I won't pretend that this year has been a good one for my investment portfolio. Most of the stocks I own have performed poorly. Some of them have been especially huge losers. I have a long-term mindset, though, so the temporary pain doesn't worry me.
Having said that, I've had a few stocks deliver impressive returns. Here are my three best stocks of 2022 -- and why I think they'll win again in 2023.
1. Devon Energy
Devon Energy (DVN -0.67%) would be in a close second place for me if I only looked at share price gains this year. However, the oil stock easily takes the No. 1 spot based on total returns. Counting dividends, Devon has generated a year-to-date total return of more than 50%, with only a few days remaining in 2022.
That total return looked even better earlier this year. However, declining crude oil prices caused Devon's share price to fall. They also caused the company to reduce the variable portion of its dividend.
I think that Devon will deliver solid total returns again in the new year. One reason behind my optimism is that the U.S. Energy Information Administration projects that crude oil prices will average $92 per barrel in 2023. While this is lower than the agency's previous forecast, it's still higher than the current price.
Devon's dividend yield tops 8.8%, even with the recent cut to the variable component. Its share price doesn't have to climb much to provide a double-digit percentage total return. I expect Devon will easily clear this hurdle.
2. Vertex Pharmaceutical
Vertex Pharmaceuticals (VRTX -1.55%) ranks as my second-best stock of 2022. Shares of the big biotech have soared more than 40% year to date while the overall stock market sank.
I've liked Vertex for a long time because of its monopoly in treating the underlying cause of cystic fibrosis (CF). This market dominance in CF has enabled the company to amass a large cash stockpile while making several smart acquisitions and licensing deals along the way.
My hunch is that one of those deals will help the biotech stock continue its momentum in 2023. Vertex and CRISPR Therapeutics appear to be in a good position to win U.S. and European Union approvals for exa-cel in treating sickle cell disease and beta-thalassemia next year.
But exa-cel isn't the only pipeline candidate to watch with Vertex. The company also hopes to win approvals for non-opioid pain drug VX-548 in the not-too-distant future. With more late-stage programs in addition to these two, I think that Vertex is a stock that will keep flying high even if a recession is on the way.
3. Bristol Myers Squibb
Several pharmaceutical stocks in my portfolio have performed well this year. Bristol Myers Squibb (BMY -8.41%) especially stands out with a share price gain of around 20% and an even higher total return thanks to its steady dividends.
There are multiple factors behind BMS' solid returns in 2022. For example, the company picked up several key regulatory approvals, including U.S. approval for Sotyktu in treating plaque psoriasis and EU approval for Opdualag in treating melanoma. It also delivered better-than-expected earnings quarter after quarter.
But can BMS keep up its winning ways next year? I think so. To be sure, the company faces some challenges with the loss of exclusivity for several key products on the way. However, it also has a robust pipeline and a strong lineup of new products featuring three that could generate peak annual sales of more than $4 billion each.
I also expect that income investors will continue to be attracted to BMS' dividend. The drugmaker's dividend yield stands at nearly 3%. BMS recently increased its dividend for the 14th consecutive year and has paid a dividend for 91 years in a row.
