In this article, we discuss 10 best long-term dividend stocks.
Over the years, dividend stocks have contributed meaningfully to long-term total market returns. According to a report by Hartford Funds, from 1960 to 2021, dividend reinvestments represented 84% of the total return of the S&P 500.
US stock market declined sharply in 2022, falling into the bear market territory twice since the start of the year. In June, the consumer price index rose 9.1% from a year ago period, marking the fastest pace for inflation since November 1981. As a result of market turbulence, investors seek stocks that can generate enough cash to return to shareholders through dividends and buybacks. Dividend payments reached their record high this year as many companies raised their payouts after recovering from the pandemic of 2020. As reported by S&P Dow Jones Indices, dividend increases for US common shares in June 2022 were $89.8 billion, up 54.7% from the same period last year. In Q2 2022, the dividend increases showed a 25.1% year-over-year growth at $19.3 billion.
Merck & Co., Inc. (NYSE:MRK), Johnson & Johnson (NYSE:JNJ), and The Coca-Cola Company (NYSE:KO) are some of the major dividend stocks that are popular among investors. These stocks have a sound dividend growth history and have generated positive returns in 2022 so far.
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Our Methodology:
For this list, we picked stocks that have solid dividend history and strong financial health. These stocks are good for long term because they are expected to keep increasing their payouts and also have prospects for share price growth.
Best Long-Term Dividend Stocks
10. Church & Dwight Co., Inc. (NYSE:CHD)
Dividend Yield as of July 18: 1.11%
Church & Dwight Co., Inc. (NYSE:CHD) is an American manufacturing company that produces household, personal care, and healthcare products. In June, Wells Fargo upgraded the stock to Buy, highlighting the company’s defensive qualities in the current macro backdrop. The firm also lifted its price target on the stock to $100.
Church & Dwight Co., Inc. (NYSE:CHD) has paid uninterrupted dividends to shareholders for 485 quarters. The company has raised its payouts consecutively for 26 years. Since 1976, the stock has raised its dividends at an annual average of 12.4%. Church & Dwight Co., Inc. (NYSE:CHD) currently offers a quarterly dividend of $0.2625 per share, with a yield of 1.11%, as of July 18.
At the end of Q1 2022, 33 hedge funds in Insider Monkey’s database owned stakes in Church & Dwight Co., Inc. (NYSE:CHD), up from 27 a quarter earlier. The consolidated value of these stakes is over $1.45 billion. Fundsmith LLP owned over 8.4 million shares in the New Jersey-based company, becoming its largest stakeholder in Q1.
Like Merck & Co., Inc. (NYSE:MRK), Johnson & Johnson (NYSE:JNJ), and The Coca-Cola Company (NYSE:KO), Church & Dwight Co., Inc. (NYSE:CHD) is also one of the prominent dividend stocks with solid dividend history.
9. Union Pacific Corporation (NYSE:UNP)
Dividend Yield as of July 18: 2.45%
Union Pacific Corporation (NYSE:UNP) is one of America’s leading transportation companies, based in Nebraska. The company has paid dividends on its common stock for 123 consecutive years while maintaining a 14-year track record of dividend growth. In Q1 2022, it paid $743 million in dividends, up from $650 million paid during the same period last year. Union Pacific Corporation (NYSE:UNP) generated $657 million in free cash flow in the first quarter and cash provided by operating activities came in at $2.23 billion.
On May 12, Union Pacific Corporation (NYSE:UNP) announced a 12% hike in its quarterly dividend to $1.30 per share. As of July 18, the stock’s dividend yield came in at 2.45%.
As rails volumes could be impacted due to the ongoing geopolitical situation, Stifel lowered its price target on Union Pacific Corporation (NYSE:UNP) in July to $225, with a Hold rating on the shares.
Insider Monkey’s Q1 2022 database shows that Union Pacific Corporation (NYSE:UNP) was popular among elite funds, as it was a part of 89 hedge fund portfolios, up from 59 in the previous quarter. These hedge funds hold stakes with a combined value of over $7 billion.
Carillon Tower Advisers mentioned Union Pacific Corporation (NYSE:UNP) in its Q1 2022 investor letter. Here is what the firm said:
“Union Pacific (NYSE:UNP) benefited from rising oil prices, which typically bring more demand for rail shipping as opposed to moving freight by truck. Rail transportation can be much more fuel-efficient than over-the-road trucking.”
8. The Home Depot, Inc. (NYSE:HD)
Dividend Yield as of July 18: 2.56%
The Home Depot, Inc. (NYSE:HD) is a Georgia-based home improvement company that sells construction products, appliances, and tools. According to BofA, the company is well-positioned to benefit as US retail sales are expected to reach $1.07 trillion in 2022.
At the end of Q1 2022, The Home Depot, Inc. (NYSE:HD) reported $2.8 billion in cash and cash equivalents, up from $2.3 billion reported during the same period last year. In FY23, the company is expected to generate $17.4 billion in free cash flow, which is 24.4% above 2022 levels. The Home Depot, Inc. (NYSE:HD) paid nearly $2 billion in dividends to shareholders in Q1 2022, compared with $1.7 billion paid in the prior-year quarter. The company has raised its dividends consecutively for the past 14 years, with a 10-year CAGR of 17.9%. It currently offers a quarterly payout of $1.90 per share, with a yield of 2.56%, as of July 18.
As per Insider Monkey’s Q1 2022 database, 75 hedge funds owned stakes in The Home Depot, Inc. (NYSE:HD), up from 68 in the previous quarter. The collective value of these stakes stood at nearly $5.6 billion.
Diamond Hill Capital mentioned The Home Depot, Inc. (NYSE:HD) in its recently-published investor letter. Here is what the firm has to say:
“Home Depot shares underperformed as continued solid fundamental results were outweighed by concerns about the impact rising mortgage rates may have on the housing market and general inflationary pressures potentially leading to a consumer spending slowdown. We view the long-term prospects and multi-year fundamental outlook as unchanged.”
7. The Allstate Corporation (NYSE:ALL)
Dividend Yield as of July 18: 2.78%
The Allstate Corporation (NYSE:ALL) is an American insurance company that provides services related to property, casualty, and other insurance products. In 2022, the stock was one of the top 20 financial stocks according to UBS, surging 2.44% year-to-date.
The Allstate Corporation (NYSE:ALL) ended Q1 2022 with $1.2 billion in cash and cash equivalents, up from $763 million during the same period last time. The company paid $230 million in dividends to shareholders in Q1. It maintains a 14-year streak of dividend growth, with a 5-year CAGR of 18.8%. The company’s payout ratio stood at 21% in 2021 and is currently at 34.1%. The Allstate Corporation (NYSE:ALL) pays a quarterly dividend of $0.85 per share, with a dividend yield of 2.78%, as of July 18.
In May, Citigroup initiated its coverage of The Allstate Corporation (NYSE:ALL) with a $159 price target and a Buy rating on the shares. The firm believes that the life sector offers an attractive entry point due to higher interest rates.
At the end of Q1 2022, 44 hedge funds held positions in The Allstate Corporation (NYSE:ALL), up from 40 in the previous quarter, according to Insider Monkey’s database. These hedge funds held collective investments in the company worth over $1 billion. With over 2.7 million shares, AQR Capital Management was the company’s leading shareholder in Q1.
6. Texas Instruments Incorporated (NASDAQ:TXN)
Dividend Yield as of July 18: 2.84%
Texas Instruments Incorporated (NASDAQ:TXN) designs, manufactures, and sells analog and embedded semiconductors, serving over 100,000 customers globally.
In Q1 2022, Texas Instruments Incorporated (NASDAQ:TXN) reported cash flow from operations of $9 billion, up from $7 billion during the same period last year. The company’s free cash flow came in at $6.5 billion, which represents 34% of its revenue. Texas Instruments Incorporated (NASDAQ:TXN) paid over $1 billion in dividends in the first quarter of 2022, compared with $940 million in the prior-year quarter. The company has been raising its dividends consecutively for the past 18 years. It currently offers a quarterly payout of $1.15 per share, with a dividend yield of 2.84%, as recorded on July 18.
In June, Benchmark initiated its coverage of Texas Instruments Incorporated (NASDAQ:TXN) with a Buy rating and a $205 price target. In addition to TXN, analysts are also positive about major dividend stocks, such as Merck & Co., Inc. (NYSE:MRK), Johnson & Johnson (NYSE:JNJ), and The Coca-Cola Company (NYSE:KO).
The number of hedge funds tracked by Insider Monkey owning stakes in Texas Instruments Incorporated (NASDAQ:TXN) declined to 46 in Q1 2022, from 53 in the previous quarter. The combined value of stakes held by hedge funds stood at nearly $2 billion.
Davis Funds mentioned Texas Instruments Incorporated (NASDAQ:TXN) in its Q4 2021 investor letter. Here is what the firm said:
“Within technology and communication services, we own a number of online businesses and semiconductor related companies, including Alphabet, Amazon, Intel, Applied Materials and Texas Instruments. Within the realm of high technology, we believe that leadership positions reflect enduring and widening competitive advantages over smaller competitors, with few exceptions. This is because online businesses, as well as semiconductor companies, benefit from economies of scale. An online search and advertising engine will, in general, be more profitable per unit of cost as it grows larger in terms of users and advertising dollars. It is a hub-and-spoke model, in other words, where it is generally not necessary to grow expenses at the same rate that revenues grow beyond a certain threshold. Therefore, returns on capital tend to be higher, the larger and more dominant the online search company is.”
5. Air Products and Chemicals, Inc. (NYSE:APD)
Dividend Yield as of July 18: 2.90%
Air Products and Chemicals, Inc. (NYSE:APD) is an American chemical industry company that sells gases and chemicals for industrial uses.
In fiscal Q2 2022, Air Products and Chemicals, Inc. (NYSE:APD) paid $664.7 million in dividends to shareholders, up from $592.7 million paid during the same period last year. The company holds a 40-year streak of dividend growth, with a 5-year CAGR of 11.83%. Considering its historical performance, the company is expected to raise its dividend by 10% in the next five years. Air Products and Chemicals, Inc. (NYSE:APD) has a payout ratio of 55%. The company pays a quarterly payout of $1.62 per share, with a dividend yield of 2.90%, as of July 18.
In July, UBS set a $295 price target on Air Products and Chemicals, Inc. (NYSE:APD) with a Buy rating on the shares, presenting a positive stance on chemical and packaging stocks.
As per Insider Monkey’s Q1 2022 database, 39 hedge funds owned positions in Air Products and Chemicals, Inc. (NYSE:APD), down from 40 in the previous quarter. The collective value of stakes owned by these funds stood at nearly $859 million. Jim Simons, Israel Englander, and Ken Griffin were some of the company’s prominent shareholders in Q1.
ClearBridge Investment mentioned Air Products and Chemicals, Inc. (NYSE:APD) in its Q1 2022 investor letter. Here is what the firm has to say:
“While commodities-exposed areas of the materials sector such as mining and steel fared well in the quarter, we tend to have less direct exposure to commodities across our portfolio. Holdings like industrial gas company Air Products and Chemicals (NYSE:APD) faced sharp input cost escalation, driving meaningful margin compression, which was not well-received by investors. While negative in the short term, we remain confident that the company will be able to adjust pricing accordingly and recover margins over the medium term.”
4. BlackRock, Inc. (NYSE:BLK)
Dividend Yield as of July 18: 3.21%
BlackRock, Inc. (NYSE:BLK) is a New York-based multinational investment management company. It provides investment, advisory, and risk management solutions to consumers. At the end of June, the company had $10 trillion in assets under management.
BlackRock, Inc. (NYSE:BLK) froze its dividends during the financial crisis of 2008 but raised its payouts every year since then. In the last five years, the company raised its dividends at a CAGR of 13%. It pays less than 45% of its earnings in dividends, which shows that the company’s payments are safe. BlackRock, Inc. (NYSE:BLK) pays a quarterly dividend of $4.88 per share, raising it by 18% in January. As of July 18, the stock’s dividend yield came in at 3.21%.
In July, UBS lowered its price target on BlackRock, Inc. (NYSE:BLK) to $718 but kept a Buy rating on the shares, highlighting the Q2 market pullback.
At the end of Q1 2022, 49 hedge funds tracked by Insider Monkey owned stakes in BlackRock, Inc. (NYSE:BLK), the same as in the previous quarter. The combined value of these stakes is over $1.8 billion, compared with $1.5 billion worth of stakes owned by hedge funds in Q4 2021.
Carillon Tower Advisers mentioned BlackRock, Inc. (NYSE:BLK) in its Q1 2022 investor letter. Here is what the firm has to say:
“BlackRock (NYSE:BLK) shares underperformed due to a decline in equity market performance. As a reminder, market weakness typically drives assets under management lower, which in turn leads to lower revenues.”
3. Extra Space Storage Inc. (NYSE:EXR)
Dividend Yield as of July 18: 3.53%
Extra Space Storage Inc. (NYSE:EXR) is a Utah-based real estate investment trust that invests in self-storage units.
At the end of Q1 2022, Extra Space Storage Inc. (NYSE:EXR) had nearly $66 million in cash and cash equivalents and $10.5 billion in total assets. The company also reported a 50% increase in its dividend payments, compared with the same period last year. Extra Space Storage Inc. (NYSE:EXR) has been raising its dividends consecutively for the past 11 years. Between 2012 and 2022, the company’s dividend gradually rose from $0.20 per share to $1.50 per share. As of July 18, the stock’s dividend yield stood at 3.53%.
In June, JPMorgan upgraded Extra Space Storage Inc. (NYSE:EXR) to Overweight, with a $193 price target. The firm believed that the company is expected to generate net operating income growth, which is above average for the REIT group in the coming years.
In Q1 2022, 29 hedge funds tracked by Insider Monkey held investments in Extra Space Storage Inc. (NYSE:EXR), up from 27 a quarter earlier. The collective value of these investments stood at $327.7 million. AEW Capital Management was the company’s leading shareholder in Q1.
2. JPMorgan Chase & Co. (NYSE:JPM)
Dividend Yield as of July 18: 3.56%
JPMorgan Chase & Co. (NYSE:JPM) is an American multinational investment bank and financial services holding company. It provides services in consumer banking, investment banking, and asset management.
In Q2 2022, JPMorgan Chase & Co. (NYSE:JPM) paid $3 billion in dividends to shareholders, up from $1.7 billion paid in the last quarter. The company has been raising its dividends consecutively for the past 12 years, with a five-year CAGR of 15%. Its payout ratio stands at 40% and is expected to remain the same for the remaining year. JPMorgan Chase & Co. (NYSE:JPM) currently pays a quarterly dividend of $1.00 per share, with a dividend yield of 3.56%, as of July 18.
Following the strong Q2 earnings of JPMorgan Chase & Co. (NYSE:JPM), RBC Capital expressed concerns about difficult capital market businesses. In view of this, the firm lowered its price target on the stock to $130 but kept an Outperform rating on the shares.
At the end of Q1 2022, 110 hedge funds tracked by Insider Monkey owned stakes in JPMorgan Chase & Co. (NYSE:JPM), up from 107 in the previous quarter. The collective value of these stakes is over $5 billion.
Carillon Tower Advisers mentioned JPMorgan Chase & Co. (NYSE:JPM) in its Q1 2022 investor letter. Here is what the firm has to say:
“More cyclical sectors, including technology and consumer discretionary, were among the weakest, likely due to rising interest rates and inflation. It was encouraging to see the quarter finish on a strong note with the S&P 500 only about 5% away from its all-time highs. Shares of JPMorgan Chase (NYSE:JPM) detracted from performance due to the company’s increased expense guidance, announced in January.”
1. First American Financial Corporation (NYSE:FAF)
Dividend Yield as of July 18: 3.77%
First American Financial Corporation (NYSE:FAF) is an American insurance company, specializing in comprehensive title insurance protection and professional settlement.
At the end of Q1 2022, First American Financial Corporation (NYSE:FAF) reported $1.7 billion in cash and cash equivalents, up from $1.22 billion in the previous quarter. The company’s total assets grew slightly to $16.5 billion, from $16.4 billion at the end of December 2021. First American Financial Corporation (NYSE:FAF) pays a quarterly dividend of $0.51 per share, with a yield of 3.77%, as of July 18. The company has a healthy payout ratio of 35%.
In July, Truist set a $77 price target on First American Financial Corporation (NYSE:FAF) with a Buy rating on the shares, highlighting the company’s Q2 order count.
According to Insider Monkey’s Q1 2022 data, 31 hedge funds owned stakes in First American Financial Corporation (NYSE:FAF), worth over $1.45 billion. In comparison, 30 hedge funds held positions in the California-based company, with stakes valued at over $1.74 billion.
You can also take a look at 10 Best Stocks To Buy In 2022 According To Billionaire Mario Gabelli and 6 Defensive Stocks to Buy in 2022 According to Seth Klarman.
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Disclosure. None. 10 Best Long-Term Dividend Stocks is originally published on Insider Monkey.
