2023 is expected to be a tough year for the UK as it goes through a tough recession. A combination of high inflation, slow growth and high interest rates could lead to underperformance of the FTSE 100 and FTSE 250 indices.
Therefore, quality companies with stable dividends can provide investors with some cushion. Here are some of the best FTSE 100 dividend stocks to buy in 2023.
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What are the FTSE 100 Dividend Lords?
A dividend aristocrat is defined as a company that has consistently paid and increased its dividend for at least 25 years. However, in the UK, an elite company is one that has increased its fees over the past 10 years.
British American Tobacco
British American Tobacco (LON: Bats) is a leading global tobacco company. The company’s brands include Dunhill, Lucky Strike and Rothmans. The company sells its products all over the world.
Like other bad stocks, BAT has a very high dividend yield of 8.42%, which is higher than most companies. It has more than 25 billion in revenue and billions in profits. The company has been active in its share buybacks, which will boost its earnings per share.
In 2022, BAT share price rose more than 26% despite exiting Russia. I suspect its stellar performance will continue into 2023 as global travel fully reopens.
Diageo (LON: DGE) is another top FTSE 100 dividend aristocrat to buy in 2023. Like BAT, it is a sin stock with a 2% dividend yield. Although the yield is slightly smaller, the company has made up for it with a significant share repurchase program.
Diageo, which owns brands such as Smirnoff and Guinness, has had a slower recovery compared to peers such as Molson Coors. This slow growth is largely due to its Russian exodus.
The company is spending aggressively to increase its market share. Its marketing budget has grown to its highest level in years. Diageo is a good dividend stock due to its strong brand positioning, potential for growth and its diversified brand positioning.
GSK (LON: GSK) is one of the largest pharmaceutical companies in the world. It has a market capitalization of over $72 billion, making it the tenth largest company in the UK. The company went through a big change in 2022 when it parted ways with Hallion as we wrote. Here.
GSK share price has lagged following the split. That’s down more than 25% from the year’s high.
However, 2022 is a good investment as the company continues with its transformation. The company has a stable business and yields a high dividend yield of 4.5%. It may rebound in 2023 due to its robust pipeline and its strong presence in key industries such as cancer treatment and a prominent presence in vaccines.