dividend stocks 2023

10 Dividend Stocks to Consider with Your 2023 Tax Refund

What to do with your tax refund? One option is to invest. Here are 10 dividend stocks to consider in 2023.

Americans will soon receive their tax refunds from the Internal Revenue Service (IRS). In 2022, the average tax refund was $2,201. The value may be higher in 2023. But what should you do with your tax refund? The top option is probably reducing debt. You can also build an emergency fund. Another popular option is to invest the money in stocks or ETFs. With around $2,000, a person can invest a reasonable amount in a few stocks, assuming no brokerage fees.

Here are 10 dividend stocks to consider buying with your 2023 tax refund.

1. Keurig Dr. Pepper

keurig dr. pepper
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Keurig Dr. Pepper (KDP) is the first dividend stock to buy with your tax refund in 2023. It is known for its market leadership in K-Cup coffee pods and Keurig brewers. It also sells sodas, water, energy drinks, etc. The leading brands are Dr. Pepper, Snapple, Bai, Mott’s, and many more. The company is a market leader and growing its dividend.

2. International Business Machines

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International Business Machines (IBM) is a company known to most investors. The company struggled for a few years with declining revenue. A new CEO, the Red Hat acquisition, and the spin-off of Kyndryl have refocused the firm on the hybrid cloud. IBM is yielding 5%+ and has a 100-year dividend payment streak.

3. Johnson & Johnson

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Johnson & Johnson (JNJ) is one of the largest global healthcare companies. It sells medical devices, consumer health products, and therapies. The company is known for its AAA-rated balance sheet. JNJ is slimming down by spinning off its Consumer Health business into a new company. In addition, JNJ has increased the dividend for 61 years, making the stock a Dividend King.

4. Microsoft

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Microsoft (MSFT) is a diversified technology conglomerate. It sells productivity software, gaming systems, cloud services, developer tools, server tools, databases, etc. This diversified revenue stream provides a degree of recession resistance. In addition, Microsoft returns cash to shareholders through stock buybacks and a growing dividend with an A+ dividend quality grade.

5. T. Rowe Price

T. Rowe Price
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T. Rowe Price (TROW) is is fifth dividend stock to consider buying in 2023. It is probably less well-known than other stocks on this list. But it manages ~$1.4 trillion in assets through its many mutual funds. The bear market is affecting the results. However, the firm is a Dividend Aristocrat known to use debt sparingly. The forward dividend yield is about 4.2%.

6. Hormel

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Hormel (HRL) is known to most Americans. It sells pork, turkey, bacon, cold cuts, and many branded products like SPAM and Planters. Unfortunately, high inflation has increased input costs and affected what stressed consumers are buying. As a result, Hormel’s sales and profits have been impacted. But Hormel is a Dividend King, and the yield is near a decade high.

7. Verizon Communications

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Verizon Communications (VZ) is one of the three market leaders in cellular communications. It also provides broadband retail and business services. The company has faced challenges making the transition to 5G. This has caused the dividend yield to reach nearly 7% but is supported by a moderate payout ratio. Income investors may be interested in this stock. Verizon is also one of the 10 biggest dividend payers in 2022.

8. Chevron

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Chevron (CVX) is the eighth dividend stock to think about buying in 2023. It is an American oil and natural gas giant with worldwide operations. The company explores, transports, and stores oil and natural gas. Additionally, it refines oil into petrochemical products. High oil and gasoline prices are driving Chevron’s sales and earnings. The company stock is yielding ~3.6%, and the dividend has been increased 36 years.

9. Union Pacific

Union Pacific
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Union Pacific (UNP) is one of the primary railroads in the United States. It transports grain, fertilizers, food, oil, chemicals, cars, etc., throughout the country. Railroads are struggling with higher expenses and labor shortages. But Union Pacific should do well over time because of its extensive rail network. The stock is yielding ~2.5% with solid dividend safety.

10. Costco Wholesale

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Costco Wholesale (COST) operates its warehouse format globally, selling branded and private-label groceries, clothing, hardware, appliances, furniture, electronics, etc. The firm is known for its low prices. In addition, Costco pays a growing regular and periodic special dividend. It is rarely undervalued, but investors may want to look at this stock.

Bottom Line

The list of 10 dividend stocks to buy with your tax refund in 2023 contains options in different sectors and industries. Many companies increase their dividend rate annually. Hence, dividend stocks can grow passive income streams over time.

Disclosure: Long KDP, IBM, MSFT, TROW, HRL, VZ, COST

Disclaimer: The author is not a licensed or registered investment adviser or broker/dealer. He is not providing you with individual investment advice. Please consult with a licensed investment professional before you invest your money.

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Prakash Kolli is the founder of the Dividend Power site. He is a self-taught investor, analyst, and writer on dividend growth stocks and financial independence. His writings can be found on Seeking Alpha, InvestorPlace, Business Insider, Nasdaq, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, and leading financial sites. In addition, he is part of the Portfolio Insight and Sure Dividend teams. He was recently in the top 1.0% and 100 (73 out of over 13,450) financial bloggers, as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha.

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