2023 has been mixed for growth stocks but I believe the worst is over. There is high optimism in the stock market as we end the year on a high note. However, if you want to secure your portfolio from such ups and downs and are looking for ways to generate passive income, considering top dividend stocks to buy is the best way forward.
But, all dividend stocks aren’t the same and some are more promising than many others. You need to look for companies that have shown steady growth, and resilience in the market and have a history of dividend payouts. Such companies will continue to reward shareholders, no matter how the market moves and you will be able to enjoy passive income while watching your investment grow. With that in mind, let’s take a look at the most undervalued dividend stocks to buy in December to enjoy a solid start to 2024.
PepsiCo (PEP)
Dividend Yield-3.01%
When looking for stable companies to invest in, PepsiCo (NASDAQ:PEP) is the first one that comes to mind. One of the global leaders, the company has a diversified business which ensures steady income despite market turmoil. It is a dividend aristocrat which has raised dividends over the past 51 years.
Pepsi’s dividend yield is 3.01% and it paid a quarterly dividend of $1.27. Exchanging hands at $168 today, this is one stock that will continue giving. The company has a range of snacks and beverages that help maintain a steady cash flow and it enjoys brand loyalty like no other.
Irrespective of the country you are in, you will see a range of Pepsi products at the supermarket and this is proof of how well the company is expanding its reach. Even in times of high inflation, Pepsi saw steady revenue growth. This is a solid dividend stock to own this month.
Dividend stocks to buy: McDonald’s (MCD)
Dividend yield-2.30%
McDonald’s (NYSE:MCD) is another undervalued dividend stock that should be a part of your portfolio. The company has nailed the franchise business, and it enjoys high cash flow through the steady income and low operating costs. It aims to expand to 50,000 stores by 2027 and this could give the business a solid push. Trading at $290 today, MCD stock might look expensive but it is worth an investment.
The company has been paying dividends for over 40 years, and it enjoys a dividend yield of 2.30%. In the recent quarter, the company saw a 14% increase in revenue to hit $6.69 billion, and the EPS came in at $3.17 per share, up 18% year-over-year.
The management increased the quarterly dividend by 10% to $1.67 per share. McDonald’s has big expansion plans, and it continues to see revenue growth. This makes it a worthwhile investment.
Enterprise Products Partners (EPD)
Dividend yield- 7.55%
With a dividend yield as high as 7.55%, Enterprise Products Partners (NYSE:EPD) is one of the top dividend stocks to buy this December. It owns a diverse portfolio of assets which include natural gas pipelines, liquid pipelines, marine terminals, and NGL fractionators. It is steadily working towards growth and expansion and aims to build two plants in the Permian Basin which will have the processing ability to handle 300 million cubic feet per day.
Enterprise Products Partners charges a fee from companies to use its assets and this is how it maintains a steady revenue growth. The company has a solid balance sheet and low debt which helps it reward shareholders. EPD is one of the top dividend stocks to buy.
The management believes in rewarding shareholders and has paid consecutive dividends for the past 25 years. It has a dividend yield of 7.55% and pays a quarterly dividend of $0.50. For a stock trading at $26, the dividend yield is certainly impressive. You will not regret owning EPD stock for a long time.
AT&T (T)
Dividend yield- 6.67%
AT&T (NYSE:T) is far from done, and while the stock may be down, it isn’t out. One of the top passive income stocks, AT&T is in the news for the recent contract with Ericsson (NASDAQ:ERIC). This $14 million deal will be a game changer for the business and it has already given a boost to the stock.
Through this collaboration, AT&T aims to cover about 70% of its wireless traffic in the U.S. It aims to expand the 5G network, and this will help it reach more than 200 million people by the end of the year. The management stated that they are in line to generate $16.5 billion in free cash flow in the year.
Additionally, it is also growing its wireless subscriber base and has added more than 468,000 net phone subscribers in the third quarter. T stock is trading for $16.65 today and is up 5% over the past month. It enjoys a dividend yield of 6.67% and has announced a quarterly dividend of $0.28.
Dividend stocks to buy: Johnson & Johnson (JNJ)
Dividend yield- 3.03%
A leader in the healthcare sector, Johnson & Johnson (NYSE:JNJ) is a dividend aristocrat with a history of paying dividends for 51 consecutive years. The company has managed to sustain the dividends through its MedTech and innovative medicine portfolio which has a few stalwarts that continue to generate revenue.
Its MedTech segment reported $7.5 billion in sales, which was a 10% rise, and the innovative medicine segment reported a revenue of $13.9 billion, a 5.1% rise. The company is launching several new products that have shown early signs of success and could become strong income generators in the long term.
JNJ could bring stability to your portfolio and is a highly reliable name in the industry with a dividend yield of 3.03% and a quarterly dividend of $1.19. The management has rewarded shareholders, no matter the market situation and I strongly believe it will continue to do so. It is one of the top stocks in the healthcare sector to own.
Coca Cola (KO)
Dividend yield-3.12%
Pepsi’s biggest rival, Coca-Cola (NYSE:KO) is another household name that believes in rewarding shareholders. The beverage giant has a global presence, and is known for a wide range of beverages including several healthy drinks. It is exchanging hands at $59 and has a dividend yield of 3.12%. Coca-Cola announced a quarterly dividend of $0.46 and has paid handsome dividends for the past 60 years.
Fundamentally, it has managed to achieve 11% organic revenue growth in the third quarter, and it has achieved success and market share across new markets like Japan, ASEAN, South Pacific, and Latin America. Like Pepsi, it enjoys brand loyalty and global recognition.
It is also Warren Buffet’s favorite stock, and he has owned it the longest. Today, he holds 400 million KO shares which could generate billions in dividends annually. Coca-Cola can thrive, irrespective of where the market moves from now, and trading below $60, it looks highly undervalued today.
Procter & Gamble (PG)
Dividend yield- 2.60%
A globally recognized household name, Procter & Gamble (NYSE:PG) is a defensive stock. It owns some of the biggest consumer brands today and is recognized for a wide range of products that cater to individuals of all age groups.
We will never see a time when we do not need personal care items which means PG is never going to run out of business. The company has established a strong position in the industry and enjoys high brand loyalty. Due to the wide umbrella of brands, it enjoys steady revenue growth and predictable cash flow.
PG is trading at $144 today and has dropped 4% year-to-date. The stock is trading lower than the all-time high of $163 but has a long way to go. It has a dividend yield of 2.60% and announced a quarterly dividend of $0.94. As the economy improves and we see higher consumer spending, Procter & Gamble could see better days ahead.
On the date of publication, Vandita Jadeja did not hold (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.