In this article, we discuss 12 best-performing dividend stocks in 2022.
Major central banks have signaled the likelihood of further interest rate hikes heading into next year. The slow economic growth has increased the risks of a global recession. Ethan Harris, a head of global economics research at Bank of America, spoke to Bloomberg in December about the possibility of a recession at the start of next year. This was also confirmed by World Bank’s president earlier in September, who asserted that the global weakening economy would result in a recession over the next year. In the current market situation, analysts are recommending dividend stocks to generate stable income.
In periods of high inflation, dividend stocks have recorded strong performance relative to the broader market. Companies that hold long dividend growth track records are particularly popular in this regard. Dividend growers and initiators delivered an annual average return of 10.4% from January 1973 to December 1984, as reported by Sterling Capital. During the same period, non-dividend stocks returned 5.1% annually. The report also mentioned that dividend growers outperformed their peers when inflation ranged between 4% to 13% annually over the past five decades.
The best dividend stocks this year exhibited strong performance and hold decades-long dividend growth track records. Companies that consistently grow their dividends can significantly increase portfolio returns for the long term during turbulent market conditions. Some dividend stocks that remained famous this year include AbbVie Inc. (NYSE:ABBV), Johnson & Johnson (NYSE:JNJ), and Merck & Co., Inc. (NYSE:MRK) among others that are mentioned below.
Photo by Karolina Grabowska: https://www.pexels.com/photo/hands-holding-us-dollar-bills-4968630/
Our Methodology:
The stocks mentioned below have shown strong returns this year and have solid dividend policies. In addition to this, we analyzed these stocks through their overall financial health and balance sheets. The stocks are ranked according to their dividend yields, as of December 21.
12 Best Performing Dividend Stocks in 2022
12. McKesson Corporation (NYSE:MCK)
Dividend Yield as of December 21: 0.57%
McKesson Corporation (NYSE:MCK) is a Texas-based healthcare company that distributes pharmaceuticals and provides other medical services to its consumers. In the first half of 2022, the company generated $166 million in operating cash flow. It remained committed to its shareholder obligation, returning $139 million in dividends during this period.
McKesson Corporation (NYSE:MCK) currently pays a quarterly dividend of $0.54 per share and has a dividend yield of 0.57%, as of December 21. The company is one of the best dividend stocks on our list as it has raised its payouts for six years consecutively. It can be a good option for dividend portfolios alongside some popular dividend stocks like AbbVie Inc. (NYSE:ABBV), Johnson & Johnson (NYSE:JNJ), and Merck & Co., Inc. (NYSE:MRK).
In November, Cowen raised its price target to McKesson Corporation (NYSE:MCK) to $416 with an Outperform rating on the shares, as the company’s underlying business remained strong this year.
At the end of Q3 2022, 51 hedge funds tracked by Insider Monkey reported owning stakes in McKesson Corporation (NYSE:MCK), compared with 47 in the previous quarter. Berkshire Hathaway owned over 3 million shares in the company. Becoming its largest shareholder in Q3.
Baron Funds mentioned McKesson Corporation (NYSE:MCK) in its Q3 2022 investor letter. Here is what the firm has to say:
“McKesson Corporation (NYSE:MCK) is a leading distributor of pharmaceuticals and medical supplies. The company also provides prescription technology solutions that connect pharmacies, providers, payers, and biopharmaceutical customers. The stock price rose on solid financial results as its business is less exposed to current macroeconomic headwinds. We continue to have the conviction that McKesson can grow earnings per share by an average of 12% to 14% annually and think the stock is still reasonably valued.”
11. Hess Corporation (NYSE:HES)
Dividend Yield as of December 21: 1.07%
Hess Corporation (NYSE:HES) is an American global independent energy company that is involved in the exploration and production of crude oil and natural gas. On December 7, the company declared a quarterly dividend of $0.375 per share, which fell in line with its previous dividend. In the past five years, the company raised its dividend at a CAGR of 8.76%, which makes it one of the best dividend stocks on our list. The stock’s dividend yield on December 21 came in at 1.07%.
Following the company’s third-quarter earnings, Barclays raised its price target on Hess Corporation (NYSE:HES) to $155 in December with an Overweight rating on the shares.
In the third quarter of 2022, Hess Corporation (NYSE:HES) reported revenue of $3.16 billion, up 74.6% from the same period last year. The company returned $265 million to shareholders in dividends and share repurchases.
As of the close of Q3 2022, 33 hedge funds in Insider Monkey’s database owned stakes in Hess Corporation (NYSE:HES), worth $1.22 billion collectively.
10. Marathon Oil Corporation (NYSE:MRO)
Dividend Yield as of December 21: 1.30%
Marathon Oil Corporation (NYSE:MRO) is a Texas-based energy company that is engaged in the exploration of hydrocarbons. The company is one of the best dividend stocks on our list as it returned $1.1 billion to shareholders in the third quarter of 2022, including $54 million in dividends. Through the first three quarters, it returned 61% of its CFO to shareholders.
Marathon Oil Corporation (NYSE:MRO) maintains a six-year streak of consistent dividend growth. The company currently pays a quarterly dividend of $0.09 per share for a dividend yield of 1.30%, as of December 21.
In December, Barclays lifted its price target on Marathon Oil Corporation (NYSE:MRO) to $35 with an Overweight rating on the shares, appreciating the company’s quarterly earnings.
At the end of Q3 2022, 50 hedge funds tracked by Insider Monkey presented a bullish stance on Marathon Oil Corporation (NYSE:MRO), up from 41 funds in the previous quarter. The stakes owned by these hedge funds have a total value of over $1 billion.
Carillon Tower Advisers mentioned Marathon Oil Corporation (NYSE:MRO) in its Q1 2022 investor letter. Here is what the firm has to say:
“Stock selection contributed the most while sector allocation was also positive. An underweight to communication services and an overweight to energy helped performance, while an underweight to consumer staples and an overweight to materials detracted. Stock selection was strong within healthcare and materials but was weak within information technology and industrials. Marathon Oil (NYSE:MRO) increased its quarterly dividend and executed an impressive share buyback that blew by the target it originally announced.”
9. Walmart Inc. (NYSE:WMT)
Dividend Yield as of December 21: 1.54%
An American multinational retail corporation, Walmart Inc. (NYSE:WMT) is another best-performing dividend stock on our list. Credit Suisse raised its price target on the stock to $170 in December with an Outperform rating on the shares. The firm mentioned that the company is a well-positioned defensive name in an uncertain economic condition.
Walmart Inc. (NYSE:WMT) currently pays a quarterly dividend of $0.56 per share for a dividend yield of 1.54%, as of December 21. The company has been raising its dividends consistently for the past 49 years, which makes it one of the best dividend stocks on our list. Moreover, it returned $1.5 billion to shareholders in dividends during the first nine months of the year.
As of the end of Q3 2022, 68 hedge funds tracked by Insider Monkey were bullish on Walmart Inc. (NYSE:WMT), compared with 67 in the previous quarter. The collective value of stakes owned by these hedge funds is over $4.08 billion.
Leaven Partners mentioned Walmart Inc. (NYSE:WMT) in its Q3 2022 investor letter. Here is what the firm has to say:
“In our last quarterly letter, I briefly mentioned that the consensus estimates for corporate profits appeared to be a bit too sanguine. I referenced a Reuters article that reported, as of June 17, Wall Street expected S&P 500 earnings to grow by 9.6% in 2022, which was up from 8.8% in April and from 8.4% in January. That tune began to change at the end of July and accelerated in August and September, as major players, such as Walmart (NYSE:WMT), has recently issued profit warnings and/or have withdrawn guidance. In response, Wall Street has altered its outlook: lowering third-quarter profit growth to 4.6%[2] from 7.2% in early August and slashing full-year profit growth to 4.5%.”
8. Archer-Daniels-Midland Company (NYSE:ADM)
Dividend Yield as of December 21: 1.70%
Archer-Daniels-Midland Company (NYSE:ADM) is an American multinational food processing company, headquartered in Chicago. On November 2, the company declared a quarterly dividend of $0.40 per share, which fell in line with its previous dividend. The company is just one year away from becoming a Dividend King, having raised its payouts for 49 years in a row. The stock’s dividend yield on December 21 came in at 1.70%.
UBS initiated its coverage of Archer-Daniels-Midland Company (NYSE:ADM) in December with a $115 price target, highlighting the company’s productivity and innovative initiatives this year.
As of the close of Q3 2022, 37 hedge funds tracked by Insider Monkey reported owning stakes in Archer-Daniels-Midland Company (NYSE:ADM), compared with 42 in the previous quarter. These stakes are valued collectively at nearly $600 million. With over 1.4 million shares, Markel Gayner Asset Management was the company’s leading stakeholder in Q3.
Diamond Hill Capital mentioned Archer-Daniels-Midland Company (NYSE:ADM) in its Q1 2022 investor letter. Here is what the firm has to say:
“ADM is a leading agricultural processor that also operates a global nutrition business focused on the development of ingredients and flavors for food and beverages, supplements and more. The company’s recent operating results have benefited (unfortunately) from the war in Ukraine as grain prices and agricultural markets globally experienced strong price increases. ADM is positioned well to benefit from the volatility due to its stable North American agricultural base.”
7. Caterpillar Inc. (NYSE:CAT)
Dividend Yield as of December 21: 1.99%
Caterpillar Inc. (NYSE:CAT) is a Texas-based construction and machinery equipment company. In December, Stifel raised its price target on the stock to $271 with a Buy rating on the shares. The firm expects the price/cost environment to generally improve.
In the third quarter of 2022, Caterpillar Inc. (NYSE:CAT) reported revenue of $15 billion, up 21% from the same period last year. The company is one of the best dividend stocks on our list as it returned $2 billion to shareholders in dividends and share repurchases.
On December 15, Caterpillar Inc. (NYSE:CAT) declared a quarterly dividend of $1.20 per share, which fell in line with its previous dividend. The company has been raising its dividends consistently for the past 28 years. The stock’s dividend yield on December 21 came in at 1.99%.
As of the end of the June quarter of 2022, 45 hedge funds tracked by Insider Monkey owned stakes in Caterpillar Inc. (NYSE:CAT), compared with 54 in the previous quarter. These stakes are collectively valued at over $3.25 billion.
Diamond Hill Capital mentioned Caterpillar Inc. (NYSE:CAT) in its Q1 2022 investor letter. Here is what the firm had to say:
“We also initiated a position in Caterpillar (NYSE:CAT), one of the world’s leading manufacturers of construction and mining equipment. It’s a company we know well, as we have owned it in our large cap portfolio for quite some time. Recent share price weakness provided an opportunity for us to add it to our large cap concentrated portfolio at an attractive discount to our estimate of intrinsic value. We believe Caterpillar stands to benefit from increased capital investment supported by a healthier/recovering end market environment, particularly in construction and mining.”
6. McDonald’s Corporation (NYSE:MCD)
Dividend Yield as of December 21: 2.27%
McDonald’s Corporation (NYSE:MCD) is an American multinational fast-food chain. On October 14, the company declared a 10% hike in its quarterly dividend to $1.52 per share. This was the company’s 46th consecutive year of dividend growth. The company’s strong cash position and strong dividend growth track record make it one of the best dividend stocks on our list. The stock’s dividend yield on December 21 came in at 2.27%.
In December, Jefferies raised its price target on McDonald’s Corporation (NYSE:MCD) to $315 with a Buy rating on the shares, maintaining a positive view on the restaurant and food service distribution sector in the US heading into 2023.
In addition to dividend stocks like AbbVie Inc. (NYSE:ABBV), Johnson & Johnson (NYSE:JNJ), and Merck & Co., Inc. (NYSE:MRK), investors are also paying attention to McDonald’s Corporation (NYSE:MCD) due to its dividend growth streak.
McDonald’s Corporation (NYSE:MCD) was a part of 53 hedge fund portfolios in Q3 2022, up from 50 in the previous quarter, according to Insider Monkey’s data. The stakes owned by these hedge funds are worth over $1.8 billion collectively. With over 2.1 million shares, Bridgewater Associates was the company’s leading stakeholder in Q3.
5. Cardinal Health, Inc. (NYSE:CAH)
Dividend Yield as of December 21: 2.48%
Cardinal Health, Inc. (NYSE:CAH) is an American multinational healthcare services company. In fiscal Q1 2023, the company reported revenue of nearly $50 billion, which showed a 13% growth from the same period last year. It had $3.5 billion available in cash and cash equivalents and its total current assets came in at $32.7 billion.
Cardinal Health, Inc. (NYSE:CAH) holds a 36-year streak of consistent dividend growth, which makes it one of the best dividend stocks on our list. The company currently pays a quarterly dividend of $0.4957 per share and has a dividend yield of 2.48%, as of December 21.
In November, Baird raised its price target on Cardinal Health, Inc. (NYSE:CAH) to $82 with a Neutral rating on the shares, highlighting the company’s improving underlying business fundamentals.
At the end of Q3 2022, 45 hedge funds in Insider Monkey’s database owned stakes in Cardinal Health, Inc. (NYSE:CAH), up from 44 a quarter earlier. The stakes owned by these hedge funds have a total value of over $1.03 billion.
Ariel Investments mentioned Cardinal Health, Inc. (NYSE:CAH) in its Q3 2022 investor letter. Here is what the firm has to say:
“Additionally, distributor of pharmaceutical and medical products Cardinal Health, Inc. (NYSE:CAH) advanced in the period as leadership changes were viewed to be a positive for shares. Management provided a new profit outlook for Fiscal 2023 and announced an improvement plan for the medical segment. We are encouraged by these changes and think CAH’s underlying fundamentals and competitive advantages around preventative maintenance screenings and medication management will continue to improve. We believe valuations of health care companies like CAH that focus on cost optimization and promote technological efficiency across the supply chain will be rewarded over the long term.”
4. The Coca-Cola Company (NYSE:KO)
Dividend Yield as of December 21: 2.76%
An American multinational beverage company, The Coca-Cola Company (NYSE:KO) reported a 4% growth in its global unit case volume in the third quarter of 2022. Year-to-date, the company’s cash flow came in at $8.1 billion and its free cash flow amounted to $7.3 billion. Its revenue for Q3 also showed an 11% growth from the same period last year.
Atlantic Equities raised its price target on The Coca-Cola Company (NYSE:KO) to $69 in December with an Overweight rating on the shares, highlighting the company’s strong execution and elevated growth.
The Coca-Cola Company (NYSE:KO) currently pays a quarterly dividend of $0.44 per share. The company holds one of the longest dividend growth streaks of 60 years, which places it as one of the best dividend stocks on our list. The stock has a dividend yield of 2.76%, as of December 21.
As of the end of Q3 2022, 59 hedge funds in Insider Monkey’s database owned stakes in The Coca-Cola Company (NYSE:KO), with a collective value of $25 billion. Berkshire Hathaway was the company’s largest stakeholder with 400 million shares.
Carillon Tower Advisers mentioned The Coca-Cola Company (NYSE:KO) in its Q3 2022 investor letter. Here is what the firm has to say:
“Shares of The Coca-Cola Company (NYSE:KO) sold off with consumer staples even as the company reported strong pricing for the second quarter. On average, product prices rose with management hinting at further momentum.”
3. Chevron Corporation (NYSE:CVX)
Dividend Yield as of December 21: 3.25%
Chevron Corporation (NYSE:CVX) is a California-based multinational energy company. Since the start of 2022, the stock delivered a 44.29% return to shareholders, and its 12-month return came in at 47.8%, as of the close of December 20.
In the third quarter of 2022, Chevron Corporation (NYSE:CVX) distributed $2.7 billion in dividends to shareholders, up 6% from the same period last year. It currently pays a quarterly dividend of $1.42 per share and has a dividend yield of 3.25%, as recorded on December 21. The company has raised its dividends for 25 years in a row, which makes it one of the best dividend stocks on our list.
The number of hedge funds tracked by Insider Monkey owning stakes in Chevron Corporation (NYSE:CVX) grew to 66 in Q3 2022, from 59 in the previous quarter. These stakes have a total value of over $27 billion. Berkshire Hathaway was the company’s leading stakeholder in Q3.
Diamond Hill Capital mentioned Chevron Corporation (NYSE:CVX) in its Q1 2022 investor letter. Here is what the firm had to say:
“Other top contributors in Q1 included multinational energy company Chevron Corp. (NYSE:CVX). The company benefited from increased energy demand as COVID-related economic restrictions eased in tandem with concerns regarding supply interruptions related to Russia’s invasion of Ukraine.”
2. Exxon Mobil Corporation (NYSE:XOM)
Dividend Yield as of December 21: 3.37%
Exxon Mobil Corporation (NYSE:XOM) specializes in the distribution of natural gas. Citigroup presented a positive outlook on energy stocks considering the current market situation. In view of this, the firm raised its price target on the stock to $110 in November with a Neutral rating on the shares.
Exxon Mobil Corporation (NYSE:XOM) has a 40-year run of raising its dividends, which places it as one of the best dividend stocks on our list. It currently offers a per-share dividend of $0.91 every quarter, with a dividend yield of 3.37%, as of December 21.
As of the close of Q3 2022, 75 hedge funds tracked by Insider Monkey owned stakes in Exxon Mobil Corporation (NYSE:XOM), up from 72 in the previous quarter. The collective value of these stakes is $5.5 billion. Rajiv Jain’s GQG Partners was the company’s leading stakeholder in Q3.
1. ConocoPhillips (NYSE:COP)
Dividend Yield as of December 21: 4.46%
ConocoPhillips (NYSE:COP) is a Texas-based petroleum refineries company that produces crude oil. In December, Piper Sandler raised its price target on the stock to $157 with an Overweight rating on the shares, appreciating the company’s performance this year.
ConocoPhillips (NYSE:COP) pays a quarterly dividend of $0.51 per share, having raised it by 11% in November. The company has been making regular dividend payments to shareholders since 1993. Its consistent dividend policy makes it one of the best dividend stocks on our list. The stock has a dividend yield of 4.46%, as of December 21.
As of the close of Q3 2022, 64 hedge funds in Insider Monkey’s database owned stakes in ConocoPhillips (NYSE:COP), worth over $2.66 billion collectively.
ClearBridge Investments mentioned ConocoPhillips (NYSE:COP) in its Q3 2022 investor letter. Here is what the firm has to say:
“ConocoPhillips (NYSE:COP) handily outperformed the energy sector, which led the value benchmark. Its exposure to natural gas helped the stock perform more in line with natural gas E&Ps, which led the sector due to the European energy crisis and U.S. shale gas being considered a secure long-term source of liquid natural gas. In addition to COP’s low-cost resource base, conservative balance sheet and experienced management team, we appreciate its strong focus on ESG measures, which we believe is a good indicator of the quality of a company’s business model and management team.
Specifically, we appreciate solid governance practices with compensation metrics emphasizing ROCE and relative total shareholder return, the board’s effective oversight of management as well as the company’s methane flaring leadership. COP is investing in field electrification and carbon capture across its portfolio, with ambitions to deliver oil production with a CO2 intensity of sub-5 kg/BOE, which would be one of the lowest emission sources of supply in the world.”
You can also take a look at Best Dogs of the Dow Stocks Ranked By Hedge Fund Sentiment and 10 Biggest Dividend Cuts and Suspensions of 2022
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Disclosure. None. 12 Best Performing Dividend Stocks in 2022 is originally published on Insider Monkey.
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