3 Top Dividend Stocks to Buy in February

As an income investor, you're always on the lookout for dividend stocks that offer a combination of high yields, dividend growth, and long-term sustainability. In this article, we'll explore three top dividend stocks that meet these criteria and are worth considering for your portfolio in February.

A.O. Smith (AOS) - Yield 2.0%, Dividend Growth 9.9%

A.O. Smith, a water heater manufacturer, has a long streak of annual dividend increases, making it a dividend aristocrat. With a 30-plus year streak of increases and a consistent free cash flow generation, A.O. Smith is well-positioned to continue its dividend growth. The company's current annual dividend of $1.36 per share is expected to increase to $1.66 by 2028, according to Morningstar equity analysts. AOS is currently trading at a discount of over 10% to its Morningstar fair value estimate, making it an attractive buy for income investors.

Coca-Cola (KO) - Yield 3.1%, Dividend Growth 3.4%

Coca-Cola, a dividend aristocrat with 62 years of consecutive dividend increases, offers a strong brand and stable earnings. The company's dividend payout ratio is expected to stabilize around 70%, which is considered prudent. Coca-Cola is trading in line with its Morningstar fair value estimate, making it a solid choice for long-term income investors.

Starbucks (SBUX) - Yield 2.2%, Dividend Growth 13.8%

Starbucks, another dividend aristocrat, has a 14-year streak of annual dividend increases. The company's strong brand and global expansion support its dividend growth. Morningstar analysts project ongoing annual dividend growth, with the current annual rate of $2.44 per share rising to $3.18 by 2029. Despite recent price appreciation, Starbucks is still trading at a premium of over 15% to its Morningstar fair value estimate, but its strong dividend growth prospects make it an attractive long-term hold.

In conclusion, A.O. Smith, Coca-Cola, and Starbucks are three top dividend stocks to consider for your portfolio in February. Each company offers a combination of high yields, dividend growth, and long-term sustainability, making them attractive options for income investors. Be sure to monitor their performance and maintain a diversified portfolio to mitigate risks associated with individual stocks.