In this article, we discuss the 10 best dividend contenders to buy for 2022.
Dividend contenders are companies with over 10 years but less than 25 years of consistent dividend increases.
The financial markets are currently facing a bloodbath, with all major indices down and cryptocurrencies posting historic losses. The market is going through a massive rotation towards value stocks. Harris Financial Group’s Jamie Cox’s 2020 interview looks prescient today, as he said at the time that he was not bullish on big tech. Instead Cox was very keen on dividend growth stocks. He explained his rationale further, observing that tech companies cannot essentially replace airlines, infrastructure, or the energy companies, and once these sectors rebound in 2021 due to pent-up demand post COVID-19 and vaccine rollout, they will continue to perform as they had pre-pandemic. These sectors also offer the highest yields, so market dips are a good opportunity to buy these stocks.
With the rising global inflation, investors are gravitating towards companies that offer a strong cash flow position, which will result in consistent dividends that grow over the years. Investors now understand that chasing a high yield is not the way to go about this stock market, instead they are looking for companies that have strong fundamentals and a rich history of paying consecutively increasing dividends.
Elite hedge funds are bullish on dividend contenders like Bristol-Myers Squibb Company (NYSE:BMY), Best Buy Co., Inc. (NYSE:BBY), and JPMorgan Chase & Co. (NYSE:JPM) to diversify their portfolios and gain reliable passive income.
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Our Methodology
We selected the dividend contenders for 2022 based on attractive yields, mostly positive analyst ratings, and solid company fundamentals. We have also mentioned the hedge fund sentiment surrounding each stock, which was gathered from the 867 elite funds tracked by Insider Monkey in Q3 2021.
Best Dividend Contenders to Buy for 2022
10. DTE Energy Company (NYSE:DTE)
Number of Years of Dividend Increases: 12
Dividend Yield as of January 21: 2.99%
Number of Hedge Fund Holders: 22
DTE Energy Company (NYSE:DTE) is a Detroit-based energy company that operates in the United States and Canada, supplying electricity, gas, and power via its subsidiaries. As of January 21, DTE Energy Company (NYSE:DTE) delivers a dividend yield of 2.99%, and has been consistently increasing its dividends for 12 years.
On October 27, DTE Energy Company (NYSE:DTE) declared a quarterly per share dividend of $0.885, which is a 7.3% increase from its prior dividend of $0.825. The dividend was paid on January 15, to shareholders of record on December 20.
Morgan Stanley analyst Stephen Byrd on January 6 upgraded DTE Energy Company (NYSE:DTE) to Overweight from Equal Weight with a price target of $133, up from $127, implying 12% upside. The analyst cites “strong” management execution, earnings growth targets that are “highly achievable”, and natural gas utility given policy support for DTE Energy Company (NYSE:DTE)’s natural gas business for the upgrade.
DTE Energy Company (NYSE:DTE) on January 19 proposed spending $388 million on Michigan’s energy grid, electric storage, and generation system “to prepare for 21st century demands posed by growing electrification needs and climate change”. DTE Energy Company (NYSE:DTE) also announced on December 7 that it will undergo a 40% increase in its renewable energy capacity in 2021, adding three wind parks and one solar park to its portfolio of assets, which will contribute 535 megawatts of power capacity.
Among the hedge funds tracked by Insider Monkey, 22 funds were bullish on DTE Energy Company (NYSE:DTE) in the third quarter of 2021, down from 32 funds in the preceding quarter. Ken Griffin’s Citadel Investment Group, the largest DTE Energy Company (NYSE:DTE) stakeholder, elevated its stake in the company by 3117% in Q3, holding 593,155 shares, worth $66.2 million.
9. Digital Realty Trust, Inc. (NYSE:DLR)
Number of Years of Dividend Increases: 16
Dividend Yield as of January 21: 2.99%
Number of Hedge Fund Holders: 28
Digital Realty Trust, Inc. (NYSE:DLR) is a California-based real estate investment trust that invests in data centers. The REIT has over 280 data centers in 26 countries, spread across North America, South America, Asia Pacific, Europe and the UK, and Africa. Digital Realty Trust, Inc. (NYSE:DLR) has consistently increased its dividend payments for 16 years, offering a yield of 2.99% as of January 21.
On November 18, Digital Realty Trust, Inc. (NYSE:DLR) declared a quarterly dividend per share of $1.16, in line with previous. The dividend was paid on January 14, to shareholders of record on December 15.
Barclays analyst Tim Long downgraded Digital Realty Trust, Inc. (NYSE:DLR) to Equal Weight from Overweight with a price target of $172, down from $180. Data centers and towers have come under intense selling pressure to start the year, he told investors in a research note.
In the third quarter of 2021, 28 hedge funds were long Digital Realty Trust, Inc. (NYSE:DLR), with stakes totaling $253.5 million. Jasper Ridge Partners is the largest stakeholder of the company, with 652,448 shares worth $94.2 million.
In addition to Bristol-Myers Squibb Company (NYSE:BMY), Best Buy Co., Inc. (NYSE:BBY), and JPMorgan Chase & Co. (NYSE:JPM), Digital Realty Trust, Inc. (NYSE:DLR) is a popular dividend contender among the smart money.
8. Auburn National Bancorporation, Inc. (NASDAQ:AUBN)
Number of Years of Dividend Increases: 20
Dividend Yield as of January 21: 3.10%
Number of Hedge Fund Holders: 2
Auburn National Bancorporation, Inc. (NASDAQ:AUBN) made it to our list of the best dividend contenders to buy for 2022 since the stock offers a yield of 3.10%, in addition to consistently growing dividends for 20 years. Auburn National Bancorporation, Inc. (NASDAQ:AUBN) is an Alabama state member bank, providing financial products and services including deposits, savings, and lending.
Auburn National Bancorporation, Inc. (NASDAQ:AUBN) declared on November 9 a $0.26 per share quarterly dividend, in line with previous. The dividend was paid on December 27, to shareholders of record on December 10.
In the third quarter of 2021, Millennium Management and Renaissance Technologies, two leading Wall Street hedge funds, were bullish on Auburn National Bancorporation, Inc. (NASDAQ:AUBN). The funds held collective stakes equaling $737,000.
In addition to Bristol-Myers Squibb Company (NYSE:BMY), Best Buy Co., Inc. (NYSE:BBY), and JPMorgan Chase & Co. (NYSE:JPM), Auburn National Bancorporation, Inc. (NASDAQ:AUBN) is a notable dividend contender heading into 2022.
7. CubeSmart (NYSE:CUBE)
Number of Years of Dividend Increases: 12
Dividend Yield as of January 21: 3.40%
Number of Hedge Fund Holders: 22
CubeSmart (NYSE:CUBE) is a REIT based in Pennsylvania, investing primarily in self storage facilities across the United States. CubeSmart (NYSE:CUBE) has more than 1200 storage facilities, and the company offers customers moving services and climate controlled storage as well.
Raymond James analyst Jonathan Hughes upgraded CubeSmart (NYSE:CUBE) on December 2 to Outperform from Market Perform with a $60 price target, citing increased conviction in the outlook for the self storage sector into next year. Although the stocks have traded sideways over the past month, self storage continues to be the best-performing REIT sector in the post-pandemic world, according to the analyst, who sees a scenario where fundamentals could easily surpass expectations for the next several years.
On November 2, CubeSmart (NYSE:CUBE) declared a $0.43 per share quarterly dividend, which reflects a 26.5% increase from the prior dividend of $0.34. The dividend was paid on January 18, to shareholders of record on January 3. The company has delivered consistent dividend increases for 12 years.
Among the hedge funds tracked by Insider Monkey in Q3 2021, 22 funds were long CubeSmart (NYSE:CUBE), with stakes totaling $225.4 million, as compared to 18 funds in the preceding quarter, holding stakes in CubeSmart (NYSE:CUBE) worth $350.1 million.
Ric Dillon’s Diamond Hill Capital is the biggest CubeSmart (NYSE:CUBE) stakeholder as of the third quarter of 2021, owning 3.1 million shares amounting to $153.1 million.
6. Bristol-Myers Squibb Company (NYSE:BMY)
Number of Years of Dividend Increases: 13
Dividend Yield as of January 21: 3.40%
Number of Hedge Fund Holders: 74
Bristol-Myers Squibb Company (NYSE:BMY) is one of the largest American pharmaceutical companies, manufacturing prescription pharmaceuticals and biologics in multiple therapeutic areas. Bristol-Myers Squibb Company (NYSE:BMY) is one of the top dividend contenders to buy for 2022, delivering a 3.40% yield as of January 21, in addition to 13 successive years of dividend increases.
On December 13, Bristol-Myers Squibb Company (NYSE:BMY) declared a quarterly dividend per share of $0.54, which is a 10.2% increase from its prior dividend of $0.49. The dividend is payable on February 1, to shareholders of record on January 7. Bristol-Myers Squibb Company (NYSE:BMY) also announced a share repurchase program of $15 billion.
Goldman Sachs analyst Chris Shibutani initiated coverage of Bristol-Myers Squibb Company (NYSE:BMY) on December 17 with a Buy rating and a $72 price target, implying 16% upside from current levels. The analyst sees an attractive entry point in the shares, as he believes current levels reflect “overly pessimistic views” on the outlook for Bristol-Myers Squibb Company (NYSE:BMY)’s new product launches and key pipeline assets.
In its 2022 guidance, Bristol-Myers Squibb Company (NYSE:BMY) projects an approximately $47 billion in total revenue, indicating an increase of low-single digits compared to the 3% year-over-year growth in the consensus. Non-GAAP earnings guidance came in at $7.65 to $7.95, which is in line with Wall Street forecasts of $7.83 per share.
Warren Buffett’s Berkshire Hathaway is the largest Bristol-Myers Squibb Company (NYSE:BMY) stakeholder as of Q3 2021, with over 22 million shares, valued at $1.30 billion. Overall, 74 hedge funds in the third quarter database of Insider Monkey were long Bristol-Myers Squibb Company (NYSE:BMY), with collective stakes equaling $4.75 billion.
Wedgewood Partners mentioned Bristol-Myers Squibb Company (NYSE:BMY) in its Q4 2020 investor letter. Here is what they had to say:
“Bristol-Myers Squibb Company (NYSE:BMY) recently reported accelerating sales as much of the medical services industry returned to work. The Company continues to expect double-digit earnings growth over the next few years, driven by existing drugs, in addition to a broad pipeline of new drugs and indications. While the market remains fixated on a couple of patent expirations that could occur over the next several years, we think this is well-known at this point, yet the market still undervalues a couple of key acquisitions the Company has made in the past few years, particularly Celgene, which was acquired for a song.”
5. Amgen Inc. (NASDAQ:AMGN)
Number of Years of Dividend Increases: 10
Dividend Yield as of January 21: 3.41%
Number of Hedge Fund Holders: 52
Amgen Inc. (NASDAQ:AMGN) is a multinational biopharmaceutical company, headquartered in California. Amgen Inc. (NASDAQ:AMGN) is a market leader in biotechnology, with a particular interest in molecular biology and biochemistry. The company leverages DNA technology to create medicines for chemotherapy and autoimmune diseases.
On December 3, Amgen (NASDAQ:AMGN) declared a $1.94 per share quarterly dividend, which is a 10.2% increase from the prior dividend of $1.76. The dividend is payable on March 8, to shareholders of record on February 15. Offering a dividend yield of 3.41% as of January 21, Amgen Inc. (NASDAQ:AMGN) is one of the top dividend contenders to buy for 2022.
BofA analyst Geoff Meacham on January 5 downgraded Amgen Inc. (NASDAQ:AMGN) to Neutral from Buy with a price target of $255, down from $285.
In the third quarter of 2021, 52 hedge funds were bullish on Amgen Inc. (NASDAQ:AMGN), with stakes totaling $1.4 billion. John Overdeck and David Siegel’s Two Sigma Advisors is the largest stakeholder of Amgen Inc. (NASDAQ:AMGN) as of Q3 2021, with 1.85 million shares worth approximately $394 million.
Here is what ClearBridge Sustainability Leaders Strategy has to say about Amgen, Inc. (NASDAQ:AMGN) in its Q3 2021 investor letter:
“In health care, Amgen, a biotechnology company, has endured several pipeline setbacks recently, including a slow transition of its Lumakras treatment into first-line lung cancer, a slower than expected development of its treatment for myeloma as well as the company’s asthma treatment Tezepelumab missing its primary endpoint in a Phase III study. We remain positive on the stock, with Amgen’s investments in biosimilars and its pipeline part of our long-term thesis.”
4. American Electric Power Company, Inc. (NASDAQ:AEP)
Number of Years of Dividend Increases: 12
Dividend Yield as of January 21: 3.47%
Number of Hedge Fund Holders: 36
American Electric Power Company, Inc. (NASDAQ:AEP) is one of the leading American investor-owned electric utility companies, which supplies electricity to approximately 5 million customers, across 11 states. In addition to owning the largest electricity transmission system in the US, American Electric Power Company, Inc. (NASDAQ:AEP) is also one of the leading generators of electricity in the country.
American Electric Power Company, Inc. (NASDAQ:AEP) on January 18 declared a $0.78 per share quarterly dividend, in line with previous. The dividend is payable on March 10, to shareholders of record on February 10.
On October 27, Mizuho analyst Paul Fremont lowered the price target on American Electric Power Company, Inc. (NASDAQ:AEP) to $86 from $91 and kept a Buy rating on the shares. This was after American Electric Power Company, Inc. (NASDAQ:AEP) announced that it sold its Kentucky Power subsidiary for $1.625 billion. The analyst reduced the price target to reflect market multiples.
A total of 36 hedge funds monitored by Insider Monkey were long American Electric Power Company, Inc. (NASDAQ:AEP), up from 29 funds in the preceding quarter. Renaissance Technologies is the biggest stakeholder of the company, owning 2.33 million shares worth $189.75 million.
3. Avista Corporation (NYSE:AVA)
Number of Years of Dividend Increases: 19
Dividend Yield as of January 21: 3.86%
Number of Hedge Fund Holders: 14
Avista Corporation (NYSE:AVA) is an energy company from Washington that supplies electricity and natural gas for residential, commercial, and industrial applications.
On November 5, Avista Corporation (NYSE:AVA) declared a $0.4225 per share quarterly dividend, in line with previous. The dividend was paid on December 15, to shareholders of record on November 19. As of January 21, Avista Corporation (NYSE:AVA) delivers a 3.86% dividend yield, with a history of 19 consistent years of dividend growth.
Avista Corporation (NYSE:AVA) and Chelan County Public Utility District on December 30 announced that they have finalized a 20-year contract for renewable hydropower. This contract will increase Avista Corporation (NYSE:AVA)’s carbon-free resources and accelerate its 2030 renewable energy goals.
14 hedge funds monitored by Insider Monkey in Q3 2021 were bullish on Avista Corporation (NYSE:AVA), with stakes totaling $42.1 million, as compared to 17 funds in the preceding quarter, holding stakes worth $44.7 million in Avista Corporation (NYSE:AVA).
Paul Tudor Jones’ Tudor Investment Corporation is the biggest stakeholder of Avista Corporation (NYSE:AVA), and the hedge fund owns 162,179 shares of the company, valued at $6.34 million.
2. Edison International (NYSE:EIX)
Number of Years of Dividend Increases: 18
Dividend Yield as of January 21: 4.45%
Number of Hedge Fund Holders: 25
Edison International (NYSE:EIX) is a California-based public utility company that supplies electricity and energy solutions to millions of customers. Edison International (NYSE:EIX) offers a dividend yield of 4.45% as of January 21, making it one of the best dividend contenders to buy for 2022.
On December 10, Edison International (NYSE:EIX) declared a $0.70 per share quarterly dividend, which is a 5.7% increase from the prior dividend of $0.66. The dividend was payable on January 31, to shareholders of record on December 31.
Argus analyst Gary Hovis raised the price target on Edison International (NYSE:EIX) to $73 from $68 and kept a Buy rating on the shares on December 29. The analyst is positive on Edison International (NYSE:EIX)’s forward earnings visibility, favorable regulatory environment, and improving financial strength.
In the third quarter of 2021, 25 hedge funds were long Edison International (NYSE:EIX), up from 18 funds in the preceding quarter. Pzena Investment Management is the biggest Edison International (NYSE:EIX) stakeholder, with an $814.6 million position in the company.
1. Algonquin Power & Utilities Corp. (NYSE:AQN)
Number of Years of Dividend Increases: 11
Dividend Yield as of January 21: 4.87%
Number of Hedge Fund Holders: 15
Algonquin Power & Utilities Corp. (NYSE:AQN) is a renewable energy company from Canada, focused on electricity generation, transmission, natural gas, and water supply. Algonquin Power & Utilities Corp. (NYSE:AQN) made it to our list of the best dividend contenders to buy for 2022, delivering a dividend yield of 4.87%.
Algonquin Power & Utilities Corp. (NYSE:AQN) on November 11 declared a $0.1706 per share quarterly dividend, in line with previous, which was paid on January 14. The company has paid increasing dividends for 11 years consecutively.
BMO Capital analyst Ben Pham upgraded Algonquin Power & Utilities Corp. (NYSE:AQN) on November 10 to Outperform from Market Perform with an unchanged price target of $17. The analyst upgraded the stock following Algonquin Power & Utilities Corp. (NYSE:AQN)’s acquisition of Kentucky Power and associated $650 million equity offering. The analyst sees “attractive” 24% potential total return in the shares.
A total of 15 hedge funds were long Algonquin Power & Utilities Corp. (NYSE:AQN) in the third quarter of 2021, down from 24 funds in the preceding quarter. Citadel Investment Group is the biggest Algonquin Power & Utilities Corp. (NYSE:AQN) stakeholder as of Q3 2021, with 1.10 million shares worth $53.5 million.
You can also take a look at 11 Best Blue Chip Stocks To Buy Now and Charlie Munger’s Daily Journal Portfolio: Top Stock Picks.
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Disclosure: None. 10 Best Dividend Contenders to Buy for 2022 is originally published on Insider Monkey.
