In this article, we discuss 10 best August dividend stocks to buy. You can skip our detailed analysis of dividend stocks and the dividend capture strategy, and go directly to read 5 Best August Dividend Stocks To Buy.
In the stock market, various strategies may gain popularity at different times, but investors consistently gravitate toward dividend stocks due to their ability to generate regular cash. As of the beginning of 2023, there has been a resurgence in the popularity and performance of tech stocks, while dividend stocks have been trailing behind in terms of investor interest and returns.
Overall, the S&P 500 experienced sluggish growth in dividend payments during the second quarter of 2023. According to a report by S&P Global, 460 companies increased their dividends in Q2 2023, down 17.1% from the same period last year. The report also mentioned that total dividend increases were $9.80 billion during this period, compared with $19.3 billion in the second quarter of last year. However, this doesn't necessarily indicate that dividend stocks have lost their appeal.
The ongoing concerns over inflation and fears of a potential recession have prompted investors to refocus their attention on dividend stocks. Historically, dividends have shown strong performance during economic downturns, making them more appealing among income investors. We recently reported Refinitiv Lipper’s data which highlighted that the ProShares S&P 500 Dividend Aristocrats ETF received a significant boost with $33 million in net inflows during the two weeks ending on July 19. This surge represents the highest two-week increase for the ETF since January.
To increase their cash flow, investors often prioritize companies with a history of strong dividend growth. By investing in such firms, investors can potentially benefit from both regular income and the potential for capital appreciation. According to a report by iShares, dividend growers outperformed dividend cutters and eliminators during both bull and bear markets from 1978 to 2021. These equities also recorded an overall strong performance than non-dividend payers during this period. McDonald’s Corporation (NYSE:MCD), Chevron Corporation (NYSE:CVX), and Johnson & Johnson (NYSE:JNJ) are some of the best dividend stocks to consider that have increased their dividends for decades.
Dividend Capture Strategy:
Within the broad category of dividend investing, various related strategies exist to help investors generate wealth. The dividend capture strategy is one of the known investment approaches where investors aim to profit from capturing dividend payments of specific stocks. The goal is to buy the stock just before the ex-dividend date, hold it long enough to receive the dividend, and then promptly sell it. By repeatedly executing this process with different dividend-paying stocks, investors can generate a stream of income from dividends.
10 Best August Dividend Stocks To Buy
Our Methodology:
This list features the dividend capture strategy for selecting notable dividend stocks set to trade ex-dividend in August 2023. The ex-dividend date signifies the last day to purchase a stock and be eligible for its upcoming dividend payment. The list is ranked chronologically, with earlier dates appearing first and later dates following in order.
Wells Fargo & Company (NYSE:WFC) is a California-based multinational financial services company that serves millions of customers around the world. After passing Fed's stress test, the company announced a 16.7% hike in its quarterly dividend on July 25 to $0.30 per share. This was the company's third consecutive year of dividend growth, which makes it one of the best dividend stocks on our list. As of July 29, the stock has a dividend yield of 3.03%.
McDonald’s Corporation (NYSE:MCD), Chevron Corporation (NYSE:CVX), and Johnson & Johnson (NYSE:JNJ) are some other popular dividend growers to consider.
In the second quarter of 2023, Wells Fargo & Company (NYSE:WFC) generated $20.5 billion in revenues, which showed a 20.6% growth from the same period last year. The company's net interest income also showed a 29% year-over-year growth at $13.1 billion. The stock will be trading ex-dividend on August 3.
At the end of Q1 2023, 78 hedge funds in Insider Monkey's database reported having stakes in Wells Fargo & Company (NYSE:WFC), compared with 87 in the previous quarter. With roughly 25 million shares, Eagle Capital Management was the company's leading stakeholder in Q1.
American Water Works Company, Inc. (NYSE:AWK) is a New Jersey-based public utility company that provides water and wastewater services to residential, commercial, and industrial customers across various states. The company saw growth in hedge fund positions in the first quarter of 2023, as 36 funds tracked by Insider Monkey owned stakes in the company, up from 31 in the preceding quarter. The collective value of these stakes is more than $1.5 billion.
American Water Works Company, Inc. (NYSE:AWK) showed strong earnings in the second quarter of 2023. The company's revenue for the quarter amounted to over $1.1 billion, which showed a 17.4% hike from the same period last year. The company ended the quarter with 794 million in cash and cash equivalents, up significantly from $85 million six months ago.
American Water Works Company, Inc. (NYSE:AWK), one of the best dividend stocks on our list, will be going ex-dividend on August 7. The company has been rewarding shareholders with growing dividends for the past 15 years. It currently pays a quarterly dividend of $0.7075 per share and has a dividend yield of 1.93%, as of July 29.
8. International Business Machines Corporation (NYSE:IBM)
Ex-Dividend Date: August 9
An American multinational tech company, International Business Machines Corporation (NYSE:IBM) offers a wide range of tech and related services to its consumers. In its recently announced Q2 earnings, the company's revenue declined by 0.4% on a year-over-year basis at $15.5 billion. Year-to-date, its operating cash flow and free cash flow came in at $6.4 billion and $3.4 billion, respectively.
International Business Machines Corporation (NYSE:IBM) returned $1.5 billion to shareholders in dividends during the second quarter, which makes it one of the best dividend stocks on our list. On July 25, it declared a quarterly dividend of $1.66 per share, which was in line with its previous dividend. The stock has a dividend yield of 4.63%, as recorded on July 29 and will be trading ex-dividend on August 9.
International Business Machines Corporation (NYSE:IBM) was a part of 49 hedge funds portfolios, tracked by Insider Monkey, up from 43 in the previous quarter. The stakes these funds own have a consolidated value of over $1.47 billion. Among these hedge funds, Ken Griffin's Citadel Investment Group was the company's largest stakeholder in Q1.
Visa Inc. (NYSE:V) is next on our list of the best dividend stocks. The American financial services company is known for its global payment technology and is one of the world's largest payment processors. In fiscal Q3 2023, the company reported revenue of $8.1 billion, up 12% from the same period last year. During the quarter, it returned nearly $4 billion to shareholders in dividends and share repurchases.
Visa Inc. (NYSE:V) has been raising its dividends consistently since 2008. The company currently pays a quarterly dividend of $0.45 per share and has a dividend yield of 0.76%, as of July 29. The stock will be going ex-dividend on August 10.
As of the close of Q1 2023, 173 hedge funds tracked by Insider Monkey reported having stakes in Visa Inc. (NYSE:V), compared with 177 in the previous quarter. These stakes are worth collectively over $26 billion.
Manole Capital Management made the following comment about Visa Inc. (NYSE:V) in its second quarter 2023 investor letter:
“We like to start out all of our discussions by telling investors who we are. We are FINTECH investors, and we define Fintech as “anything utilizing technology to improve an established process.” We realize that half of Fintech is financial, but we don’t invest in traditional, credit sensitive banks. Having managed money during the Financial Crisis, we learned firsthand how certain opaque and balance sheet intensive financials could go bankrupt or insolvent.
W.W. Grainger, Inc. (NYSE:GWW) is an Illinois-based company that supplies products across various industries and sectors. The company is a Dividend King with 53 years of consecutive dividend growth under its belt. It currently pays a quarterly dividend of $1.86 per share and has a dividend yield of 1.02%, as of July 29. This one of the best dividend stocks on our list will be going ex-dividend on August 11.
In addition to GWW, investors are also paying attention to McDonald’s Corporation (NYSE:MCD), Chevron Corporation (NYSE:CVX), and Johnson & Johnson (NYSE:JNJ) due to their decades-long dividend growth streaks.
In the second quarter of 2023, W.W. Grainger, Inc. (NYSE:GWW) posted revenue of $4.1 billion, which showed a 9% growth from the same period last year. The company generated over $450 million in operating cash flow during the quarter and returned $265 million to shareholders through dividends and share repurchases.
At the end of Q1 2023, AQR Capital Management was one of the company's leading stakeholders in W.W. Grainger, Inc. (NYSE:GWW). Overall, 32 hedge funds in Insider Monkey's database reported having stakes in the company, worth nearly $286 million.