In this article, we discuss 10 best dividend stocks to buy in 2022.
In 2022, dividend stocks are gaining traction among investors due to the global market crash. Since the start of the year, the S&P 500 is down 17.4% and the tech-heavy NASDAQ fell by 24.8%, presenting an alarming picture of the market for the rest of the year. Analysts suggest investing in dividend stocks, as dividend income represented 40% of the total market returns from 1930 to 2021 and dividend-paying companies are known to have weathered severe market storms in the past.
According to BofA Securities, the S&P 500 is expected to generate minimal returns for the next decade while dividend stocks will contribute significantly to overall returns. The firm further mentioned that companies with strong balance sheets, steady cash flows, and attractive yields can save investors from inflation as they are expected to grow their dividends regularly. In the second quarter of 2022, dividend payments reached a record high as the companies in the S&P 500 paid out $140 billion in dividends, up from $137.6 billion in the previous quarter, as reported by Wall Street Journal. Howard Silverblatt, a senior analyst at S&P Dow Jones Indices, said that he expects dividend payments to grow by another 10% by the end of the year.
Dividend stocks like The Coca-Cola Company (NYSE:KO), Johnson & Johnson (NYSE:JNJ), and The Procter & Gamble Company (NYSE:PG) are popular among investors as they have raised their dividends for a significant period of time. These stocks also offer investors a regular stream of passive income, which is rewarding in the current market situation.
Photo by Sharon McCutcheon on Unsplash
Our Methodology:
The dividend stocks mentioned below have strong dividend policies and reported solid financials in the first quarter of 2022. The stocks are ranked from the lowest yield to the highest. Our data of over 900 elite hedge funds show that these dividend stocks are also popular among famous hedge funds.
Best Dividend Stocks to Buy in 2022
10. UnitedHealth Group Incorporated (NYSE:UNH)
Dividend Yield as of July 21: 1.27%
UnitedHealth Group Incorporated (NYSE:UNH) is an American healthcare and insurance company that offers related services to consumers.
In Q2 2022, UnitedHealth Group Incorporated (NYSE:UNH) generated $6.9 billion in cash flows from operations. The company’s cash and cash equivalents at the end of the quarter stood at $24.6 billion, up from $19.8 billion during the same period last year. UnitedHealth Group Incorporated (NYSE:UNH) returned nearly $4 billion to shareholders in Q2 in dividends and buybacks. On June 8, the company raised its quarterly dividend by 14% to $1.65 per share, with a yield of 1.27%, as of July 21. The company maintains a 12-year track record of dividend growth and raised its payout by 130% in the past five years.
Following the company’s Q2 results, BMO Capital raised its price target on UnitedHealth Group Incorporated (NYSE:UNH) in July to $610 with a Market Perform rating on the shares.
UnitedHealth Group Incorporated (NYSE:UNH) was the 15th most popular stock among elite funds in Q1 2022, as 103 hedge funds in Insider Monkey’s database owned stakes in the company, worth over $12.8 billion. In the previous quarter, 96 hedge funds owned $13.6 billion worth of stakes in the company.
In addition to The Coca-Cola Company (NYSE:KO), Johnson & Johnson (NYSE:JNJ), and The Procter & Gamble Company (NYSE:PG), UNH is also one of the most prominent stocks in 2022.
Baron Funds mentioned UnitedHealth Group Incorporated (NYSE:UNH) in its Q1 2022 investor letter. Here is what the firm has to say:
“UnitedHealth Group Incorporated is a leading diversified health and well- being company whose divisions include insurance arm United Healthcare and Optum, which offers care delivery and other services. Shares increased on a fourth quarter beat and a reaffirmation of what is likely conservative guidance for 2022. We believe UnitedHealth leads the health care industry in innovation and execution, as evidenced by its strong value proposition leading to Medicare Advantage share gains, strong cost controls, and its leadership position in the shift to value-based care.”
9. American Express Company (NYSE:AXP)
Dividend Yield as of July 21: 1.40%
American Express Company (NYSE:AXP) is a New York-based leading issuer of personal, corporate, and small business credit cards. In addition to this, the company also offers travel-related services to consumers.
American Express Company (NYSE:AXP) raised its dividends for years before ceasing dividend growth in 2020 and 2021 due to the pandemic. However, the company has been making uninterrupted dividend payments for the past 30 years. Its average quarterly free cash flow stands at $2.36 billion in the past five years and it allocates approximately $403 million in dividend payments every quarter. American Express Company (NYSE:AXP) currently pays a quarterly dividend of $0.52 per share, raising it by 20% in March. As of July 21, the stock’s dividend yield came in at 1.40%.
In July, Wells Fargo called American Express Company (NYSE:AXP) one of the most favored stocks in the card issuer but lowered its price target on the stock to $190 due to the ongoing economic risks. The firm kept an Overweight rating on the AXP.
At the end of Q1 2022, 69 hedge funds tracked by Insider Monkey presented a bullish stance on American Express Company (NYSE:AXP), up from 64 in the previous quarter. These stakes hold a collective value of over $33.1 billion. With 151.6 million shares valued at $28.3 billion, Berkshire Hathaway was the company’s leading shareholder at the end of March 2022.
8. Nucor Corporation (NYSE:NUE)
Dividend Yield as of July 21: 1.70%
Nucor Corporation (NYSE:NUE) is an American producer of steel and related products based in North Carolina. The company is also one of the biggest recyclers of scrap in the state.
Nucor Corporation (NYSE:NUE) has shown its financial strength in the first quarter of 2022, generating nearly $2 billion in free cash flow. The company repurchased approximately $930 million worth of stocks during the quarter, at an average share price of $157.3. In the first half of 2022, it spent roughly $2 billion on the capital return program, including dividend payments. Nucor Corporation (NYSE:NUE) has been increasing its payouts every year since 1973. It pays a quarterly dividend of $0.50 per share, with a dividend yield of 1.70%, as of July 21.
As the steel prices have fallen from their March highs, Morgan Stanley lowered its price target on Nucor Corporation (NYSE:NUE) in July to $121 with an Equal Weight rating on the shares.
At the end of Q1 2022, 22 hedge funds in Insider Monkey’s database held stakes in Nucor Corporation (NYSE:NUE), down from 24 a quarter earlier. The collective value of these stakes is over $260.6 million. AQR Capital Management was the company’s leading shareholder in Q1, with roughly one million shares.
ClearBridge Investments mentioned Nucor Corporation (NYSE:NUE) in its Q3 2021 investor letter. Here is what the firm has to say:
“Our active approach also applies to being disciplined in managing positions in companies in more cyclical industries and taking profits during stronger periods of each cycle. We closed a position in steel maker Nucor during the quarter after the shares had more than doubled over the last year as a direct participant in the recovery of the U.S. economy and rebound in industrial activity. At this point in the cycle, we no longer view the risk/reward as compelling and feel more confident in deploying the proceeds in more attractive areas discussed in this and previous letters.”
7. Lowe’s Companies, Inc. (NYSE:LOW)
Dividend Yield as of July 21: 2.20%
Lowe’s Companies, Inc. (NYSE:LOW) is a North Carolina-based retail company that mainly specializes in home improvement.
In Q1 2022, Lowe’s Companies, Inc. (NYSE:LOW) paid over $524 million to shareholders in dividends, up from 430 million paid during the same period last year. The company reported over $3.4 billion in cash and cash equivalents at the end of the quarter, compared with $1.13 billion in the previous quarter. On May 27, Lowe’s Companies, Inc. (NYSE:LOW) declared a quarterly dividend of $1.05 per share, up 31% from the previous quarter. The company has been paying dividends consistently since its IPO in 1961 with a 25-year streak of dividend growth. The stock’s dividend yield was recorded at 2.20% on July 21.
In June, MKM Partners initiated its coverage of Lowe’s Companies, Inc. (NYSE:LOW) with a $190 price target and a Neutral rating on the shares, appreciating the company’s performance in inflation.
With a stake worth over $5.5 billion, 65 hedge funds in Insider Monkey’s database owned positions in Lowe’s Companies, Inc. (NYSE:LOW) in Q1, down from 72 a quarter earlier. Pershing Square held over 10.2 million LOW shares, worth $2.06 billion, becoming the company’s leading stakeholder in Q1.
6. Raytheon Technologies Corporation (NYSE:RTX)
Dividend Yield as of July 21: 2.32%
Raytheon Technologies Corporation (NYSE:RTX) is an American multinational aerospace and defense company that specializes in intelligence services and defense manufacturing.
In Q1 2022, Raytheon Technologies Corporation (NYSE:RTX) generated $37 million in free cash flow while its operating cash flow came in at $476 million. For FY22, the company expects its free cash flow to reach $6 billion. Moreover, it paid $745 million in dividends to shareholders during the quarter, up from $705 million paid during the same period last year. Raytheon Technologies Corporation (NYSE:RTX) pays a quarterly dividend of $0.55 per share, with a dividend yield of 2.32%, as of July 21. The company has been raising its dividends consecutively for the past 28 years.
As per Insider Monkey’s Q1 2022 data, 50 hedge funds owned stakes in Raytheon Technologies Corporation (NYSE:RTX), down from 51 in the previous quarter. The collective value of these stakes is over $2.1 billion.
Just like famous dividend stocks, such as The Coca-Cola Company (NYSE:KO), Johnson & Johnson (NYSE:JNJ), and The Procter & Gamble Company (NYSE:PG), Raytheon Technologies Corporation (NYSE:RTX) is also favored by analysts and investors in 2022.
5. Amgen Inc. (NASDAQ:AMGN)
Dividend Yield as of July 21: 3.15%
Amgen Inc. (NASDAQ:AMGN) is a California-based multinational biopharmaceutical company that manufactures medicines for patients with serious diseases.
In Q1 2022, Amgen Inc. (NASDAQ:AMGN) generated $2 billion in free cash flow, compared with $1.9 billion during the same period last year. Its operating cash flow came in at $2.2 billion at the end of the quarter, up from $2.1 billion in the prior-year quarter. The company paid $1.1 billion in dividends to shareholders in Q1, representing a 10% increase from 2021. Amgen Inc. (NASDAQ:AMGN) has been raising its payout consecutively for the last ten years, with a five-year CAGR of 11.97%. The company currently pays a quarterly dividend of $1.94 per share, with a yield of 3.15%, as of the close of July 21.
In June, Oppenheimer raised its price target on Amgen Inc. (NASDAQ:AMGN) to $290 with an Outperform rating on the shares, highlighting the company’s strong financials.
The number of hedge funds tracked by Insider Monkey owning stakes in Amgen Inc. (NASDAQ:AMGN) grew to 56 in Q1 2022, from 52 in the previous quarter. The collective value of these stakes stood at over $1.88 billion. Two Sigma Advisors was the company’s largest stakeholder in Q1, owning over 1.7 million shares.
ClearBridge Investments mentioned Amgen Inc. (NASDAQ:AMGN) in its Q3 2021 investor letter. Here is what the firm has to say:
“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. Broadcom Inc. (NASDAQ:AVGO)
Dividend Yield as of July 21: 3.20%
Broadcom Inc. (NASDAQ:AVGO) manufactures products for wireless and broadband communication industries. The technology company also specializes in semiconductors and infrastructure software solutions.
Broadcom Inc. (NASDAQ:AVGO) presented solid results in the fiscal Q2 of 2022 and expects its financials to remain strong for the coming quarters as well. The company reported $4.2 billion in free cash flow, up from $3.4 billion during the same period last year. Its cash flow from operations stood at $4.24 billion, compared with $3.5 billion in the prior-year period. Moreover, Broadcom Inc. (NASDAQ:AVGO) returned $1.7 billion worth of cash dividends to shareholders during the quarter. The company maintains an 11-year track record of dividend growth. In fiscal Q2, it paid out 50% of its free cash flow as dividends, signaling further dividend growth. Its quarterly payout stands at $4.10 per share, with a yield of 3.20%, as of July 21.
Highlighting the supply chain issues, Deutsche Bank lowered its price target on Broadcom Inc. (NASDAQ:AVGO) in July to $635 but kept a Buy rating on the shares.
Insider Monkey’s Q1 2022 database reported increased hedge fund interest for Broadcom Inc. (NASDAQ:AVGO), with 71 hedge funds holding stakes in the company, up from 62 in the previous quarter. These stakes are collectively valued at over $5.4 billion.
ClearBridge Investments mentioned Broadcom Inc. (NASDAQ:AVGO) in its Q4 2021 investor letter. Here is what the firm has to say:
“However, ClearBridge portfolio companies are responding by supporting their workforces and showing resilience in adapting and thriving. Semiconductor companies ClearBridge owns and engages with have been successful in advancing vaccinations in their global supply chains. In Malaysia, for example, Broadcom has taken part in PIKAS, a public-private partnership vaccination program focusing on the workforce in critical manufacturing sectors. By the summer of 2021 Broadcom was able to get over 90% of workers in its Penang factory at least one dose of vaccine, and roughly 73% fully vaccinated. Companies in the program also pay the administration cost for vaccinations including cases where the employee is no longer employed by the company before full immunization of the employee.”
3. Darden Restaurants, Inc. (NYSE:DRI)
Dividend Yield as of July 21: 3.97%
Darden Restaurants, Inc. (NYSE:DRI) is an American multi-brand restaurant company that operates in over 1800 locations across the country. In July, BofA named DRI as one of the most resilient restaurant stocks as recession risks rise. The firm raised its price target on the stock to $145 with a Buy rating on the shares.
In fiscal Q4 2022, Darden Restaurants, Inc. (NYSE:DRI) paid $563 million in dividends to shareholders, up from $202.6 million paid during the same period last year. In FY22, the company generated $1.3 billion of cash from operations. Darden Restaurants, Inc. (NYSE:DRI) suspended its dividends during the pandemic of 2020 but raised its quarterly payouts four times since then. It currently pays a dividend of $1.21 per share every quarter, with a yield of 3.97%, as of the close of July 21.
At the end of Q1 2022, 32 hedge funds tracked by Insider Monkey presented a bullish stance on Darden Restaurants, Inc. (NYSE:DRI), up from 30 in the previous quarter. These hedge funds held a total stake worth $241.8 million in the Florida-based restaurant company. Ken Griffin and Ray Dalio were the company’s most prominent shareholders in Q1.
2. Triton International Limited (NYSE:TRTN)
Dividend Yield as of July 21: 4.52%
Triton International Limited (NYSE:TRTN) specializes in the acquisition, leasing, and re-leasing of various types of intermodal containers. In addition to this, the company also operates in equipment trading.
At the end of 2021, Triton International Limited (NYSE:TRTN) resumed its shares buyback program and repurchased over 3.3 million shares during the first quarter of 2022. The company paid roughly $42 million in dividends to shareholders during Q1, up from $38.1 million during the same period last year. Triton International Limited (NYSE:TRTN) pays a quarterly dividend of $0.65 per share, with a dividend yield of 4.52%, as recorded on July 21. Due to the company’s payout ratio of 25%, its dividend growth is likely to remain strong in the upcoming quarters.
According to Insider Monkey’s Q1 2022 database, 17 hedge funds owned stakes in Triton International Limited (NYSE:TRTN), worth $303.8 million. In comparison, 21 hedge funds owned positions in the company in the previous quarter, with stakes valued at $254.2 million.
1. Franklin Resources, Inc. (NYSE:BEN)
Dividend Yield as of July 21: 4.56%
Franklin Resources, Inc. (NYSE:BEN) is one of the largest investment management companies in the world, that provides services related to mutual funds, retirement, institutional and individual accounts.
Over the past four quarters, Franklin Resources, Inc. (NYSE:BEN) generated $869 million in free cash flow. At the end of Q1 2022, the company reported $6.8 billion available in cash and cash equivalents. On June 8, Franklin Resources, Inc. (NYSE:BEN) declared a quarterly dividend of $0.29 per share, consistent with its previous dividend. The company has been raising its dividend consecutively for the past 42 years. As of July 21, the stock’s dividend yield came in at 4.56%.
In July, UBS lowered its price target on Franklin Resources, Inc. (NYSE:BEN) to $24 with a Neutral rating on the shares, highlighting pressures on the sector due to the Q2 market pull.
At the end of Q1 2022, 30 hedge funds tracked by Insider Monkey held investments in Franklin Resources, Inc. (NYSE:BEN) worth roughly $250 million. In the previous quarter, 29 hedge funds held stakes in the company, valued at $401 million.
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Disclosure. None. 10 Best Dividend Stocks to Buy in 2022 is originally published on Insider Monkey.
