As 2022 winds to a close, the stock market is on track to have its worst year since 2008. But focusing too much on calendar-year performance sidesteps the brutal drawdowns that investors have experienced in recent years. Wild market swings and sector rotations have taught investors some tough lessons. The good news is that by now, you probably have a clearer idea of what kind of investor you want to be -- in terms of risk tolerance and allocation.

Conservative investment strategies tend to underperform bull markets. But they also result in lower volatility and can help you sleep better at night. Union Pacific (UNP -0.15%), American Electric Power (AEP -0.21%), and Honeywell (HON 0.45%) are three industry-leading companies that investors can count on to outlast a prolonged bear market. Here's why each dividend stock is set up for 2023 and beyond. 

A train passes through a snowy mountain valley.

Image source: Getty Images.

Long-term dividend growth is assured at Union Pacific

Lee Samaha (Union Pacific): If you are looking for a stock with excellent long-term dividend growth prospects to pick up on near-term weakness, West Coast railroad Union Pacific fits the bill. 

There's no escaping that the railroads face a challenging trading environment. Slowing economic growth and rising costs are putting pressure on revenue growth and profit margins. 

As such, Wall Street analysts expect earnings per share of just $11.89 in 2023, compared with $11.54 in 2022. Clearly, no one is buying a stock for a 3% growth rate. Still, investors with a longer-term mindset will understand that these negative conditions won't persist.

Thinking longer-term, as long as the U.S. economy grows, the railroads, the veins and arteries of the physical economy, can increase revenue and profits. Moreover, given their unique competitive position -- they own their infrastructure and mainly compete with the trucking industry -- investors can be sure they will be around for decades. Furthermore, Union Pacific's current dividend of $5.20, at its current yield of 2.4%, is easily covered by earnings, so investors can expect dividend growth in the coming years.

All that said, investors shouldn't just think of Union Pacific as a boring dividend growth play. The reality is that management still has a long-term margin growth opportunity through the implication of precision scheduled railroading management techniques. As such, any market-led weakness in the share price will make Union Pacific's stock more attractive for patient investors.

Ring in the New Year with a powerful passive-income provider

Scott Levine (American Electric Power): New gym memberships and better eating habits may be in the cards for some people after ringing in the New Year, but many investors are focused on building robust passive income streams. And while it may be tempting to seek stocks offering high yields, savvy investors know that trusted dividend stocks like American Electric Power, with its forward dividend yield of 3.4%, is a much wiser approach.

Serving 5.5 million customers in 11 states, American Electric Power is one of the largest publicly traded electric utilities based on market capitalization. While its customer base is impressive, what should be more alluring to investors is the stable nature of the company's business. Because American Electric Power operates as a regulated utility, it doesn't have the luxury of raising prices arbitrarily, yet it has excellent foresight into future cash flows. During a recent investor presentation, for example, management projected operating cash flow growth of $5.4 billion in 2022 to $7.7 billion in 2027.

With the increase in capital, the company plans to reinvest significantly in its assets, including $10.8 billion for distribution and $9.1 billion for transmission. Moreover, management forecasts that the company will achieve a compound annual growth rate of 7.6% over the next five years for its rate base, the total value of its assets. This, in turn, is expected to support American Electric Power's earnings-per-share growth of 6% to 7% from 2023 to 2027.

How will the growing bottom line affect the company's plans for its dividend? With the electric utility's powerful earnings growth, investors should see a comparable rise in the payout; American Electric Power has targeted a payout ratio of 60% to 70%.

Returning capital to shareholders seems to be a part of this company's DNA -- it has issued consecutive quarterly dividends for 112 years. For those looking to plug in to a proven passive income powerhouse, therefore, American Electric Power is a worthwhile consideration to accompany those rounds of "Auld Lang Syne."

Honeywell gives investors a lot to like to ring in the new year

Daniel Foelber (Honeywell): Honeywell is quietly crushing the market this year, particularly in the last three months, as shares have surged more than 18%. 

The industrial behemoth has an impact in almost every industry in the industrial sector, from engines, aviation products, and thermostats to software to support the industrial internet of things, and more.

The COVID-19 pandemic took a sledgehammer to the company's performance in 2020 and 2021. But 2022 has been a good year, as Honeywell has consistently beaten estimates. But it's not just higher revenue and earnings that have been impressive. Rather, it's the company's 19.5% operating margin, which is near an all-time high. 

Honeywell is leaner and more profitable than it used to be. But maybe the more valuable aspect of the company is its balance sheet, which continues to be arguably one of the best of the megacap industrial companies.

HON Financial Debt to Equity (Quarterly) Chart

HON Financial Debt to Equity (Quarterly) data by YCharts

Honeywell has very little debt for its size. And its financial debt-to-equity and debt-to-capital ratios indicate the company's capital structure is not dependent on debt.

In a market where many investors are looking for safety, Honeywell stock makes a lot of sense. It has a leading position across many industries. It's growing. It isn't dependent on debt, but its balance sheet is more than capable of taking on debt if needed or for buying out competitors for a low price during a downturn. In sum, Honeywell is well positioned to take market share if there's a prolonged recession. Its 2% dividend yield is the cherry on top of a strong underlying investment thesis.