2 Top Dividend Stocks to Buy in February

In choppy markets, dividend stocks are particularly useful as a way to balance out returns. That's because no matter how the stock performs, the dividend will be there -- with a good dividend stock, that is.

There are two income-generating stocks that should be on your radar this month, and they aren't your typical dividend stocks. One of them has only increased its dividend for two years in a row, while the other pays out a monthly, not quarterly, dividend. But both are intriguing options for dividend investors.

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1. Fidelity National Information Services

Fidelity National Information Services (NYSE: FIS) is a fintech that provides the technology to help institutions move money. It's one of a handful of dominant players and has a good-sized moat due to the complexity of its services and the high switching costs.

Fidelity's 63% decline in stock price over the past five years was not due to dwindling revenues or loss of market share; it had more to do with a bad acquisition in 2019. The company spent $43 billion to buy Worldpay, a merchant acquirer, in 2019 to expand into that space, but it proved to be a drag on earnings from the high costs.

Just this year it sold off the last vestiges of Worldpay and in return acquired the Issuer Solutions business from Global Payments. This business is seen as a better fit for Fidelity because it focuses on the technology to process credit payments, complementing Fidelity's strength in debit payment processing.

Analysts see high upside from it. The stock is rated a consensus buy and has a median price target that suggests a 67% return over the next 12 months.

Further, the company just boosted it by 10% to $0.44 per share at a high yield of 3.62%. Fidelity hasn't been the most reliable dividend payer, as this is just the second year in a row of dividend raises, but that was mostly due to the Worldpay deal. With that now behind it and the Issuer Solutions business expected to be a better fit, Fidelity should see its stock price rise and its dividend improve.

2. Main Street Capital

The second nontraditional dividend stock to buy in February is Main Street Capital (NYSE: MAIN). It pays a monthly dividend, as opposed to a quarterly dividend. There are only about 80 stocks that pay out dividends monthly.

Main Street Capital is a business development company (BDC), which means, because it gets tax breaks, it must allocate 90% of its annual taxable income to dividends. As BDCs go, Main Street Capital is one of the best for dividends.

In early March it will pay out a monthly dividend of $0.26 per share, the same as February. This payout comes at an incredibly high yield of 7.20%. Plus, it has reliably increased its annual dividend payout for 18 straight years. On top of this high monthly payout, it distributes supplemental dividends four times a year to distribute excess taxable income.

In addition, Main Street's stock has been a reliable performer over the years with a five-year annualized return of 11%.

Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.