Top 3 Dividend Stocks to Watch in February 2025
A.O. Smith, Coca-Cola, and Starbucks Offer Strong Income Potential
Market Overview
Dividend stocks continue to attract income-focused investors, and for February 2025, three companies stand out for their consistent dividend growth and financial stability. This month’s picks include two dividend aristocrats—companies with a long history of increasing payouts—alongside a strong performer in the consumer sector.
1. A.O. Smith (AOS): A Rising Dividend Aristocrat
• A.O. Smith, a leading water heater manufacturer, has built a reputation for steady dividend increases over the past 30+ years.
• Over the last five years, its dividend has grown at an annualized rate of 9.9%, though the current dividend yield is 2.0%.
• Analysts expect the annual dividend to rise from $1.36 per share today to $1.66 by 2028.
• The stock trades at a 10% discount to its Morningstar fair value estimate of $82, making it an attractive buy for long-term investors.
2. Coca-Cola (KO): A Dividend Powerhouse
• Coca-Cola remains one of the most reliable dividend stocks, boasting 62 consecutive years of dividend increases.
• The stock currently yields 3.1%, with 3.4% annualized dividend growth over the past five years.
• It trades in line with its Morningstar fair value estimate of $64 per share.
• The next dividend increase announcement is expected in mid-March, continuing its strong history of shareholder returns.
• Analysts believe Coca-Cola will maintain a payout ratio of around 70%, ensuring stability in future dividends.
3. Starbucks (SBUX): Growth Despite Market Challenges
• Starbucks has raised its dividend for 14 consecutive years, with an impressive 13.8% annualized dividend growth over the past five years.
• The company recently increased its quarterly dividend by 7%.
• The stock’s yield had briefly climbed to 2.8%, but after a recent price rebound, it now sits at 2.2%—closer to its five-year average.
• While Starbucks has faced declining sales in the past four quarters, analysts still project long-term dividend growth, with the current annual payout of $2.44 per share expected to rise to $3.18 by 2029.
• However, the stock is currently trading at a 15% premium to its Morningstar fair value estimate of $86, which may make it less attractive for new investors at this price point.
Final Thoughts
For February 2025, these three dividend stocks offer different opportunities:
• A.O. Smith is a solid value play with a long dividend history.
• Coca-Cola remains a reliable income stock with steady payouts.
• Starbucks offers growth potential but is trading at a premium.
Investors looking for consistent dividend income may find these stocks appealing, though it’s essential to consider valuation before making any moves.
A.O. Smith, Coca-Cola, and Starbucks Offer Strong Income Potential
Market Overview
Dividend stocks continue to attract income-focused investors, and for February 2025, three companies stand out for their consistent dividend growth and financial stability. This month’s picks include two dividend aristocrats—companies with a long history of increasing payouts—alongside a strong performer in the consumer sector.
1. A.O. Smith (AOS): A Rising Dividend Aristocrat
• A.O. Smith, a leading water heater manufacturer, has built a reputation for steady dividend increases over the past 30+ years.
• Over the last five years, its dividend has grown at an annualized rate of 9.9%, though the current dividend yield is 2.0%.
• Analysts expect the annual dividend to rise from $1.36 per share today to $1.66 by 2028.
• The stock trades at a 10% discount to its Morningstar fair value estimate of $82, making it an attractive buy for long-term investors.
2. Coca-Cola (KO): A Dividend Powerhouse
• Coca-Cola remains one of the most reliable dividend stocks, boasting 62 consecutive years of dividend increases.
• The stock currently yields 3.1%, with 3.4% annualized dividend growth over the past five years.
• It trades in line with its Morningstar fair value estimate of $64 per share.
• The next dividend increase announcement is expected in mid-March, continuing its strong history of shareholder returns.
• Analysts believe Coca-Cola will maintain a payout ratio of around 70%, ensuring stability in future dividends.
3. Starbucks (SBUX): Growth Despite Market Challenges
• Starbucks has raised its dividend for 14 consecutive years, with an impressive 13.8% annualized dividend growth over the past five years.
• The company recently increased its quarterly dividend by 7%.
• The stock’s yield had briefly climbed to 2.8%, but after a recent price rebound, it now sits at 2.2%—closer to its five-year average.
• While Starbucks has faced declining sales in the past four quarters, analysts still project long-term dividend growth, with the current annual payout of $2.44 per share expected to rise to $3.18 by 2029.
• However, the stock is currently trading at a 15% premium to its Morningstar fair value estimate of $86, which may make it less attractive for new investors at this price point.
Final Thoughts
For February 2025, these three dividend stocks offer different opportunities:
• A.O. Smith is a solid value play with a long dividend history.
• Coca-Cola remains a reliable income stock with steady payouts.
• Starbucks offers growth potential but is trading at a premium.
Investors looking for consistent dividend income may find these stocks appealing, though it’s essential to consider valuation before making any moves.