In this article, we discuss 10 stocks for dividend growth investing in 2022.
Dividend growth investing is a popular strategy when it comes to selecting securities for a solid portfolio, since it involves betting on companies that consistently increase their dividends over the years and display solid cash flow positions. The rate of dividend increases might not be over the top, since these companies consistently continue to expand their operations as well, which requires reinvesting part of the excess cash.
Kevin O’Leary, chairman of O’Shares ETFs, joined CNBC ‘Halftime Report’ on January 19 to discuss where to invest amid rising inflation. O’Leary stated that the best companies in the currently rising inflationary environment are those that hold the pricing power, and investors should seek out solid balance sheets and consistency of dividend payouts. He explained that while tech stocks still make major headlines, inflation tends to compress their price to earnings ratios.
“Buy Big Boring Cash Cows”
The O’Shares chairman suggested that sectors like healthcare and consumables are quite strong in pricing power right now, which means they will thrive in the current market conditions. His top dividend ETF at O’Shares is OUSA, which consists of diverse stocks like Johnson & Johnson (NYSE:JNJ), The Procter & Gamble Company (NYSE:PG), Verizon Communications Inc. (NYSE:VZ), and Microsoft Corporation (NYSE:MSFT), since he strongly believes in quality names. He explained that investors should diversify into high yielding sectors and hold “big and boring” names since they usually generate stable cash flows. Another tip for investors by O’Leary was to explore the European market, where cash cows like Nestlé S.A. (OTC:NSRGY) are highly ignored by Americans for some reason.
Hedge funds are bullish on quality dividend growth stocks like Merck & Co., Inc. (NYSE:MRK), JPMorgan Chase & Co. (NYSE:JPM), and Best Buy Co., Inc. (NYSE:BBY) heading into 2022.
Photo by Sharon McCutcheon on Unsplash
Our Methodology
We chose companies that have been consistently paying dividends for at least 10 years, and our selection criteria focused on quality stocks with growth potential and financial stability over the years.
Stocks for Dividend Growth Investing in 2022
10. Comcast Corporation (NASDAQ:CMCSA)
Dividend Yield as of January 24: 2.01%
Number of Years of Consistent Dividend Increases: 13
Number of Hedge Fund Holders: 75
Comcast Corporation (NASDAQ:CMCSA) is an American multinational telecommunications conglomerate, headquartered in Pennsylvania, dealing in products and services including broadband, broadcasting, cable television, direct-broadcast satellite, internet, TV production, and VoIP phone.
On October 28, Comcast Corporation (NASDAQ:CMCSA) declared a $0.25 per share quarterly dividend, in line with previous. This dividend is payable on January 26, to shareholders of record on January 5. Comcast Corporation (NASDAQ:CMCSA) has been consistently increasing its dividends for 13 years.
In its Q3 earnings preview on October 27, Comcast Corporation (NASDAQ:CMCSA) stated that over the last 2 years, the company has beaten EPS estimates 100% of the time and has exceeded revenue estimates 88% of the time.
In the third quarter of 2021, 75 hedge funds were bullish on Comcast Corporation (NASDAQ:CMCSA), down from 84 funds in the preceding quarter. First Eagle Investment Management is the largest stakeholder of Comcast Corporation (NASDAQ:CMCSA) as of Q3 2021, owning roughly 30 million shares worth $1.64 billion.
In addition to Merck & Co., Inc. (NYSE:MRK), JPMorgan Chase & Co. (NYSE:JPM), and Best Buy Co., Inc. (NYSE:BBY), Comcast Corporation (NASDAQ:CMCSA) is a popular dividend growth stock among the smart money.
Here is what ClearBridge Investments has to say about Comcast Corporation (NASDAQ:CMCSA) in its Q2 2021 investor letter:
“We funded the shift primarily with trims in Comcast following big gains in this name. Comcast is a long-term holding that has been and remains core holdings. During the quarter, however, we took gains and resized the positions to reflect their current risk-reward post strong increases in the stocks.
Comcast, like Blackstone, has been a meaningful long-term holding whose stock performance has at times lagged its robust fundamental performance. Over the last nine months the stock price caught up some with the fundamentals and looked like it had more room to run. Our thesis on the name evolved, however, following the May 17 announcement that competitor Discovery was merging its operations with Time Warner. This deal positions the new company as a credible competitor to Netflix, Amazon Prime, Hulu and Disney, and results in Comcast being left without the proverbial dance partner in the evolving pay TV/DTC landscape. While we continue to believe Comcast’s cable systems business is well-positioned and that NBCUniversal remains valuable, the competitive dynamic for NBCUniversal has stiffened. Our reduced position size reflects both our continued enthusiasm for many parts of the franchise and emerging concerns given the evolving pay TV/DTC landscape.”
9. The Bank of New York Mellon Corporation (NYSE:BK)
Dividend Yield as of January 24: 2.38%
Number of Years of Consistent Dividend Increases: 13
Number of Hedge Fund Holders: 46
The Bank of New York Mellon Corporation (NYSE:BK), commonly abbreviated as BNY Mellon, is an investment banking holding company that offers financial services including corporate banking, global wealth management, financial analysis, and private equity.
The Bank of New York Mellon Corporation (NYSE:BK) on January 18 declared a $0.34 quarterly dividend per share, in line with previous. The dividend is payable on February 11, to shareholders on record as of January 31. The Bank of New York Mellon Corporation (NYSE:BK)’s dividend yield came in at 2.38% on January 24, and the bank has consecutively raised its dividends for 13 years.
Wells Fargo analyst Mike Mayo on January 19 raised the price target on The Bank of New York Mellon Corporation (NYSE:BK) to $70 from $62 and kept an Equal Weight rating on the shares.
46 hedge funds monitored by Insider Monkey were long The Bank of New York Mellon Corporation (NYSE:BK) in Q3 2021, down from 52 funds in the preceding quarter. Warren Buffett’s Berkshire Hathaway has held a stake in The Bank of New York Mellon Corporation (NYSE:BK) since Q3 2013. As of the third quarter of 2021, Buffett’s fund holds over 72 million shares of the bank, worth $3.75 billion.
8. Texas Instruments Incorporated (NASDAQ:TXN)
Dividend Yield as of January 24: 2.62%
Number of Years of Consistent Dividend Increases: 18
Number of Hedge Fund Holders: 40
Texas Instruments Incorporated (NASDAQ:TXN) is an American tech company that specializes in semiconductors, which are supplied globally to manufacturers in multiple industries. Texas Instruments Incorporated (NASDAQ:TXN) also designs analog electronics, calculators, digital signal processors, digital light processors, integrated circuits, and embedded processors.
On January 20, Texas Instruments Incorporated (NASDAQ:TXN) declared a quarterly dividend per share of $1.15, in line with previous. The dividend is payable on February 7, to shareholders of record on January 31. Texas Instruments Incorporated (NASDAQ:TXN) has a history of consistently increasing its dividends for 18 years.
Deutsche Bank analyst Ross Seymore on January 20 lowered the price target on Texas Instruments Incorporated (NASDAQ:TXN) to $170 from $185 and kept a Hold rating on the shares ahead of the company’s Q4 results.
Here is what Miller Howard Investments has to say about Texas Instruments Incorporated (NASDAQ:TXN) in its Q3 2021 investor letter:
“We now hold Texas Instruments (TXN), of which has a strong growth prospect, yet attractive valuations in our view. Unlike many younger tech companies, we believe our holdings should significantly benefit from an upturn in the economy. Five of the holdings in our Income-Equity Strategies increased their dividends in the third quarter. Texas Instruments (TXN) once again showed its dedication to shareholders, increasing its dividend by 13%. This is the fourth consecutive double-digit percentage increase since we made our initial investment.”
7. JPMorgan Chase & Co. (NYSE:JPM)
Dividend Yield as of January 24: 2.76%
Number of Years of Consistent Dividend Increases: 10
Number of Hedge Fund Holders: 101
Headquartered in New York, JPMorgan Chase & Co. (NYSE:JPM) is a multinational investment bank and financial services company, offering asset management, commodities, equities trading, insurance, investment management, mortgage loans, mutual funds, private equity, and risk management. JPMorgan Chase & Co. (NYSE:JPM) is one of the Big Four American banks, and it is a leading global banking institution.
Publishing its Q4 financial results on January 14, JPMorgan Chase & Co. (NYSE:JPM) posted earnings per share of $3.33, exceeding estimates by $0.30. Revenue over the period came in at $29.26 billion, missing estimates by approximately $521 million.
On December 14, JPMorgan Chase & Co. (NYSE:JPM) declared a $1.00 per share quarterly dividend, in line with previous. The dividend will be paid on January 31, to shareholders of record on January 6. JPMorgan Chase & Co. (NYSE:JPM) has consecutively boosted its dividends for 10 years, and delivers a yield of 2.76% as of January 24.
UBS analyst Erika Najarian lowered the price target on JPMorgan Chase & Co. (NYSE:JPM) on January 18 to $197 from $210 but kept a Buy rating on the shares. The analyst told investors that the market was already anticipating JPMorgan Chase & Co. (NYSE:JPM) to deliver a 2022 expense outlook that is higher than expectations, and it also did not help that the outlook for net interest income was “unnecessarily confusing and complex”. She reiterated however that she still likes the stock as its near-term negatives now appear to be out.
Ken Fisher’s Fisher Asset Management is the biggest JPMorgan Chase & Co. (NYSE:JPM) stakeholder as of Q3 2021, holding 7.10 million shares worth $1.16 billion. Overall, 101 hedge funds were bullish on JPMorgan Chase & Co. (NYSE:JPM) in the third quarter of 2021, with stakes equaling $5.6 billion.
Here is what Vltava Fund has to say about JPMorgan Chase & Co. (NYSE:JPM) in its Q3 2021 investor letter:
“While all the previous names could be categorized as founder, continuing, or key shareholders, these last two names fall into the category of hired professional managers. This is actually the most numerous category among the bosses of large companies, but even among them there exist a number of individuals with exceptional long-term track records. In our view, these include Jamie Dimon and Herman Gref.
We consider JP Morgan to be the strongest, largest, and most profitable bank in the world. It has not always been so, and the fact that it is what it is today can be attributed especially to its CEO Jamie Dimon. Dimon has spent his entire career in banking. He came to JP Morgan in a roundabout way in 2004 after the bank bought Bank One, of which he was CEO at the time. Since early 2006, Dimon has been CEO of the entire JP Morgan.
The quality and strength of JP Morgan under his leadership became fully apparent for the first time in 2008. Not only did JP Morgan help to stabilize the market by taking over the failing Bear Stearns in the spring of that year, but it was the only major US bank that did not require government assistance throughout the Great Financial Crisis and that was highly profitable even in the difficult year of 2008. Today, JP Morgan is even bigger, even more profitable, and even stronger than ever before. Many investors view banks with disdain, but a good bank with good management can be a very good long-term investment. From the time of its merger with Bank One in 2004 through the end of 2020, JP Morgan’s stock has outperformed even the S&P 500 index. The bank has earned a total net profit of USD 330 billion during this period, of which USD 232 billion has been paid out to shareholders in dividends and in share buybacks. I can recommend two books about Jamie Dimon: The House of Dimon and Last Man Standing.”
6. Alliant Energy Corporation (NASDAQ:LNT)
Dividend Yield as of January 24: 2.86%
Number of Years of Consistent Dividend Increases: 12
Number of Hedge Fund Holders: 17
Alliant Energy Corporation (NASDAQ:LNT), a Wisconsin-based public utility company supplying electricity and natural gas, made it to our list of the top stocks for dividend growth investing in 2022, since the company has been consistently increasing dividends for 12 years and offers a 2.86% yield as of January 24.
Alliant Energy Corporation (NASDAQ:LNT) on January 21 declared a per share quarterly dividend of $0.4275, which is a 6.2% increase from its prior dividend of $0.4025. The dividend is payable on February 15, to shareholders of record on January 31.
BofA analyst Julien Dumoulin-Smith on January 19 downgraded Alliant Energy Corporation (NASDAQ:LNT) to Underperform from Neutral with a price target of $60, up from $57. The analyst sees limited upside with the shares getting “pricey.”
Alliant Energy Corporation (NASDAQ:LNT) was ranked as one of the top most responsible companies in the United States due to workforce diversity and advancements into clean energy.
In the third quarter of 2021, 17 hedge funds in the database of Insider Monkey held stakes worth $76.6 million in Alliant Energy Corporation (NASDAQ:LNT). Renaissance Technologies elevated its stake in Alliant Energy Corporation (NASDAQ:LNT) by 217% in Q3 2021, owning 372,900 shares, valued at $20.8 million.
Endorsements of leading Wall Street hedge funds makes Alliant Energy Corporation (NASDAQ:LNT) one of the top dividend growth stocks to invest in, just like Merck & Co., Inc. (NYSE:MRK), JPMorgan Chase & Co. (NYSE:JPM), and Best Buy Co., Inc. (NYSE:BBY).
5. Best Buy Co., Inc. (NYSE:BBY)
Dividend Yield as of January 24: 2.90%
Number of Years of Consistent Dividend Increases: 18
Number of Hedge Fund Holders: 29
Best Buy Co., Inc. (NYSE:BBY) is a Minnesota-based consumer electronics retailer operating in the United States, Canada, and Puerto Rico. Best Buy Co., Inc. (NYSE:BBY) has had 18 consecutive years of dividend growth, and the stock offers a 2.90% yield as of January 24.
On November 24, Best Buy Co., Inc. (NYSE:BBY) declared a $0.70 per share quarterly dividend, in line with previous. The dividend was paid on January 4, to shareholders of record on December 14.
Among the hedge funds tracked by Insider Monkey in Q3 2021, 29 funds were bullish on Best Buy Co., Inc. (NYSE:BBY), with stakes totaling roughly $680 million. AQR Capital Management is the biggest stakeholder of the company, owning 1.6 million shares worth $176.9 million.
4. Lockheed Martin Corporation (NYSE:LMT)
Dividend Yield as of January 24: 3.02%
Number of Years of Consistent Dividend Increases: 19
Number of Hedge Fund Holders: 51
Lockheed Martin Corporation (NYSE:LMT) is an American aerospace company with multiple divisions including aeronautics, missiles and fire control, rotary and mission systems, and space. Lockheed Martin Corporation (NYSE:LMT) has consistently elevated its dividend payments for 19 years, and the company delivers a 3.02% yield.
On September 23, Lockheed Martin Corporation (NYSE:LMT) declared a $2.80 per share quarterly dividend, which reflects a 7.7% increase from its prior dividend of $2.60. The dividend was paid on December 27, to shareholders of record on December 1.
Wells Fargo analyst Matthew Akers raised the price target on Lockheed Martin Corporation (NYSE:LMT) to $379 from $340 and kept an Equal Weight rating on the shares on January 10. The analyst noted that Lockheed Martin Corporation (NYSE:LMT)’s large exposure to the F-35 aircraft family is now a liability after driving outsized growth for the past several years, although new programs transitioning to production could offset risk to legacy rotorcraft platforms. Future Vertical Lift FLRAA program remains a big opportunity, the analyst added in a research note.
Among the hedge funds monitored by Insider Monkey in the third quarter of 2021, 51 funds were bullish on Lockheed Martin Corporation (NYSE:LMT), down from 58 funds in the prior quarter. Israel Englander’s Millennium Management is one of the leading Lockheed Martin Corporation (NYSE:LMT) stakeholders. Englander’s fund boosted its stake in the company by 4753% in the third quarter, holding a total of 561,512 shares worth $193.7 million.
Here is what Vltava Fund has to say about Lockheed Martin Corporation (NYSE:LMT) in its Q4 2021 investor letter:
“Of course, not all of our companies are doing better than we expected. Lockheed Martin fell somewhat short of our expectations last year. In the cases of Lockheed disruptions in the supply and logistics chains. Lockheed uses a great many subcontractors from various countries and could not avoid issues with continuity of supplies. As a result, production will be slightly lower than we had expected.”
3. Amgen Inc. (NASDAQ:AMGN)
Dividend Yield as of January 24: 3.41%
Number of Years of Consistent Dividend Increases: 10
Number of Hedge Fund Holders: 52
Headquartered in California, Amgen Inc. (NASDAQ:AMGN) is one of the largest multinational biopharmaceutical companies in the world that uses recombinant DNA technology to create cures for autoimmune diseases and cancer.
On December 3, Amgen Inc. (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 will be paid on March 8, to shareholders of record on February 15.
John Overdeck and David Siegel’s Two Sigma Advisors is the biggest Amgen Inc. (NASDAQ:AMGN) stakeholder as of Q3 2021, with 1.85 million shares worth roughly $394 million. Overall, 52 hedge funds in the third quarter database of Insider Monkey were bullish on Amgen Inc. (NASDAQ:AMGN), with stakes totaling $1.4 billion.
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.”
2. Merck & Co., Inc. (NYSE:MRK)
Dividend Yield as of January 24: 3.45%
Number of Years of Consistent Dividend Increases: 12
Number of Hedge Fund Holders: 77
Merck & Co., Inc. (NYSE:MRK) has consistently increased its dividends for the past 12 years, and offers a 3.45% yield as of January 24, making it one of the top dividend growth stocks heading into 2022. Merck & Co., Inc. (NYSE:MRK) is a New Jersey-based pharmaceutical company that develops medicines, vaccines, biologic therapies, and animal health products.
On November 30, Merck & Co., Inc. (NYSE:MRK) declared a $0.69 per share quarterly dividend, which reflects an increase of 6.2% from its prior dividend of $0.65. The dividend was distributed on January 7, to shareholders of record on December 15.
Goldman Sachs analyst Chris Shibutani on December 17 initiated coverage of Merck & Co., Inc. (NYSE:MRK) with a Buy rating and a $93 price target. The analyst also added the shares to the firm’s Conviction List with the price target implying 22% upside from current levels. Further, Keytruda is one of Merck & Co., Inc. (NYSE:MRK)’s products that is competitively positioned to capture commercial gains, according to the analyst.
In the third quarter of 2021, elite hedge funds were keen on Merck & Co., Inc. (NYSE:MRK). The Q3 database of Insider Monkey indicated that 77 funds were bullish on Merck & Co., Inc. (NYSE:MRK), holding stakes totaling $4.55 billion. Fisher Asset Management is the largest Merck & Co., Inc. (NYSE:MRK) stakeholder, with 10.6 million shares worth approximately $799 million.
Here is what Miller Howard Investments has to say about Merck & Co., Inc. (NYSE:MRK) in its Q3 2021 investor letter:
“While optimistic about a recovery, we continue to balance our cyclical holdings with dividend-payers in stable, less economically-sensitive industries. We hold three pharmaceutical companies, (which includes) Merck (MRK). All three have strong cash flows and balance sheets, making their high dividends reasonably safe. The investment controversy surrounding these pharma companies is whether they can develop or acquire new products to replace their current blockbuster drugs. The low valuations on these stocks reflects what we believe to be undue pessimism by investors on the prospects for new drugs.”
1. Consolidated Edison, Inc. (NYSE:ED)
Dividend Yield as of January 24: 3.82%
Number of Years of Consistent Dividend Increases: 47
Number of Hedge Fund Holders: 24
Consolidated Edison, Inc. (NYSE:ED) is a leading American energy company that is entirely investor-owned, supplying electricity, gas, and steam to the New York metropolitan area. Consolidated Edison, Inc. (NYSE:ED) has been distributing increasing dividends for 47 consecutive years.
On January 20, Consolidated Edison, Inc. (NYSE:ED) declared a $0.79 per share quarterly dividend, which is a 1.9% increase from its prior dividend of $0.78. As of January 24, Consolidated Edison, Inc. (NYSE:ED) delivers a 3.82% dividend yield, making it one of the top plays for dividend growth investing in 2022.
RBC Capital analyst Shelby Tucker on December 22 raised the price target on Consolidated Edison, Inc. (NYSE:ED) to $85 from $78 but kept a Sector Perform rating on the shares. The company has the potential to capitalize on meaningful investment opportunities given the state’s “ambitious” clean energy goals, but New York’s challenging regulatory environment remains an issue, the analyst tells investors in a research note.
In the third quarter of 2021, 24 hedge funds were long Consolidated Edison, Inc. (NYSE:ED), with stakes totaling $364.1 million. Electron Capital Partners owns 1.35 million Consolidated Edison, Inc. (NYSE:ED) shares as of Q3, valued at $98.4 million, and is the biggest stakeholder of the company.
You can also take a look at Retirement Stock Portfolio: 10 Safe Tech Stocks To Consider and 10 Best Dividend Aristocrats to Buy for 2022.
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Disclosure: None. 10 Stocks for Dividend Growth Investing in 2022 is originally published on Insider Monkey.
