16 Best Dividend Stocks of 2022

Published on December 13, 2022 at 3:28 pm by Vardah Gill in Dividend Stocks, Hedge Funds, News

In this article, we discuss 16 best dividend stocks of 2022. You can skip our detailed analysis of dividend stocks and their performance in the past, and go directly to read 5 Best Dividend Stocks of 2022.

This year’s inflation and continued interest rates hike were heavy on the markets. Analysts recommended investing in income-generating stocks because they could stabilize overall portfolios through dividends. Moreover, regular income in these times is massively rewarding for anxious investors. Companies like AbbVie Inc. (NYSE:ABBV), Eli Lilly and Company (NYSE:LLY), and Becton, Dickinson and Company (NYSE:BDX) remained popular among investors because of their regular dividend growth and solid balance sheets.

The historical analysis of dividend stocks revealed that these securities have outperformed other asset classes during previous inflationary periods. This is mainly because many companies keep on raising their dividends even during periods of slow economic growth. Since 1957, dividends have grown at an average of 5.7%, more than 2% above the rate of inflation during this time, as reported by Wisdom Tree. The report also mentioned that dividends in the S&P 500 delivered a 5.45% return from 1991 to 2021, compared with a 2.51% growth in the Consumer Price Index.

According to a report by JPMorgan, equity performance turns negative during recessionary periods. This results in a drop in earnings-per-share. However, dividends remain stable during these times as companies avoid slashing their payouts. The report referred to data by Ibbotson, Refinitiv Datastream, Standard & Poor’s, and J.P. Morgan Asset Management and mentioned that since 1926, dividends have accounted for a significant percentage of overall market returns.

In view of this, we will discuss the best dividend stocks of 2022.

Pixabay/Public Domain

Our Methodology:

For this list, we selected dividend stocks with the highest returns in 2022 so far. These companies also have strong balance sheets and sound financials. The stocks are ranked according to their year-to-date returns, as of December 12.

16. Devon Energy Corporation (NYSE:DVN)

Year-to-date Returns as of December 12: 34.04%

Devon Energy Corporation (NYSE:DVN) is an American energy company that is engaged in the exploration of hydrocarbons. In December, Piper Sandler raised its price target on the stock to $98 with an Overweight rating on the shares, following the company’s strong performance in the third quarter.

Devon Energy Corporation (NYSE:DVN) is one of the best dividend stocks on our list as the company has been raising its dividends consistently for the past 29 years. The company currently pays a quarterly dividend of $1.35 per share for a dividend yield of 8.52%, as of December 12.

In addition to dividend stocks like AbbVie Inc. (NYSE:ABBV), Eli Lilly and Company (NYSE:LLY), and Becton, Dickinson and Company (NYSE:BDX), investors are also paying attention to DVN due to the company’s strong dividend growth track record.

In Q3 2022, Devon Energy Corporation (NYSE:DVN) reported revenue of $5.43 billion, which showed a 56.5% growth from the same period last year. The company’s cash position remained strong, with $2.1 billion in operating cash flow and $1.5 billion in free cash flow.

As of the close of Q3 2022, Devon Energy Corporation (NYSE:DVN) was a part of 51 hedge fund portfolios, according to Insider Monkey’s database. The stakes owned by these hedge funds have a total value of over $1.5 billion. With over 10.6 million shares, GQG Partners was the company’s leading stakeholder in Q3.

GoodHaven Capital Management mentioned Devon Energy Corporation (NYSE:DVN) in its Q2 2022 investor letter. Here is what the firm has to say:

“Our biggest dollar gainer within this period was Devon Energy Corporation (NYSE:DVN), a position which emanated from a takeover in early 2021 of our long time holding WPX Energy. We are sitting on a material (unrealized) gain from our cost and are now receiving material dividends thanks to Devon’s thoughtful fixed/variable dividend policy. Energy is now a hot sector for investors but we have had a material exposure for a long time. We remember a bit too well $40 oil, NEGATIVELY PRICED front-month oil contract, and what it’s like to own a company with leverage and negative free cash flow during such periods. Our desire to have our biggest portfolio exposures be high return, growing, reasonably predictable and moderately levered companies lead us to reduce our Devon exposure in the past. When the recent facts and circumstances for the industry changed and appeared supportive of healthy oil prices, we decided to maintain a sizable holding and more recently added to the position. At Devon’s Q1 dividend rate, which is mostly variable in nature, the shares now yield approximately 10% and our yield on our average cost is materially higher. In addition, we maintain additional energy exposure through our long-term (and successful) holding in Hess Midstream and less directly through TerraVest and Berkshire Hathaway’s energy investments.”

15. Phillips 66 (NYSE:PSX)

Year-to-date Returns as of December 12: 34.7%

Phillips 66 (NYSE:PSX) is a Texas-based energy company that specializes in petroleum refining and also deals in the transportation of natural gas liquids and petrochemicals. In the third quarter of 2022, the company reported revenue of $48.7 billion, up 55% from the prior-year quarter. The company generated $3.1 billion in operating cash flow. Moreover, it returned $1.2 billion to shareholders through dividends and share repurchases, which makes it one of the best dividend stocks to buy.

Piper Sandler presented a positive outlook on energy stocks in the current environment and raised its price target on Phillips 66 (NYSE:PSX) to $155 in November with an Overweight rating on the shares.

Phillips 66 (NYSE:PSX) currently pays a quarterly dividend of $0.67 per share and has a dividend yield of 3.85%, as of December 12. The company has raised its dividends 11 times since its inception in 2012 at a CAGR of 18%.

At the end of Q3 2022, 34 hedge funds tracked by Insider Monkey owned stakes in Phillips 66 (NYSE:PSX), compared with 38 in the previous quarter. The collective value of these stakes is roughly $780 million.

14. EOG Resources, Inc. (NYSE:EOG)

Year-to-date Returns as of December 12: 36.09%

An American energy company, EOG Resources, Inc. (NYSE:EOG) announced a 10% hike in its quarterly dividend to $0.825 per share on November 3. The company also declared a special dividend of $1.50 per share. The stock’s dividend yield on December 12 came in at 2.66%.

In Q3 2022, EOG Resources, Inc. (NYSE:EOG) reported an operating cash flow of $4.7 billion. The company generated $2.3 billion in free cash flow. Its cash generation was strong enough to return $1.31 billion in dividends to shareholders during the quarter, including $874 million of special dividends. The company’s strong cash position makes it one of the best dividend stocks of 2022.

Raymond James appreciated the natural gas production of EOG Resources, Inc. (NYSE:EOG) and lifted its price target on the stock to $171 in November with a Strong Buy rating on the shares.

The number of hedge funds tracked by Insider Monkey owning stakes in EOG Resources, Inc. (NYSE:EOG) jumped to 52 in Q3 2022, from 43 in the previous quarter. The collective value of these stakes is over $1.37 billion. Among these hedge funds, Harris Associates owned the largest stake in the company in Q3.

13. Archer-Daniels-Midland Company (NYSE:ADM)

Year-to-date Returns as of December 12: 37.4%

Archer-Daniels-Midland Company (NYSE:ADM) is a multinational food processing company, based in Chicago, US. The company reported revenue of $24.6 billion in Q3 2022, which showed a 21.3% growth from the same period last year. It ended the quarter with $1 billion available in cash and cash equivalents. Moreover, the company returned $677 million to shareholders in dividends.

Archer-Daniels-Midland Company (NYSE:ADM), one of the best dividend stocks, has been raising its dividends consistently for the past 49 years. The company currently offers a per-share dividend of $0.40 every quarter. The stock’s dividend yield came in at 1.72%, as of December 12.

At the end 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.

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.”

12. CF Industries Holdings, Inc. (NYSE:CF)

Year-to-date Returns as of December 12: 39.8%

CF Industries Holdings, Inc. (NYSE:CF) is an American distributor and manufacturer of agricultural products, including ammonia and urea. In November, Mizuho maintained a Neutral rating on the stock with a $113 price target, presenting a favorable view of the agriculture sector.

In the third quarter of 2022, CF Industries Holdings, Inc. (NYSE:CF) generated $4.75 billion in operating cash flow and its free cash flow for the quarter came in at $3.68 billion. The company’s revenue for the quarter came in at $2.32 billion, up 70.6% from the same period last year.

CF Industries Holdings, Inc. (NYSE:CF) currently pays a quarterly dividend of $0.40 per share and has a dividend yield of 1.63%, as of December 12.

At the end of Q3 2022, 65 hedge funds tracked by Insider Monkey reported owning stakes in CF Industries Holdings, Inc. (NYSE:CF), up from 52 in the previous quarter. These stakes have a collective value of over $1.52 billion.

Here is what Carillon Carillon Tower Advisers had to say about CF Industries Holdings, Inc. (NYSE:CF) in its first-quarter 2022 investor letter:

“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. CF Industries (NYSE:CF) manufactures and distributes nitrogen fertilizer. The stock rose as Russia’s invasion of Ukraine accelerated already rising fertilizer prices.”

11. Merck & Co., Inc. (NYSE:MRK)

Year-to-date Returns as of December 12: 41.7%

Merck & Co., Inc. (NYSE:MRK) is an American multinational pharmaceutical company. In 2022, the company extended its dividend growth streak to 12 years, which makes it one of the best dividend stocks. It currently pays a quarterly dividend of $0.73 per share for a dividend yield of 2.68%, as of December 12.

Credit Suisse initiated its coverage of Merck & Co., Inc. (NYSE:MRK) in November with an Outperform rating and a $120 price target and called the company one of its top two ideas in the healthcare sector.

As of the close of Q3 2022, 82 hedge funds tracked by Insider Monkey presented a bullish stance on Merck & Co., Inc. (NYSE:MRK), up from 79 in the previous quarter. The stakes owned by these hedge funds have a total value of over $4.7 billion.

Chartwell Investment Partners mentioned Merck & Co., Inc. (NYSE:MRK) in its Q2 2022 investor letter. Here is what the firm has to say:

“In the Dividend Equity accounts, the three best performers in Q2 includes Merck (NYSE:MRK, 3.6%), up 12.0%. Merck, like other pharma companies, is in a defensive business, but the stock also did well as peak-sales estimates for their flagship drug, Keytruda, have gone up (JPMorgan estimates $32 billion in sales by 2026).”

10. ConocoPhillips (NYSE:COP)

Year-to-date Returns as of December 12: 51.5%

ConocoPhillips (NYSE:COP) is an American natural gas liquids company that also deals in the exploration and production of hydrocarbons. Following the company’s Q3 earnings, Barclays raised its price target on the stock to $151 with an Overweight rating on the shares.

In Q3 2022, ConocoPhillips (NYSE:COP) reported revenue of $21.6 billion, which saw an 86.07% growth from the same period last year. During the quarter, the company returned $4.3 billion to shareholders, including $1.5 billion in dividends.

On November 3, ConocoPhillips (NYSE:COP) declared an 11% hike in its quarterly dividend to $0.51 per share. The company is one of the best dividend stocks on our list as it has been making regular dividend payments to shareholders since 1993. The stock has a dividend yield of 4.67%, as of December 12.

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.”

9. McKesson Corporation (NYSE:MCK)

Year-to-date Returns as of December 12: 52.2%

McKesson Corporation (NYSE:MCK) is a Texas-based pharmaceutical company that sells related products and provides healthcare management tools. The company’s cash position remained strong this year, as it generated $166 million in operating cash flow in the first half of 2022. Moreover, it returned $139 million to shareholders in dividends during this period.

McKesson Corporation (NYSE:MCK) has raised its dividends consistently for the past six years, which makes it one of the best dividend stocks on our list. The company currently offers a quarterly payout of $0.54 per share and has a dividend yield of 0.57%, as of December 12.

In November, Cowen lifted its price target on McKesson Corporation (NYSE:MCK) to $416 and maintained an Outperform rating on the shares, appreciating the company’s underlying business.

With over 3 million shares, Berkshire Hathaway was the leading stakeholder of McKesson Corporation (NYSE:MCK) in Q3. Overall, 51 hedge funds tracked by Insider Monkey owned stakes in the company in Q3, up from 47 in the previous quarter. The collective value of these stakes is over $4.08 billion.

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 conviction that McKesson can grow earnings per share by an average of 12% to 14% annually and think the stock is still reasonably valued.”

8. Cardinal Health, Inc. (NYSE:CAH)

Year-to-date Returns as of December 12: 52.8%

Cardinal Health, Inc. (NYSE:CAH) is an American multinational healthcare services company. The company has a 36-year run of raising its dividends consistently and falls in the category of Dividend Aristocrats. It currently pays a quarterly dividend of $0.4957 per share for a dividend yield of 2.52%, as of December 12.

In November, Credit Suisse lifted its price target on Cardinal Health, Inc. (NYSE:CAH) to $79 with a Neutral rating on the shares, highlighting the company’s strong earnings and performance this year.

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.”

7. APA Corporation (NASDAQ:APA)

Year-to-date Returns as of December 12: 56.4%

APA Corporation (NASDAQ:APA) is an American holding company that is engaged in the exploration of hydrocarbons. In December, Barclays appreciated the company’s recent quarterly earnings and lifted its price target on the stock to $55 with an Overweight rating on the shares.

In Q3 2022, APA Corporation (NASDAQ:APA) reported a 40.3% growth in its revenue at $2.89 billion. The company’s operating cash flow came in at $1.1 billion and generated $609 million in free cash flow. For Fy22, it expects to return $1.6 billion to shareholders in dividends.

APA Corporation (NASDAQ:APA) currently offers a quarterly dividend of $0.25 per share and has a dividend yield of 2.27%, as of December 12.

APA Corporation (NASDAQ:APA) was a popular stock among hedge funds in Q3 2022, as 47 funds tracked by Insider Monkey owned stakes in the company, up from 36 a quarter earlier. The collective value of these stakes is over $796.2 million.

Oakmark Funds mentioned APA Corporation (NASDAQ:APA) in its Q1 2022 investor letter. Here is what the firm has to say:

“Our oil holding, APA Corporation (NASDAQ:APA) (+54%) was one of our top contributors in the quarter as oil prices rallied due to tight supplies, which were then exacerbated by the Russian invasion of Ukraine. Although their share prices have increased considerably, both companies still look quite undervalued even using longer term oil prices in the $65-70 dollar range. Meanwhile, if times are good over the next couple of years, we expect these companies to return significant percentages of their market caps to shareholders.”

6. Marathon Oil Corporation (NYSE:MRO)

Year-to-date Returns as of December 12: 61.1%

Marathon Oil Corporation (NYSE:MRO) is an American petroleum refineries company that is also engaged in the exploration of hydrocarbons. In December, Barclays raised its price target on the stock to $35 with an Overweight rating on the shares, appreciating the company’s solid quarterly performance.

In the third quarter of 2022, Marathon Oil Corporation (NYSE:MRO) remained committed to its shareholder obligations. The company returned $1.1 billion to shareholders, including $54 million in dividends. Through the first three quarters, it returned 61% of its adjusted CFO to shareholders. The company’s strong cash position makes it one of the best dividend stocks on our list.

On October 26, Marathon Oil Corporation (NYSE:MRO) declared a 12.5% hike in its quarterly dividend to $0.09 per share. This marked the company’s sixth consecutive year of dividend growth. As of December 12, the stock has a dividend yield of 1.33%. The company can be a good addition to dividend portfolios alongside AbbVie Inc. (NYSE:ABBV), Eli Lilly and Company (NYSE:LLY), and Becton, Dickinson and Company (NYSE:BDX).

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.”

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