The 3 Best Dividend Growth Stocks to Buy in January 2024

Core Insights - The article emphasizes the importance of diversification within dividend stock portfolios, highlighting blue-chip stocks with stable cash flows and attractive valuations for dividend growth [1] - It identifies specific companies, such as Lockheed Martin, Merck, and Kinross Gold, as strong candidates for dividend growth based on their financial metrics and market conditions [2][5][6] Group 1: Lockheed Martin (LMT) - Lockheed Martin stock is attractively valued with a forward P/E ratio of 17 and offers a dividend yield of 2.72% [2] - The company has achieved a historical dividend growth CAGR of 9.78% over the last 10 years, with a current order backlog of $156 billion, indicating strong future cash flows [2][3] - Expectations for free cash flow (FCF) are around $6.2 billion for the previous year, with similar or higher projections for 2024 [2] Group 2: Merck (MRK) - Merck stock shows a dividend growth CAGR of 6% over the last decade and 9.3% over the past five years, with expectations for continued growth [5] - The company has a robust product pipeline with 80 programs in phase two and 30 in phase three, supported by a $50 billion investment in strategic business development since 2019 [5] - Merck aims to expand its operating margin to 43% by 2025, which is expected to enhance free cash flows and dividend growth visibility [5] Group 3: Kinross Gold (KGC) - Kinross Gold is considered an attractive investment due to its undervalued stock with a forward P/E ratio of 14.3 and a dividend yield of 2% [6] - The company reported a liquidity buffer of $2 billion and an annualized FCF visibility of $500 million, with expectations for higher figures this year [7] - Strong fundamentals position Kinross for dividend growth and potential share buybacks, along with opportunities for acquisitions [7]