the oil industry, it is extremely hard for oil companies to maintain a multi-year dividend growth record. Magellan Midstream Partners is a shining exception thanks to its defensive business model. It raised its distribution for 70 consecutive quarters at a 12% average annual rate until the second quarter of 2020, when the firm froze it due to the coronavirus crisis. Then, the MLP froze its distribution for seven consecutive quarters and resumed raising it at the end of 2021, thanks to its business recovery. Overall, Magellan Midstream Partners has grown its distribution for 22 straight years at a 10% average annual rate, making the stock a Dividend Contender.

The stock is currently offering a distribution yield of 8.3%. Given its reasonable payout ratio of 81%, resilient business model, and positive business momentum, the MLP is likely to continue raising its distribution for many more years, albeit at a somewhat low rate. It is also worth noting that the stock is trading at a nearly 10-year low price-to-cash flow ratio of 9.6. Overall, investors who purchase the stock around its current price are likely to be highly rewarded in the long run.

Portfolio Insight - Dividend Yield History MMP
Source: Portfolio Insight*

Balance Sheet

It is also important to note that Magellan Midstream Partners is one of the highest-quality MLPs in the investing universe, thanks to some key characteristics. Most MLPs have weak balance sheets, post poor free cash flows due to excessive capital expenses, and regularly dilute their unit holders. They also tend to have payout ratios near or above 100%.

Magellan Midstream Partners has a strong balance sheet and has posted positive free cash flows for over ten consecutive years. In addition, the MLP has a healthy payout ratio and does not dilute its unitholders. In fact, since the onset of the pandemic, the stock has become markedly cheap, and thus management has begun repurchasing units at a meaningful pace. All these characteristics confirm the quality of management, which invests only in high-return projects.

Final Thoughts

Most investors had gotten used to a rising stock market, so they have been caught off-guard in the ongoing bear market. In addition, the surge of inflation to a 40-year high has caused panic in the investing community, as it has reduced the valuation levels of most stocks while eroding the real value of the investor’s portfolios. As a result, the above three stocks offer a safe haven in the current bear market. While stock price volatility cannot be excluded, these stocks are likely to reward investors highly with a long-term perspective. We view them as the three best buy-and-hold dividend stocks in 2023.

Disclosure: Members of the Sure Dividend Team are long JNJ, R, and MMP.

You can also read 3 Recession Proof Stocks with Low Volatility by the same authors.

Related Articles on Dividend Power

Here are my recommendations:


  • Simply Investing Report & Analysis Platform or the Course can teach you how to invest in stocks. Try it free for 14 days. 
  • Sure Dividend Newsletter is an excellent resource for DIY dividend growth investors and retirees. Try it free for 7 days.
  • Stock Rover is the leading investment research platform with all the fundamental metrics, screens, and analysis tools you need. Try it free for 14 days.
  • Portfolio Insight is the newest and most complete portfolio management tool with built-in stock screeners. Try it free for 14 days.

Receive a free e-book, “Become a Better Investor: 5 Fundamental Metrics to Know!” Join thousands of other readers !

*This post contains affiliate links meaning that I earn a commission for any purchases that you make at the Affiliates website through these links. This will not incur additional costs for you. Please read my disclosure for more information.

Aristofanis Papadatos
Website | + posts

Aristofanis Papadatos applies fundamental and technical analysis and mainly use options as a tool for both investing and trading. He writes extensively on Seeking Alpha and is also a member of the Sure Dividend team. He is the author of two mathematics books ("Arithmetic calculations without a calculator" and "Word Problems").

Leave a Reply

Your email address will not be published. Required fields are marked *