7 Dynamite Dividend Stocks for Income and Growth in 2023

Many long-term investors appreciate dividend stocks, for many reasons. Companies that pay back a portion of their profits to their shareholders via dividends are generally more reliable. Additionally, dividend stocks provide investors looking for income in retirement with a steady stream of passive income.

Generally, dividends are typically issued by well-established, financially stable companies that are often household names. And the most dependable dividend stocks have long histories of distributing capital to their shareholders. That’s what many such investors focus on.

With the market showing consistent improvement, dividend stocks are likely to provide growth and income in 2023. Investors can choose to reinvest their dividends back into a given stock, or can choose to receive the dividend payments as cash, which can provide a steady stream of income.

Dividend-yielding companies tend to be financially healthy and stable over the long term. They tend to be wise investments anytime, especially in an upward-trending market.

Philip Morris (PM) 

Philip Morris (NYSE:PM) is a leading tobacco company known for the biggest cigarette brands. However, because Philip Morris operates in a highly-regulated industry and faces declining smoking rates, many investors could easily ignore it.

That said, the company is pivoting into an evolving tobacco industry with a strategy that looks to give it a significant advantage over its competitors. That positioning and its substantial dividend make PM stock very potent.

Let’s start with Philip Morris’ dividend. It yields around 5%, which is quite high. This dividend is also relatively stable, having last been reduced in 2008. In 2022, shareholders received $5.04 in dividend payments for each share of PM stock owned. Analysts expect PM stock to increase to $111 in the next 12-18 months, and it currently trades around $100 per share. So, there’s roughly a 15% upside baked into the stock, if analyst estimates are to be believed.

Philip Morris is relying on growth from its smokeless tobacco brands, which have been profitable, while competitors rely more heavily on cigarettes for revenues even as smoking rates continue to decline.

Eli Lilly (LLY) 

Investors should seriously consider Eli Lilly (NYSE:LLY) stock. The company develops and sells medications in various therapeutic areas, including diabetes, oncology, and immunology. Currently, its diabetes drug, Mounjaro, has investors excited.

Overall, Eli Lilly appeals to investors seeking exposure to the pharmaceutical industry and a steady source of income. Those considering Eli Lilly note that this company is a highly-profitable, fast-growing, dependable dividend stock with a potent catalyst for future growth in Mounjaro.

Eli Lilly boasts exceptionally high profitability metrics within a drug manufacturing industry known for increased profitability. Its gross, operating, and net margins exceed the 90th percentile of industry competitors. Further, the firm’s cost of capital is 3.5%, while it returns 21.55% on that capital.

LLY stock provides a modest forward dividend yield around 1.4%. However, this distribution was last reduced in 1986, so it’s dependable. Lastly, Eli Lilly is seeking FDA approval to market the diabetes drug Mounjaro for weight loss. Sales of Mounjaro recently fell short of expectations, but the company still exceeded expectations and could take off when and if Mounjaro receives FDA approval.

Chevron (CVX) 

Chevron (NYSE:CVX) is an American multinational energy corporation that has seen a very strong 2022. The company is among the world’s largest producers of oil and natural gas. Although Chevron had a strong 2022, challenges related to the volatility of commodity prices and environmental concerns make it somewhat volatile. But its dividend balances those concerns as a source of income. With its current lower price, Chevron looks like a buy.

The energy sector was the strongest performer in 2022. Oil majors, including Chevron, Shell (NYSE:SHEL), and Exxon Mobil (NYSE:XOM) profited more than $132 billion in 2022, returning $78 billion through buybacks and dividends. But investors have shied away from CVX, which has seen its stock price drop considerably of late. Concerns over environmental issues and an unclear situation in Ukraine are likely factors.

That said, 2022 showed that oil demand will likely remain robust for a long time. That gives Chevron a potent catalyst moving forward as it continues to provide revenue for shareholders.

Broadcom (AVGO) 

Broadcom (NASDAQ:AVGO) stock is a strong choice for investors seeking semiconductor exposure and dividends. The company designs, develop and sells semiconductor and infrastructure software solutions. Its software is used across multiple industries, including telecommunications, data centers, and enterprise software.

Broadcom offers investors growth and income. Currently, AVGO shares currently trade for $575 and carry an average target price of $665. AVGO’s dividend yielded 3.1% at last count, totaling $16.90 in dividends per share last year. Assuming Broadcom continues to pay $4.60 quarterly for all of 2023, it’ll reward investors with $18.40 of dividends in 2023. So, Broadcom’s value could grow to $683.40 per share, which equates to 14.86% growth.

The company will re-release earnings on Mar. 2 after a strong 2022 in which revenues grew 21% to $33.2 billion. Broadcom’s net income growth was even more robust in 2022, growing by 70.65% and reaching $11.495 billion.

Raytheon (RTX) 

Raytheon (NYSE:RTX) stock represents a multinational aerospace and defense company that sells systems and services to commercial, military, and government customers worldwide. Its products include missile defense systems, radar, and communication systems.

Raytheon has paid a dividend for several decades. However, it was reduced in 2021, so investors seeking rock-solid increases should beware. In any case, it provides reliable, if fluctuating, income to long-term investors.

The company has strong growth prospects, including high demand for weapons orders tied to the Ukraine conflict. Additionally, with other geopolitical pressures coming out of China and other regions, there’s plenty to like about the company’s long-term prospects. Although revenues related to the war in Ukraine have been substantial, supply chain issues have hampered deliveries. That suggests Raytheon could move higher if and when those issues are sorted.

Raytheon expects between $72 to $73 billion in sales for fiscal 2023. That would represent between 7.3% and 8.8% top-line growth over its 2022 results. Indeed, I think these numbers should entice investors as this growth rate would significantly outpace the company’s 4% growth seen between 2021 and 2022.

Visa (V) 

Visa (NYSE:V) is a multinational financial services corporation providing payment processing and digital payment solutions for individuals and businesses globally. The company is most notable for offering credit and debit cards but also provides payment gateway and risk management services.

Visa shares include a dividend, yielding very modest 0.8%. So, it won’t provide substantial income or dividends that allow for any sort of significant share repurchases upon reinvestment. That said, the company’s dividend is highly-dependable, having last been reduced in 2008, and growing 17.4% over the last five years. In any case, Visa’s pricing upside is most attractive.

The company’s Q1 revenue grew by 12%, with cross-border travel as a bright spot. Payments volume remained stable. Cross-border volume increased by 22%, suggesting that travel remains strong even as overall economic concerns remain substantial. Visa returned $4 billion to shareholders during the period as well.

Mondelez (MDLZ) 

Last on this list of dividend stocks to buy is Mondelez (NASDAQ:MDLZ). This diversified consumer goods stock has impressive upside, a solid dividend, and ended 2022 on a strong note. Those factors should interest investors in the snack company that sells Oreos, Wheat Thins, Chips Ahoy!, and BelVita.

Firstly, MDLZ stock has roughly a $10 upside above its current $66 price, according to analyst. This is among the dividend stocks I think is worth buying, despite its modest 2.3% yield. That’s because Mondelez has grown its revenue by 12.3% over the last five years. The math suggests plenty of appreciation for investors willing to buy now.

Additionally, Mondelez’s performance leading into 2023 only strengthens that notion. Revenues increased 9.7% overall in 2022 and grew an even faster 13.5% rate in Q4.

Mondelez’s organic revenue growth reached 12.3% in 2022 and 15.4% in Q4. Its core brands are performing well and should bolster investor confidence in MDLZ as an investment.

On the date of publication, Alex Sirois 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.