In this article, we discuss 11 best dividend-paying stocks to buy now. You can skip our detailed analysis of dividend stocks and their returns over the years, and go directly to read 5 Best Dividend-Paying Stocks To Buy Now.
Dividend investing has been a reliable source of generating income for investors, especially during periods of financial volatility. Companies with solid dividend histories can deliver superior total returns and often outperform their non-dividend paying counterparts. According to a report published by RMB Capital, companies that regularly raised their dividends delivered an average annual return of 9.62% from 1972 to 2018, compared with a 2.40% average annual return of non-dividend payers during the same period.
As various economic and geopolitical circumstances sent the US financial market into a tailspin in 2022, investors are putting their money in dividend stocks. Recently, Citigroup’s CIO David Bailin also emphasized this in one of his interviews, saying that investors should readjust their portfolios in a defensive position, with more and more consideration for dividend equities, especially in the last six months of the year. He further mentioned that the market is in a rate-raising environment, so investors must shift their focus on earnings which can be achieved through their dividend investments. In 2022, US exchanges saw considerable growth in dividend earnings, as NASDAQ and Russell 2000 dividend payments surged by 20% through May from a year ago period, as mentioned in a report by CME Group. Moreover, iShares Core High Dividend ETF, which tracks high dividend-paying US equities, such as Johnson & Johnson (NYSE:JNJ), The Coca-Cola Company (NYSE:KO), and Merck & Co., Inc. (NYSE:MRK) gained 7.42% in the past year, compared with an 11.9% decline of the S&P 500 during the same period.
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In this article, we discuss 11 best dividend-paying stocks to buy now. The stocks mentioned below are considered because of their strong business fundamentals, solid dividend histories, and analysts’ ratings. These stocks are also famous among elite funds, according to the Q1 2022 database of Insider Monkey.
Best Dividend-Paying Stocks To Buy Now
11. W.W. Grainger, Inc. (NYSE:GWW)
Dividend Yield as of July 5: 1.52%
W.W. Grainger, Inc. (NYSE:GWW) is an American business-to-business distributor of maintenance, repair, operating supplies, and other related products.
On April 27, W.W. Grainger, Inc. (NYSE:GWW) announced a quarterly dividend of $1.72 per share, up 6% from the same period. The company has been raising its dividends for the past 51 years consistently. The stock’s dividend yield was recorded at 1.52% on July 5.
In May, Stephens raised its price target on W.W. Grainger, Inc. (NYSE:GWW) to $565 with an Equal Weight rating on the shares, appreciating the company’s Q1 earnings beat and as the stock reached its all-time high in April.
At the end of March 2022, 33 hedge funds reported having investments in W.W. Grainger, Inc. (NYSE:GWW), according to Insider Monkey’s database. These investments amounted to over $474 million. AQR Capital Management was the company’s largest stakeholder in Q1, owning stakes worth $113.8 million.
Just like Johnson & Johnson (NYSE:JNJ), The Coca-Cola Company (NYSE:KO), and Merck & Co., Inc. (NYSE:MRK), GWW also has a long history of dividend payments.
Third Avenue Management mentioned W.W. Grainger, Inc. (NYSE:GWW) in its Q1 2022 investor letter. Here is what the firm has to say:
“Held in the Fund since 2019, Grainger plc (“Grainger”) is a UK-based real estate operating company that is the leading owner, manager, and developer of multi-family properties in the supply-constrained markets of the UK (where the multi-family business is more commonly referred to as the private-rental sector or “PRS”). At the end of the 2021 calendar year, the company owned a portfolio of 7,100 PRS units that were 95.0% leased with two-thirds of the value in the greater London area and the remaining one-third in the other UK regions. (See full text here).
10. Dover Corporation (NYSE:DOV)
Dividend Yield as of July 5: 1.67%
Dover Corporation (NYSE:DOV) is an American manufacturing company that specializes in industrial products. In May, the company announced the acquisition of Malema Engineering, in a deal worth $225 million. This acquisition will strengthen the company’s sensor portfolio with new technological devices.
On May 6, Dover Corporation (NYSE:DOV) declared a quarterly dividend of $0.50 per share, raising it by 1% in August 2021. Though the company has raised its dividends by a small percentage, it maintains a 66-year streak of dividend growth. Moreover, its long-term dividend growth is satisfactory, with a 10-year CAGR of 9%. Dover Corporation (NYSE:DOV) is expected to grow free cash flow from $944.4 million in 2021 to $1.3 billion in 2022, which makes it a safer option to return cash to shareholders. The stock’s dividend yield stood at 1.67%, as of July 5.
In May, Barclays appreciated the strong balance sheet of Dover Corporation (NYSE:DOV) but also mentioned the challenges of inflation. The firm lowered its price target on the stock to $140, with an Equal Weight rating on the shares.
At the end of Q1 2022, 29 hedge funds in Insider Monkey’s database owned stakes in Dover Corporation (NYSE:DOV), the same as in the previous quarter. These stakes hold a collective value of roughly $429 million. Millennium Management was the company’s leading shareholder in Q1, owning stakes worth over $123.5 million.
9. Nucor Corporation (NYSE:NUE)
Dividend Yield as of July 5: 1.98%
Nucor Corporation (NYSE:NUE) is a North Carolina-based steel production company and one of the biggest recyclers in the state. In May, the company remained one of the prime beneficiaries of the growth in building materials and energy demand. In the past year, the stock delivered a 10.6% return to shareholders, as of the close of July 5.
Nucor Corporation (NYSE:NUE) is one of the best dividend stocks to buy now as it has been raising its payouts every year since its first announced dividends in 1973. In June, the company announced its 197th consecutive dividend payment of $0.50 per share. Moreover, the company also paid additional dividends to shareholders from 2005 to 2008. In Q1 2022, Nucor Corporation (NYSE:NUE) generated over $2 billion in free cash flow, which is expected to grow in the coming quarters. The stock’s dividend yield came in at 1.98% on July 5.
As the steel equities fell by a certain percentage from recent peaks in 2022, Goldman Sachs lowered its price target on Nucor Corporation (NYSE:NUE) in May, with a Neutral rating on the shares, highlighting the stock’s potential to overcome these headwinds.
As per Insider Monkey’s Q1 2022 database, 22 hedge funds owned stakes in Nucor Corporation (NYSE:NUE), down from 26 a quarter earlier. These hedge funds have a total of $260.6 million invested in the company, up from $186.2 million worth of investments made by funds in Q4 2021.
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.”
8. PPG Industries, Inc. (NYSE:PPG)
Dividend Yield as of July 5: 2.05%
PPG Industries, Inc. (NYSE:PPG) is a supplier of paints, coatings, and specialty materials, with operations in over 70 countries. The company beat market estimates in Q1 2022 and exceeded its January guidance due to higher-than-expected sales volume. For Q2, it expects its sales volume to grow by a low-to-middle single-digit percentage.
PPG Industries, Inc. (NYSE:PPG) has a track record of raising dividends for the past 50 years consecutively, achieving a Dividend King status in 2021. Also, the company has been making uninterrupted annual dividend payments since 1899. It currently offers a quarterly payout of $0.59 per share, with a yield of 2.05%, as of July 5. The company’s payout ratio is 37%, with a 5-year dividend CAGR standing at 8.1%.
In June, Vertical Research upgraded PPG Industries, Inc. (NYSE:PPG) to Buy from Hold, with a $139 price target, highlighting the stock’s compelling value.
According to Insider Monkey’s Q1 database, 33 hedge funds made investments in PPG Industries, Inc. (NYSE:PPG), worth $441.3 million. In comparison, 34 hedge funds owned stakes in the Pennsylvania-based company in Q4 2021, valued at nearly $5 million. First Eagle Investment Management was the company’s leading shareholder at the end of March 2022.
ClearBridge Investments mentioned PPG Industries, Inc. (NYSE:PPG) 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 paint and coating company PPG Industries (NYSE:PPG) that use natural gas and oil related products as feedstock into their products 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.”
7. Archer-Daniels-Midland Company (NYSE:ADM)
Dividend Yield as of July 5: 2.18%
Archer-Daniels-Midland Company (NYSE:ADM) is a food processing company that specializes in human and animal nutrition and operates over 270 food processing plants across the globe. The stock is up 5.41% for 2022 so far, as investors take shelter in consumer defensive stocks due to rising recession fears. In the past year, the stock returned 20.37% to shareholders, as of the market close of July 5.
Archer-Daniels-Midland Company (NYSE:ADM) is just one year away from becoming a part of the Dividend King group, raising its dividends for the past 49 years consistently. On May 4, the company announced a quarterly payout of $0.40 per share, raising it by 8% in January. In the past 10 years, the company’s annual dividend growth rate stood at 8.4%. By 2025, it expects its payout ratio to fall between 30% to 40%, up from 26.4% in 2022. As of July 5, the stock’s dividend yield was 2.18%.
In April, Baird raised its price target on Archer-Daniels-Midland Company (NYSE:ADM) to 108 with an Outperform rating on the shares. The firm said that the company is well-positioned to achieve its 2025 EPS target of $6.00-$7.00 and is handling numerous operational challenges while maintaining strong performance.
At the end of March 2022, 42 hedge funds owned positions in Archer-Daniels-Midland Company (NYSE:ADM), up from 41 a quarter earlier. These stakes hold a collective value of $625.6 million, compared with $481.2 million worth of stakes owned by hedge funds in Q4 2021.
6. Sysco Corporation (NYSE:SYY)
Dividend Yield as of July 5: 2.29%
Sysco Corporation (NYSE:SYY) is a Texas-based food company that is involved in the marketing and distribution of food products and kitchen equipment. On June 29, the stock gained 1.49% as investors moved toward consumer defensive stocks amid recession fears. The stock is up 7.70% for 2022, as of July 5’s close.
On April 28, Sysco Corporation (NYSE:SYY) announced a quarterly dividend of $0.49 per share, up 4.3% from its previous dividend. The company has a run of making dividend payments every quarter since it went public in 1970 while growing its annual payouts every year since 1976. In the past 10 years, its dividend CAGR stood at 5.9%, however, the yield has fallen during this period from 3.5% to 2.29%, as recorded on July 5. By June 2023, Sysco Corporation (NYSE:SYY) is expected to boost its free cash flow to $2.1 billion, indicating further dividend hikes in the coming years.
In June, Sysco Corporation (NYSE:SYY) was one of Barclays’ top picks in a defensive sector as quick service servants are gaining more traction among consumers than higher-cost casual dining. The firm raised its price target on the stock to $102 with an Overweight rating on the shares.
Insider Monkey’s Q1 database shows that Sysco Corporation (NYSE:SYY) remained popular among elite funds, with 31 hedge fund positions, up from 25 a quarter earlier. The combined value of hedge fund investments stood at over $1.71 billion. With over 11.5 million shares, Trian Partners was the company’s leading shareholder in Q1.
In addition to Johnson & Johnson (NYSE:JNJ), The Coca-Cola Company (NYSE:KO), and Merck & Co., Inc. (NYSE:MRK), Sysco Corporation (NYSE:SYY) is also one of the prominent dividend stocks to consider.
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Disclosure. None. 11 Best Dividend-Paying Stocks To Buy Now is originally published on Insider Monkey.
