Investors don't yet know what to expect in 2023. The market may slowly stroll along the path to recovery. Or it could race ahead, with stock prices soaring. In either case, it's a good idea to add some dividend stocks to your portfolio. They'll offer you guaranteed income no matter what the market does.
But which players to choose? If you want to benefit from passive income and potential growth, I've got two stocks in mind. They both are Dividend Kings. That means they've increased their dividend for at least the past 50 years. This shows a commitment to rewarding shareholders. The stocks I'm talking about also have reached a turning point that could lead to earnings growth down the road. So, let's check out these top dividend stocks to own in 2023.
1. Johnson & Johnson
Johnson & Johnson (JNJ -2.04%) will pay you $4.52 a share annually just for being a shareholder. That means if you own 100 shares, the pharmaceutical giant will offer you $452. Pretty good deal, right? This is at a dividend yield of 2.67%. That's higher than the industry average of about 2.15%, according the NYU Stern School of Business.
And more growth may be on the horizon for J&J. That's because the company this year will spin off its slowest-growing unit into a separate company. Consumer health -- the business that sells brands like Tylenol and Neutrogena -- will become Kenvue.
Consumer health's revenue rose 3.9% on an adjusted operational basis last year. Adjusted operational removes items that make comparison difficult, like the impact of acquisitions, for example. The pharmaceutical business and the medtech unit posted growth of 6.8% and 6.1%, respectively. So, the upcoming spinoff should lead to a higher overall growth rate for J&J.
J&J aims to reach $60 billion in pharmaceutical sales by 2025. That implies 15% growth from today's level. The picture looks bright for medtech, too. That business has about 12 platforms that deliver more than $1 billion in annual sales. J&J's pipeline of more than 100 candidates and increasing investment in research and development add to growth potential, too.
The consumer health spinoff marks the start of a new phase of growth. And this move and the strength of J&J's other businesses could lift the shares in the near term and over time.
2. AbbVie
AbbVie (ABBV 0.74%) pays investors an annual dividend of $5.92, representing a yield of 4.02%. And the company's rising free cash flow over time indicates it has what it takes to continue increasing payments.
ABBV Free Cash Flow data by YCharts
You can count on AbbVie for solid passive income and growth of that income over time. But you also can count on this pharmaceutical company for earnings growth. Like J&J, AbbVie's 2023 will be one of transition. Part of this may be seen as negative at first. AbbVie's biggest blockbuster, immunology drug Humira, is set to face competition.
At the same time, though, AbbVie's newer immunology drugs, Skyrizi and Rinvoq, are gaining ground. The company predicts that together the two will generate more than $17 billion in revenue in 2025. By 2027, AbbVie expects them to surpass Humira's peak annual revenue of more than $20 billion. AbbVie aims to win approval for Skyrizi and Rinvoq in all of Humira's indications. With eight approvals, combined, for the two drugs, it's well on the way.
And thanks to its broad portfolio of products, AbbVie is on track to become the No. 1 pharmaceutical company by prescription drug market share in 2026, according to Evaluate.
All of this means right now is the perfect moment to get in on AbbVie. You'll benefit from passive income right away -- and the new chapter in AbbVie's earnings story as it unfolds.
