Next year isn’t very far away. In less than two months, we’ll be ringing in the New Year and making resolutions. Many of those resolutions will revolve around making better investment decisions. And looking for dividend stocks to buy is a great decision because many of these stocks are set to surge higher in 2023.

Dividends are cash paid to the owners of stock. Companies that pay dividends tend to be mature. That means their days of rapid growth are often behind them. To some, that makes them less desirable than riskier growth stocks.

But what dividend stocks lack in growth is balanced by the respectable, reliable returns that they tend to generate. Indeed, the dividends they pay quickly add up when these payments are used to buy more of their shares. In short, the value of dividend stocks can quickly compound with the right mindset.

Next year could end up being better or worse than 2022. But in any case, there’s a good chance that dividend stocks will surge higher. Here are seven top-notch dividend stocks to buy.

Church & Dwight (CHD)
Church & Dwight’s (NYSE:CHD) brand has been around since 1846. It’s very fair to call it a mature business. That business centers around the company’s flagship brand, Arm & Hammer baking soda. The company has expanded its product line to include personal care brands that utilize Arm & Hammer baking soda as well as other personal care brands that don’t incorporate the baking soda. Today Church & Dwight has 14 “Power Brands,” 13 of which have been added by the company since 2003.

This year has been tough for stocks overall, and CHD stock hasn’t been spared, falling more than 20%. So why should investors expect 2023 to be any better? Well, for one, Church & Dwight continues to grow modestly. Its Q3 sales increased 0.4% year-over-year, although its earnings per share did fall 5% YOY. That trend of growing sales but lower EPS should continue into 2023.

If a recession occurs, as many expect, Church & Dwight will be in a reasonably strong position because only 10% of its sales are generated from products that are considered to be discretionary.

That means that the remaining 90% of its revenues should remain stable no matter what happens to the .economy

CHD stock is trading about $6 below analysts’ average price target on the shares. When paired with its dividend, that makes it a compelling choice.

Expeditors International of Washington (EXPD)
Expeditors International of Washington (NASDAQ:EXPD) stock hasn’t suffered quite as much as the overall stock market in 2022. EXPD has fallen roughly 15% this year, while the S&P 500 has declined about 18% in the same period. Next year could be a lot better than 2022 for Expeditors International of Washington because it is an air, ocean, and ground freight-services company.

Industry experts suggest that the supply chains should normalize in 2023. Such a trend would likely boost EXPD’s sales. That isn’t to say the company isn’t currently growing. It is. In 2022, the company saw its revenues increase 22% through the first three quarters.

Therefore, Expeditors International of Washington looks like a company that has already hit its stride and also has the benefit of being in a resurgent industry. It hasn’t reduced its dividend since 1996. That dividend yields a modest 1.2% currently, but the firm’s payout ratio of 0.13 should enable it to raise its dividend a great deal down the road.

Brown & Brown (BRO)
Brown & Brown (NYSE:BRO) is in the very boring, but profitable, insurance industry. It has reported very strong results results in 2022 . And there’s a very strong possibility that it will do equally well in 2023.

Brown & Brown’s revenues have increased by 15.5% in the first three quarters of 2022 and 20.55% year-over-year last quarter. The demand for the company’s products and services is clearly strong. Those growing revenues have enabled its net income to climb 8.45% in the first three quarter of 2022. In short, Brown & Brown is doing well.

Yet BRO stock is still over 17% below analysts’ average price target on it. That’s partly because the company’s earnings were slightly lower than anticipated. But Brown & Brown has grown its revenues at an average of 14.6% over the last three years. And its top line is likely to keep growing in any event.

Brown & Brown should fare well if there’s a recession in 2023 as the demand for insurance tends to be fairly resilient during economic downturns.

Albemarle (ALB)
Albemarle (NYSE:ALB) stock is a picks-and-shovels company that is benefiting from the rapid transformation of the automotive market. And because of that, Albemarle should continue to do well into 2023 and beyond.

Albemarle is a North Carolina-based chemicals firm that is focused on lithium, bromine, and catalysts that are used to manufacture electric-vehicle batteries. So it’s similar to the people who supplied gold seekers with picks and shovels during the 19th century.

All indications are that the demand for lithium will continue to grow. In fact, the lithium market is expected to double by 2030 as the mass adoption of EVs may already be upon us.

Right now is probably a good time to pick up the shares of ALB since the stock has tumbled this year. But don’t be fooled; Albemarle’s business is strong as its Q3 sales soared 152% YOY.

The company is also favored by the government as Washington seeks to shore up the production of critical resources. The Energy Department just awarded the firm $150 million a month ago. ALB will use those funds to build lithium concentrators.

West Pharmaceutical Services (WST)
West Pharmaceutical Services (NYSE:WST) stock has a chance to rebound early in 2023, according to its CEO, even though it reported weaker-than-expected Q3 results. Last quarter, its revenue declined 2.8% as the demand for the firm’s more expensive products fell.

As a result, WST reduced its full-year guidance by roughly $130 million to a range between $2.83 billion and $2.84 billion.

WST believes that the issue will be short lived and expects it to be resolved in early 2023.

West Pharmaceutical Services is a highly profitable firm within the highly profitable pharmaceutical industry. Its margin and return metrics are within the top 10%-15% of its industry, and its average revenue growth of 17.7% over the last year is near the top 25% of the sector.

Realty Income (O)
Realty Income (NYSE:O) stock is a real estate investment trust (REIT). The company leases real estate to many types of retailers. The law stipulates that REITs must pay 90% or more of their taxable income to investors in the form of dividends. And O stock’s dividend yields 4.6%.

The other interesting thing to note about Realty Income is that the company pays that dividend monthly, while the majority of firms pay their dividends quarterly or annually.

The company just announced its 100th consecutive quarterly dividend increase in conjunction with its latest earnings report. The firm’s business is reliable, and it leases over 11,700 properties in the U.S., the U.K., and Spain.

The company paid $219.6 million of dividends last quarter and maintains $2.5 billion of liquidity. Even if the retail sector suffers in 2023, O stock will do well because the REIT relies on lease revenue which is unlikely to decline because retailers have to pay their rent first.

Enterprise Product Partners (EPD)
Enterprise Product Partners (NYSE:EPD) stock has a very high dividend yield of 7.7%. In general, stocks with very high dividend yields tend to be risky.

But Enterprise Product Partners operates a business that carries relatively little risk. It manages a pipelines, storage terminals, processing plants, and shipping terminals. In other words, it is a midstream company. Midstream companies tend to be backed by long-term contracts and generally benefit from predictable cash flows as a result.

The midstream sector is likely to remain strong into 2023 as energy prices are expected to remain high through 2023. That should result in EPD being able to charge higher prices. Meanwhile, the shares are trading nearly 30% below analysts’ average price target on the name.

So, even though the firm’s high-yield dividend makes it appear risky, most other information seems to indicate that its medium-term outlook remains very strong.

— Alex Sirois

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Source: Investor Place