In this article, we will discuss 15 best dividend-paying dividend stocks to buy now. You can skip our detailed analysis of dividend stocks and their performance over the years, and go directly to read 5 Best Dividend Paying Stocks To Buy Now.
Dividend stocks provide several advantages to income investors, including regular income, the potential for growth, and long-term returns. The current inflation and risks of a recession have gravitated investors’ attention toward these equities as passive income has become their priority. Reinvesting dividends is also important in this regard, as it leads to compounding returns over time.
In one of its reports, Schroders revealed the positive performance of dividends. The report examined stocks across different markets and their performance when dividends are reinvested. The annual average growth across eight markets came in at 4.3% over the past 25 years, which was increased to 7.1% with reinvested dividends.
Professor Siegel’s research in his book The Future of Investors further elaborates on high-dividend stocks and how dividends influence the overall market’s returns. Siegel divided the performance of the S&P 500 dividend stocks into quintiles with the main focus on companies with high dividends. According to the research, stocks with high dividend yields outperformed the broader market by over 1.6% per year from 1957 to 2022.
Investors are steadily investing in dividend stocks to stay afloat this year. Dividend-focused exchange-traded funds are also experiencing record inflows, according to data from Refinitiv Lipper. In the two weeks that ended February 22nd, investors have poured approximately $272 million into dividend ETFs and a record $48 billion in these funds last year. The trend of dividend investing is likely to continue this year as well as analysts are positive about dividend growth. In February, UBS Group AG spoke to Wall Street Journal about the dividend outlook for this year. The firm mentioned that dividends per share are expected to rise by 1% in 2023, despite a possible 11% fall in per-share earnings.
Daniel Dusina, director of investments at Blue Chip Partners, talked to Forbes about a reliable dividend investment strategy to beat inflation. Here are some comments from Dusina:
“In this type of environment, simply targeting companies that currently offer the highest dividend yield is not enough. As inflation and tighter financial conditions hit corporations, investors should look for greater certainty that a company’s profitability, and ultimately their ability to pay an attractive dividend, will not be impaired.”
When analyzing dividend stocks, investors turn to companies with strong dividend policies and solid cash positions. McDonald’s Corporation (NYSE:MCD), Merck & Co., Inc. (NYSE:MRK), and AbbVie Inc. (NYSE:ABBV) are some well-known dividend stocks that have rewarded shareholders with consistent dividend growth and have sound financials. In this article, we will further discuss some of the best dividend-paying stocks to buy now.
Image by Sergei Tokmakov Terms.Law from Pixabay
Our Methodology:
For this list, we scanned Insider Monkey’s database of 943 hedge funds and picked the top 15 dividend stocks, which means the stocks mentioned in this list are the most popular dividend-paying stocks among hedge funds as of the fourth quarter of 2022. The list is ranked in ascending order of the number of hedge funds having stakes in the companies.
15. Union Pacific Corporation (NYSE:UNP)
Number of Hedge Fund Holders: 83
Dividend Yield as of March 14: 2.67%
Union Pacific Corporation (NYSE:UNP) is an American transport company that has operations in 23 states in the US. On February 9, the company declared a quarterly dividend of $1.30 per share, which fell in line with its previous dividend. The company is one of the best dividend-paying stocks on our list as it has been making uninterrupted dividend payments for the past 123 years and has raised its payouts for 16 years in a row. The stock has a dividend yield of 2.67%, as of March 14.
McDonald’s Corporation (NYSE:MCD), Merck & Co., Inc. (NYSE:MRK), and AbbVie Inc. (NYSE:ABBV) are some other popular dividend stocks that are grabbing investors’ attention.
In the fourth quarter of 2022, Union Pacific Corporation (NYSE:UNP) reported revenue of $6.2 billion, which showed an 8.2% growth from the same period last year. The company’s cash and cash equivalents at the end of December 2022 stood at over $973 million, compared with $960 million in the prior year period.
In February, RBC Capital upgraded Union Pacific Corporation (NYSE:UNP) to Sector Perform and also lifted its price target on the stock to $210.
Union Pacific Corporation (NYSE:UNP) was a popular stock among elite funds in Q4 2022, as 83 hedge funds in Insider Monkey’s database owned stakes in the company, up from 74 in the previous quarter. These stakes have a total value of roughly $5.4 billion.
Diamond Hill Capital Management mentioned Union Pacific Corporation (NYSE:UNP) in its Q2 2022 investor letter. Here is what the firm has to say:
“Union Pacific Corporation (NYSE:UNP) is a large railroad company that carries freight across the western US and between Canada and Mexico. It transports a variety of industrial goods, raw materials and containerized freight between major US ports, industrial hubs and international gateways. The goods that Union Pacific and other railroads transport are fundamental inputs in the economy and are resilient to long-term trends in the business cycle. We believe Union Pacific offers a compelling investment opportunity as its substantial infrastructure investments, relative cost advantages, limited leverage and the essential nature of the products it delivers provides the company with what we believe is one of the widest moats in the transportation sector. We also like that Union Pacific has a shareholder-oriented management team that is focused on growing earnings while returning capital to shareholders.”
14. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 84
Dividend Yield as of March 14: 2.95%
Johnson & Johnson (NYSE:JNJ) is one of the world’s largest pharmaceutical companies. It specializes in medical devices, vaccines, and other consumer products. In March, Guggenheim initiated its coverage of the stock with a Neutral rating and a $161 price target, highlighting the company’s MedTech segment that is showing ‘reasonable’ signs of recovery.
Johnson & Johnson (NYSE:JNJ), one of the best dividend-paying stocks on our list, currently pays a quarterly dividend of $1.13 per share. The company’s current dividend growth streak stands at 61 years. The stock’s dividend on March 14 came in at 2.95%.
Johnson & Johnson (NYSE:JNJ) was a part of 84 hedge fund portfolios in Q4 2022, as per Insider Monkey’s database. The stakes owned by these hedge funds have a total value of over $5.5 billion. Ken Griffin, Ray Dalio, and Warren Buffett were some of the company’s major stakeholders in Q4.
13. Wells Fargo & Company (NYSE:WFC)
Number of Hedge Fund Holders: 87
Dividend Yield as of March 14: 3.12%
An American multinational financial services company, Wells Fargo & Company (NYSE:WFC) is next on our list of the best dividend-paying stocks to buy. The company experienced positive hedge fund sentiment in Q4 2022, as 87 funds in Insider Monkey’s database owned investments in the company, up from 77 in the previous quarter. These investments have a value of over $5.5 billion collectively.
Wells Fargo & Company (NYSE:WFC) has been paying dividends to shareholders since 1959. The company currently offers a quarterly dividend of $0.30 per share and has a dividend yield of 3.12%, as of March 14.
In the fourth quarter of 2022, Wells Fargo & Company (NYSE:WFC) reported revenue of $19.6 billion, which fell by 5.8% from the same period last year. However, the company’s total client assets for the quarter came in at over $1.8 billion, up from $1.7 billion in the previous quarter.
In January, Citigroup lifted its price target on Wells Fargo & Company (NYSE:WFC) to $52 and maintained a Buy rating on the stock. The firm mentioned that the stock remained the ‘best value’ on board due to management’s strong performance.
12. Danaher Corporation (NYSE:DHR)
Number of Hedge Fund Holders: 88
Dividend Yield as of March 14: 0.45%
Danaher Corporation (NYSE:DHR) is a Washington-based diversified conglomerate that manufactures products related to a wide range of industries, including medical, commercial, and industrial markets. On February 22, the company announced an 8% hike in its quarterly dividend to $0.27 per share. This was the company’s ninth consecutive year of dividend growth. The stock has a dividend yield of 0.45%, as of March 14.
In January, Cowen maintained an Outperform rating on Danaher Corporation (NYSE:DHR) with a $320 price target, appreciating the company’s improving year-over-year reported growth.
Danaher Corporation (NYSE:DHR) reported revenue of $8.3 billion in Q4 2022, which saw a 2.8% growth from the same period last year. The company’s cash flow for FY22 also remained strong as it posted an operating cash flow of $8.5 billion and a free cash flow of $7.4 billion.
Danaher Corporation (NYSE:DHR) is one of the best dividend-paying stocks to buy on our list as 88 hedge funds in Insider Monkey’s database owned stakes in the company in Q4 2022. These stakes have a consolidated value of over $5.4 billion.
Stewart Asset Management mentioned Danaher Corporation (NYSE:DHR) in its Q3 2022 investor letter. Here is what the firm has to say:
“We also need to point out one global consequence of the rapid rise in interest rates: an irrepressibly strong dollar. This hurts the reported earnings of U.S. companies who sell their goods and services overseas. Foreign currency earnings translate into fewer dollars and thus lower earnings. Most of the companies in your portfolios gain a notable amount of earnings from their international operations. While the strength or weakness of a currency doesn’t change the quality of a business or its longer-term earnings power, it can change the reported earnings of a company over short periods of time. It is difficult to forecast this effect accurately because many of our companies manufacture where they sell, which to some extent dulls the sharp negative effect of a surging dollar. Danaher (NYSE:DHR), among others, is a good example.”
11. Intuit Inc. (NASDAQ:INTU)
Number of Hedge Fund Holders: 92
Dividend Yield as of March 14: 0.80%
Intuit Inc. (NASDAQ:INTU) is an American business software company that mainly specializes in financial software. The company reported strong earnings in fiscal Q2 2023 with revenue of $3.04 billion, which showed a 13.9% growth from the same period last year. Moreover, its cash position also improved as the company’s operating cash flow for the quarter came in at $612 million, up from $230 million in the prior-year period.
On February 24, Intuit Inc. (NASDAQ:INTU) declared a quarterly dividend of $0.78 per share, which was consistent with its previous dividend. The company has been raising its dividends for the past 10 years, which places it as one of the best dividend-paying stocks on our list. The stock’s dividend yield on March 14 came in at 0.80%.
Intuit Inc. (NASDAQ:INTU) also gained positive analysts’ ratings due to its strong quarterly earnings. In February, Citigroup raised its price target on the stock to $475 and maintained a Buy rating on the shares.
The number of hedge funds tracked by Insider Monkey owning stakes in Intuit Inc. (NASDAQ:INTU) grew to 92 in Q4 2022, from 86 a quarter earlier. These stakes have a total value of over $5.6 billion.
Fundsmith mentioned Intuit Inc. (NASDAQ:INTU) in its annual 2022 investor letter. Here is what the firm has to say:
“Take the example of Microsoft and Intuit Inc. (NASDAQ:INTU). Microsoft shares are currently being valued at a P/E ratio of 25.0 times the consensus EPS estimate for the fiscal year ending June 2023. Meanwhile, Intuit is being valued at 28.4 times the non-GAAP consensus estimate for the fiscal year ending July 2023. Many investors and analysts may accept that Intuit is trading at a higher multiple given expectations of greater growth potential. However, Intuit removes share-based compensation from their non-GAAP EPS whereas Microsoft does not. Given that Intuit’s GAAP EPS guidance for the year ending 31st July 2023 is $6.92–$7.22, its non-GAAP guidance is $13.59–$13.89, and the consensus estimate for 2023 EPS is at $13.69, it seems clear that most sell-side analysts are accepting the company’s non-GAAP adjustments, which includes the removal of some $1.8bn of share-based compensation, in their estimates. If we include the impact of share-based compensation in Intuit’s 2023 EPS to make a more apples-to-apples comparison with Microsoft based upon GAAP EPS, Intuit’s 2023 EPS would be closer to $9, meaning that the shares would be trading at a multiple of about 43 times. I think investors and analysts may find a premium of 14% for Intuit over Microsoft (28.4 times versus 25.0 times) to be reasonable. I’m not so sure they are fully aware that Intuit shares are actually trading at a premium of 73% if share-based compensation is treated in the same manner between the two companies.
Many investors and analysts, including us, look to cash flow metrics more than accrual profits. Unfortunately, share-based compensation may cause distortions in cash flow metrics as well, even when they follow GAAP. Under GAAP, share-based compensation is added back in the cash flow from operating activities, which in turn is used in the computation of free cash flow. ..” (Click here to read the full text)
10. Thermo Fisher Scientific Inc. (NYSE:TMO)
Number of Hedge Fund Holders: 92
Dividend Yield as of March 14: 0.26%
Thermo Fisher Scientific Inc. (NYSE:TMO) is an American company that specializes in supplying scientific instrumentation and consumables. Street analysts appreciated the company’s quarterly earnings and the growth it showed on various accounts. Given this, both Morgan Stanley and Cowen raised their price targets on the stock in February to $670 and $711, respectively.
On February 22, Thermo Fisher Scientific Inc. (NYSE:TMO) declared a 17% hike in its quarterly dividend to $0.35 per share, which marked the company’s sixth consecutive year of dividend growth. The stock has a dividend yield of 0.26%, as of March 14. Its strong earnings and sustainable dividend make it one of the best dividend-paying stocks on our list.
At the end of Q4 2022, 92 hedge funds in Insider Monkey’s database owned stakes in Thermo Fisher Scientific Inc. (NYSE:TMO), the same as in the previous quarter. The collective value of these stakes is over $7 billion.
Polen Capital mentioned Thermo Fisher Scientific Inc. (NYSE:TMO) in its Q4 2022 investor letter. Here is what the firm has to say:
“Thermo Fisher Scientific Inc. (NYSE:TMO) is a leader in attractive end markets with a skilled management team who has demonstrated the ability to consistently and wisely allocate capital. It is the world leader in serving science. It is a globally scaled supplier serving more than 400,000 customers working within pharmaceutical and biotech companies, hospitals and clinical diagnostic labs, research institutions, and government agencies. Thermo provides many of the products and services that companies in these industries, particularly pharma and biotech, need to operate and drive science forward. The company manufactures and sells instruments, reagents, and consumables used for a wide range of applications in labs. (Click here to view the full text)
9. S&P Global Inc. (NYSE:SPGI)
Number of Hedge Fund Holders: 97
Dividend Yield as of March 14: 1.11%
S&P Global Inc. (NYSE:SPGI) is next on our list of the best dividend-paying stocks to buy now. The American private banking company was a part of 97 hedge fund portfolios in Q4 2022, up from 90 in the previous quarter, as tracked by Insider Monkey. The stakes owned by these hedge funds have a total value of over $7.8 billion.
S&P Global Inc. (NYSE:SPGI) currently pays a quarterly dividend of $0.90 per share and has a dividend yield of 1.11%, as of March 14. The company has been rewarding shareholders with growing dividends for 50 years now.
Argus raised its price target on S&P Global Inc. (NYSE:SPGI) to $400 in February and maintained a Buy rating on the shares, appreciating the company’s outperformance relative to its peers.
In the fourth quarter of 2022, S&P Global Inc. (NYSE:SPGI) reported revenue of $3 billion, up 40.7% from the same period last year. The company remained committed to its shareholder obligation, returning approximately $1 billion to investors in dividends in FY22.
Andvari Associated mentioned S&P Global Inc. (NYSE:SPGI) in its Q4 2022 investor letter. Here is what the firm has to say:
“S&P Global Inc. (NYSE:SPGI) is another company we own that is part of a duopoly in the business of credit rating. S&P and Moody’s have roughly equal market shares and rate more than 90% of all bonds worldwide. The service provides high value for the cost. A company that chooses to issue debt without a rating will pay an interest rate that could be higher by half of a percent. The cost of a higher interest rate far exceeds any savings gained by not using the services of S&P.
We think of S&P as a toll road that earns fees from its customers in exchange for cost-effective access to capital. As such, the company has extraordinary margins and pricing power and requires little of its own capital to grow. Even after fully reinvesting in its business, S&P still has an excess of cash. In 2021, S&P produced $3.5 billion of free cash from $8.3 billion of revenues. The company returns the majority of its free cash to investors in the form of dividends and share repurchases.”
8. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 100
Dividend Yield as of March 14: 3.05%
JPMorgan Chase & Co. (NYSE:JPM) is a New York-based multinational financial services company that provides related services to its consumers. In view of the Silicon Valley Bank collapse, a huge number of customers are reported to shift their accounts to the bank from small lenders. The stock is up by 13.03% in the past six months.
JPMorgan Chase & Co. (NYSE:JPM), one of the best dividend-paying stocks to buy, currently pays a quarterly dividend of $1 per share. The stock has a dividend yield of 3.05%, as of March 14.
As of the close of Q4 2022, 100 hedge funds tracked by Insider Monkey reported having stakes in JPMorgan Chase & Co. (NYSE:JPM), compared with 110 in the previous quarter. These stakes have a collective value of over $5.1 billion. Edgar Wachenheim and Ken Griffin are two of the company’s leading stakeholders in Q4.
7. Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund Holders: 100
Dividend Yield as of March 14: 3.09%
Bank of America Corporation (NYSE:BAC) is a North Carolina-based multinational investment bank that provides related financial services to its consumers. On February 1, the company declared a quarterly dividend of $0.22 per share, which fell in line with its previous dividend. In 2022, it took its dividend growth track record to nine years. The stock’s dividend yield on March 14 came in at 3.09%.
Presenting a positive outlook on Bank of America Corporation (NYSE:BAC) in January, Citigroup raised its price target on the stock to $38 and maintained a Neutral rating on the shares.
At the end of December 2022, 100 elite funds in Insider Monkey’s database were long Bank of America Corporation (NYSE:BAC), up from 97 in the previous quarter. The stakes owned by these hedge funds have a consolidated value of $37.5 billion.
Ariel Investments mentioned Bank of America Corporation (NYSE:BAC) in its third-quarter 2022 investor letter. Here is what the firm has to say:
“We initiated three new positions in the quarter. We added leading financial institution Bank of America Corporation (NYSE:BAC) which serves individual consumers, small and middle-market businesses, and large corporations with a full range of banking, investing, asset management, and other financial and risk management products and services. The current company was formed through various mergers including NationsBank, FleetBoston, US Trust, Countrywide Financial, and Merrill Lynch with the legacy commercial bank to form a national banking powerhouse and bulge bracket investment firm. As one of the ‘Big Four’ U.S. banks it enjoys scale driven cost advantages and economies of scale which provide meaningful competitive advantages and potential for strong returns in the largely commoditized banking industry. A survivor of the financial crisis, BAC has emerged with a solid capital base and stands to benefit from a rising interest rate environment.”
6. UnitedHealth Group Incorporated (NYSE:UNH)
Number of Hedge Fund Holders: 110
Dividend Yield as of March 14: 1.42%
UnitedHealth Group Incorporated (NYSE:UNH) is an American multinational managed healthcare and insurance company. In January, Deutsche Bank raised its price target on the stock to $617 with a Buy rating on the shares, following the company’s recent quarterly earnings.
UnitedHealth Group Incorporated (NYSE:UNH) pays a quarterly dividend of $1.65 per share and has a dividend yield of 1.42%, as of March 14. The company has been a regular dividend payer since 1990, coming through as one of the best dividend-paying stocks on our list. McDonald’s Corporation (NYSE:MCD), Merck & Co., Inc. (NYSE:MRK), and AbbVie Inc. (NYSE:ABBV) are some other popular dividend stocks for income investors.
At the end of Q4 2022, 110 hedge funds in Insider Monkey’s database owned stakes in UnitedHealth Group Incorporated (NYSE:UNH), the same as in the previous quarter. However, the collective value of these stakes grew to over $11.4 billion this quarter, from $10.3 billion in the preceding quarter.
Distillate Capital mentioned UnitedHealth Group Incorporated (NYSE:UNH) in its Q4 2022 investor letter. Here is what the firm has to say:
“The largest sector change in the rebalance was a six-percentage point increase in technology. The biggest component of this increase was the introduction of a 4% weight in Apple, which is discussed further below. Offsetting this increased tech weight was a 3-percentage point decrease in industrials and a two-percentage point decline in health care. The biggest reductions in weight were UnitedHealth Group Incorporated (NYSE:UNH), which is capped at a 2% weight as it ranks in the bottom quartile of the fund by valuation.”
Click to continue reading and see 5 Best Dividend Paying Stocks To Buy Now.
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Disclosure. None. 15 Best Dividend Paying Stocks To Buy Now is originally published on Insider Monkey.
