Best US Dividend Stocks in 2023
If you want to invest in dividend stocks, it is a good idea to take a closer look at companies in the United States. Most of the companies that pay a high dividend to their shareholders are based here. The question is how to best approach this way of investing. This blog discusses the best American high dividend stocks . You can also read what is involved if you want to invest in these investments.
Want to know more about investing in US stocks in general? Read our blog: Buying US stocks .
The Best US High Dividend Stocks
If you are looking for good high dividend stocks, American stocks will soon come to light. America has many large multinationals with high profitability. Most of the stocks you encounter in this blog can be purchased from almost all brokers. The dividend yield is the average return per year.
Please note that this is just an example of a top 5 dividend stocks. The overview is meant as inspiration, always do your own research before making an investment. Also read our article: points of attention when investing in high dividend stocks .
| # | Company | Ticker | Dividend yield |
|---|
| 1 | International Business Machines | IBM | 5,0% |
| 2 | 3M Company | MMM | 4,69% |
| 3 | AbbVie, Inc. | ABBV | 3,95% |
| 4 | People United Financial, Inc. | PBCT | 3,71% |
Best Known US Dividend Stocks
The best US dividend stocks are not only those with the highest dividend yield, but also those with a stable and growing dividend payout and solid financial foundations. Here are some examples of well-known US companies that pay dividends regularly and have a good reputation for financial stability:
- Procter & Gamble : A global consumer goods company with a wide range of well-known brands, such as Gillette, Oral-B and Pampers. The company has a long history of dividend payments and is a Dividend Aristocrat (see further in this blog for more information).
- Johnson & Johnson : A major player in the healthcare industry, with products ranging from pharmaceuticals to medical devices and consumer products, Johnson & Johnson is known for its reliable dividend payments and solid financial base.
- Coca-Cola : One of the world’s largest beverage companies, with a wide range of popular brands. Coca-Cola has a long history of paying stable and growing dividends.
What is dividend investing and what are dividend stocks?
Every company can pay dividends to its shareholders if it makes a profit. However, this is not mandatory. The company itself can determine how high the dividend is. So if you invest in high dividends, you invest in companies that pay out relatively high dividends. With this method of investing, you automatically receive an income from your investments. Do you not know exactly what dividends are? Then read our article: meaning of dividends .
Dividend stocks are shares of companies that pay out a portion of their profits to their shareholders. These payments, also called dividends, can occur periodically, for example quarterly or annually. Investors find dividend stocks attractive because of the passive income they generate, in addition to the potential price gains of the stocks themselves. High dividend stocks are stocks with a higher than average dividend yield. This yield is calculated by dividing the dividend per share by the current share price. High dividend stocks America can be attractive to investors looking for a higher passive income. However, keep in mind that a high dividend yield is not always a guarantee for a successful investment.
Why invest in US dividend stocks?
US dividend stocks are popular among investors for several reasons:
- Stable and Strong Economy: The US economy is one of the largest and most stable in the world, providing a solid foundation for businesses to grow and make profits.
- Diversification: Investing in US dividend stocks helps to diversify your investment portfolio, both geographically and sectorally.
- Well-known companies: Many American companies are known worldwide and have strong brand names, which contributes to investor confidence.
- Transparency and Regulation: The US financial markets are known for their transparency and strict regulations, which reduce the risk of fraud or deception.
Dividend Aristocrats
Dividend Aristocrats are companies that not only have a long history of paying dividends, but have also increased their dividend payments for at least 25 consecutive years. These are companies with strong financial fundamentals and a proven ability to generate profits, which contributes to their appeal to dividend investors. Some examples of US Dividend Aristocrats include:
- McDonald’s: The well-known fast food giant has an impressive track record of paying and increasing dividends. The company has increased its dividend every year since 1976.
- 3M: This global industrial company, known for its innovative products, has a long history of dividend growth dating back to the 1950s.
Risks and pitfalls
Investing in dividend stocks, particularly US ones, comes with some risks and pitfalls that investors should consider:
- Currency risk : Since US stocks are traded in dollars, investors are exposed to currency risk. Fluctuations in the exchange rate between the euro and the dollar can affect your returns.
- Dividend Cuts or Eliminations : Companies may cut or even eliminate their dividend payments in the event of financial problems or changing business strategies. This can lead to a decrease in passive income for investors.
- Overconcentration : While diversification is important, investors who focus too much on U.S. dividend stocks can create an overconcentration of their portfolio in one market, increasing the risk of loss if that market performs poorly.
Taxes on US dividend stocks
Investors investing in US dividend stocks should be aware of the tax rules that apply to their dividends. The United States imposes a withholding tax on dividends paid to foreign investors. This withholding tax is usually 30%, but can be reduced to 15% as a result of the tax treaty between the United States and the Netherlands.
To qualify for the reduced withholding tax, Dutch investors are typically required to complete a form known as the W-8BEN form.
How to Invest in US Dividend Stocks
There are several ways to invest in US dividend stocks:
- Individual Stocks: You can invest directly in individual US dividend stocks by purchasing them through an online broker. Be sure to research the company’s financial health and dividend history before investing.
- Dividend ETFs : Another option is to invest in exchange-traded funds (ETFs) that focus on dividend stocks. These ETFs offer diversification and access to a wide selection of dividend stocks.
Conclusion: US Dividend Stocks
Investing in US dividend stocks can be an attractive option for investors looking for passive income and portfolio diversification. By carefully researching the best US dividend stocks and considering the risks and taxes that come with investing in these stocks, you can build a solid foundation for a successful investment strategy. It is important to create a balanced and diversified portfolio and focus not only on dividend yield, but also on the financial health and growth potential of the companies you invest in.