2 Best Stocks to Own for Passive Income in 2023
An analysis by S&P Global says that these two stocks are prime candidates to significantly raise dividends this year.
The stock market has gotten off to a good start in 2023. The S&P 500 reached 4,000 this month, and the index was up about 2% year-to-date as of Jan. 20, 2023. Market analysts predict another correction this year while others anticipate huge gains for the year. Dividend stocks are a great option for investors looking to find predictability in uncertain markets. According to S&P Global Market Intelligence, the banks sector is one of the most likely to generate more passive income than any other dividend stock. According to S&P Global, 16 of 17 U.S. banks are expected to raise dividends by 2023. PNC Financial (PNC 4.63%), which is the holding company of PNC Bank, the sixth largest bank in the country. It is a long-standing dividend stock and according to S&P Global analysis, its dividend per share will increase by 17.4% in 2023. PNC's dividend per share, which measures the amount of earnings that are paid in dividends, was $5.75 in 2022. Last year, I wrote that PNC had the highest dividend in the banking sector. It remains my favorite dividend stock for 2023. PNC announced a $1.50 share dividend in its fourth quarter earnings report released Jan. 18. This is an increase of 20% year-over-year. PNC has increased its dividend every year for the past 12 years, even during the 2020 Pandemic, when banks reduced or frozen their payouts. At the end of fourth quarter, its common equity tier 1 ratio was 9.1%, which is well above the minimum 7.4%, with its 2.9% capital buffer. It has a 38.8% dividend payout ratio. Regions Financial (RF 4.61%), which is the holding company of Regions Bank, was among the best-performing bank stocks on the S&P 500 in 2022. The stock ended the year with a 2.3% increase, exceeding the S&P 500's 19.4% decline last year. Regions stock is also a reliable dividend stock. It paid out $0.20 per share, which is a yielding 3.57%. S&P's analysis projects a 14.1% rise in dividend per share to $0.71 to $0.81 in 2023, making it one the largest industry gains. The latest quarter saw a 31% increase year-over-year in net interest income for regions. This was due to an increase in loan activity and a low deposit beta. It also had excellent efficiency. It has excellent liquidity. The common equity tier 1 ratio was 9.3% in the most recent quarter, which is well above the minimum 7.8%. David Jackson Turner, Goldman Sachs U.S. Financial Services Conference CFO, stated that he anticipates loan growth in 2023 and higher dividend payouts. We want to pay fair dividends, which is 35% to 45% from our earnings that we kind of peg for our shareholders. He said that we have been at the lower end. These two bank stocks perform well and can be a great option for investors who want to earn income or increase their total return in uncertain years. Dave Kovaleski does not hold any position in any of these stocks. The Motley Fool recommends Goldman Sachs Group and PNC Financial Services to its readers. The Motley Fool follows a disclosure policy.