In this article, we will discuss the 10 best Dividend stocks to buy now.
With heightened concerns about a potential recession and rising inflation, investing wisely in the dividend industry could help investors protect their portfolios from turbulent developments.
With dividend stocks, many companies provide investors quarterly payouts with the potential for capital gains. Additionally, the power of compounding can significantly increase earnings when investors wisely reinvest dividend money.
Quality dividend companies are consistently profitable and have long histories of increasing their payouts. With the market lower, many quality dividend companies, including some companies who are Dow Jones components, offer opportunities to investors who have a long-term outlook. The Dow Jones includes the 30 most significant market leaders on the American stock exchange, including many blue chips that are both large cap and well known.
Many Dow Jones stocks have durable businesses that could continue to grow profits even if the Federal Reserve raises interest rates that could increase borrowing costs. Given their low valuations, the shares of many Dow Jones components could increase even if rising interest rates make dividend yields less compelling.
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Methodology
In order to identify the best dividend stocks to buy right now, we use the collective wisdom of nearly 900 hedge funds tracked by Insider Monkey. We started with the highest yielding Dow Jones stocks as listed by SPDR Dow Jones Industrial Average ETF Trust holdings and then sorted these stocks by the number of hedge funds in our database with long positions in each stock. We also included their dividend yields based as of September 3.
So, according to hedge funds, here are the 10 best dividend stocks to buy right now:
10 Best Dividend Stocks to Buy Now
10. Walgreens Boots Alliance, Inc. (NASDAQ:WBA)
Number of Hedge Fund Holders: 40
Dividend Yield: 5.44%
Walgreens Boots Alliance, Inc. (NASDAQ:WBA) is an integrated healthcare, pharmacy and retail leader with a strong dividend history.
In July, Walgreens Boots Alliance, Inc. (NASDAQ:WBA) announced that it would increase its quarterly dividend payable September by 0.5% to 48 cents per share, which gives it one of the highest dividend yields among stocks listed in the Dow Jones index. As a result of the dividend increase, Walgreens Boots Alliance, Inc. (NASDAQ:WBA) has raised its dividend for 47 consecutive years.
Walgreens Boots Alliance, Inc. (NASDAQ:WBA) is also popular with hedge funds. According to Insider Monkey’s Q2 data, 40 hedge funds had stakes in Walgreens Boots Alliance, Inc. (NASDAQ:WBA). The total value of the holdings is $599.01 million.
Much like Cisco Systems, Inc. (NASDAQ:CSCO), Intel Corporation (NASDAQ:INTC), and JPMorgan Chase & Co. (NYSE:JPM), Walgreens Boots Alliance, Inc. (NASDAQ:WBA) is a widely held dividend stock among hedge funds.
9. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 40
Dividend Yield: 5.16%
International Business Machines Corporation (NYSE:IBM) is a global tech company operating in 171 countries with a long dividend history.
International Business Machines Corporation (NYSE:IBM) has paid consecutive quarterly dividends every year since 1916 and the company has also raised its dividend every year for the last 28 years.
As a result of the increases, International Business Machines Corporation (NYSE:IBM) has a quarterly dividend of $1.65 per share.
When looking at the institutional investors followed by Insider Monkey, Citadel Investment Group, managed by Ken Griffin, holds the biggest position in International Business Machines Corporation (NYSE:IBM). Citadel Investment Group has a $420.87 million position in the stock, comprising 0.1% of its 13F portfolio.
40 hedge funds in Insider Monkey’s database had International Business Machines Corporation (NYSE:IBM) in a bullish position at the end of the second quarter of 2022. These hedge funds held shares in the firm worth about $948.31 million.
Here is what St. James Investment Company had to say about the past sales strength of International Business Machines Corporation in its Q4 2021 investor letter:
“IBM was not the first company to build computers. The distinction belongs to Sperry-Rand’s subsidiary UNIVAC, which introduced the first commercially successful computers in the early 1950s. In this era, IBM did possess the largest research and development department in the business machines industry and quickly caught up, introducing cost-competitive computers a few years after UNIVAC. By the late 1950s, IBM held the dominant market share in computers. IBM also touted a vastly superior sales organization, which used a sales tactic called “paper machines” (the equivalent of today’s “vaporware”). If a competitor’s product was selling well in a market segment that IBM had yet to penetrate, the company would announce a competing product and start taking orders for the “paper machine” long before it was available.
One cannot overstate how powerful IBM was in the computer industry in the 1950s and 1960s. Every competitor rightly worried that if their product worked too well for too long, it was only a matter of time before an army of IBM salesforce representatives mobilized. In their easily recognizable uniforms of starched white shirts, red ties, and blue suits, IBM marketers marched on their customers and offered a more expensive, but much more defensible, choice. “Nobody gets fired for buying IBM” was a common phrase. Even competitors acknowledged that the company excelled at sales. As a UNIVAC executive once complained, ‘It doesn’t do much good to build a better mousetrap if the other guy selling mousetraps has five times as many salesmen.’”
While International Business Machines Corporation (NYSE:IBM) isn’t as dominant as it was before, the company is still very profitable and its new innovations could help its dividend growth.
8. Dow Inc. (NYSE:DOW)
Number of Hedge Fund Holders: 45
Dividend Yield: 5.68%
Headquartered in Michigan, US, Dow Inc. (NYSE:DOW) is a commodity chemical company that is well positioned to profit from the European gas crisis, which could make competitors BASF and Covestro lose competitiveness.
Although some analysts are bearish due to slowing demand, Dow Inc. (NYSE:DOW) has a low forward P/E ratio of 7.37. Dow Inc. (NYSE:DOW) also has one of the highest yields in the Dow Jones index at 5.68% as of September 3.
The company has a quarterly dividend of $0.70 per share and a forward payout ratio of 41.76%.
According to Insider Monkey’s Q2 data, 45 hedge funds had stakes in Dow Inc. (NYSE:DOW). The total value of the holdings is $871.52 million.
7. 3M Company (NYSE:MMM)
Number of Hedge Fund Holders: 54
Dividend Yield: 4.9%
3M Company (NYSE:MMM), a global manufacturer with headquarters in Minnesota, is another blue chip stock with a strong dividend history. Given its durable businesses, the company has increased its dividend for 65 years and shares of the company have increased substantially. As a result of the increases, 3M Company (NYSE:MMM) has a quarterly dividend of $1.49 per share.
Although Bank of America analyst Andrew Obin recently lowered his price target on 3M Company (NYSE:MMM) to $140 from $165, the average analyst estimate is still $147.46 and 3M Company (NYSE:MMM) still has one of the highest dividend yields in the Dow Jones with a yield of 4.9% as of September 3.
As of August 30, 2022, Ken Fisher’s Fisher Asset Management is the largest shareholder in 3M Company (NYSE:MMM), in our database and holds a stake worth $801.79 million. The investment covers 0.56% of Fisher Asset Management’s 13F portfolio.
According to Insider Monkey’s Q2 data, 54 hedge funds had stakes in 3M Company (NYSE:MMM). The total value of the holdings is $1.38 billion.
6. Amgen Inc. (NASDAQ:AMGN)
Number of Hedge Fund Holders: 55
Dividend Yield: 3.2%
Amgen Inc. (NASDAQ:AMGN) develops cutting-edge human treatments and focuses on serious systemic diseases. The biotech company is also a Dow Jones component that has increased its dividend for 11 consecutive years. As a result of the increases, Amgen Inc. (NASDAQ:AMGN) pays a quarterly dividend of $1.94 per share.
In August, Christopher Raymond of Piper Sandler maintained Amgen Inc. (NASDAQ:AMGN) at an overweight rating and raised the price target from $260 to $265.
According to Insider Monkey’s Q2 data, 55 hedge funds also had stakes in Amgen Inc. (NASDAQ:AMGN) with the total value of the holdings at $2.17 billion.
ClearBridge Investments mentioned Amgen Inc. (NASDAQ:AMGN) in its Q3 2021 investor letter. Here is what the firm has to say:
“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.”
Alongside Amgen Inc. (NASDAQ:AMGN), Cisco Systems, Inc. (NASDAQ:CSCO), Intel Corporation (NASDAQ:INTC), and JPMorgan Chase & Co. (NYSE:JPM) are also widely held dividend stocks among hedge funds.
5. Verizon Communications Inc. (NYSE:VZ)
Number of Hedge Fund Holders: 58
Dividend Yield: 6.2%
American telecommunications company Verizon Communications Inc. (NYSE:VZ) offers its customers data and video service solutions. Verizon Communications Inc. (NYSE:VZ) is one of the largest telecommunication companies in the United States and it benefits from increased data usage. As of August, the firm now pays a quarterly dividend of $0.64 per share, for a yield of 6.2%.
When looking at the institutional investors followed by Insider Monkey, Fisher Asset Management, managed by Ken Fisher, holds the biggest position in Verizon Communications Inc. (NYSE:VZ). Fisher Asset Management has $879.83 million position in the stock, comprising 0.62% of its 13F portfolio.
As per Insider Monkey’s Q2 2022 database, 58 hedge funds were bullish on Verizon Communications Inc. (NYSE:VZ). The stakes owned by these hedge funds are valued at over $2.29 billion.
Weitz Investment Management mentioned Verizon Communications Inc. (NYSE:VZ) in its Q4 2021 investor letter. Here is what the firm had to say:
“After several quarters of pandemic-induced outsized growth, new broadband connection growth has slowed for U.S. cable operators. This slower growth has coincided with a renewed push by competitors like Verizon and AT&T to offer high-speed data (either via wireless connects or by building new fiber-optic networks).”
4. Chevron Corporation (NYSE:CVX)
Number of Hedge Fund Holders: 59
Dividend Yield: 3.6%
Headquartered in California, Chevron Corporation (NYSE:CVX) is a multinational that operates in the energy industry. Warren Buffett’s Berkshire Hathaway is the largest stakeholder in Chevron Corporation (NYSE:CVX) with shares valued at $23.37 billion comprising 7.78% of its 13F portfolio.
For the past 34 years, Chevron Corporation (NYSE:CVX) has continuously increased its dividends. The company’s stock, as of September 3, has a yield of 3.6% and pays a quarterly dividend of $1.42 per share.
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.”
3. Cisco Systems, Inc. (NASDAQ:CSCO)
Number of Hedge Fund Holders: 63
Dividend Yield: 3.41%
Cisco Systems, Inc. (NASDAQ:CSCO), is an American global tech company offering its clients cloud and security solutions. The company’s stock, as of September 3, has a yield of 3.41% and pays a quarterly dividend of $0.38 per share.
At the end of Q2 2022, 63 hedge funds tracked by Insider Monkey were bullish on Cisco Systems, Inc. (NASDAQ:CSCO). These stakes are collectively valued at around $1.91 billion.
Carillon Tower Advisers mentioned Cisco Systems, Inc. (NASDAQ:CSCO) in its Q1 2022 investor letter. Here is what the firm has to say:
“Cisco Systems (NASDAQ:CSCO) traded lower as investors weighed how supply chain concerns would impact sales growth. The company has been upgrading its switching and routing offerings, which should lead to strong demand as on-site locations upgrade infrastructure.”
2. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 65
Dividend Yield: 4.68%
Based in Santa Clara, California, Intel Corporation (NASDAQ:INTC) is a multinational corporation that specializes in cloud computing and manufacturing semiconductor chips. In terms of revenue, it is the biggest producer of semiconductor chips in the world. As of September 2022, it had a dividend yield of 4.68% and paid a quarterly dividend of $0.365 per share.
At the end of Q2 2022, 65 hedge funds tracked by Insider Monkey were bullish on Intel Corporation (NASDAQ:INTC). These stakes are collectively valued at around $2.53 billion.
Although its stock is lower by almost 40% YTD, Intel Corporation (NASDAQ:INTC) is investing tens of billions into new factories and R&D to regain market share.
1. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 104
Dividend Yield: 3.52%
JPMorgan Chase & Co. (NYSE:JPM) is an American global financial services and investment banking firm. The firm has a $1.00 per share quarterly dividend as of September 2022 and a dividend yield of 3.52%.
If there is an economic slowdown or recession, JPMorgan Chase & Co. (NYSE:JPM) has strong business fundamentals that could help it grow its dividend once the economy recovers.
Many hedge funds also like the stock. At the end of Q2, 104 hedge funds in Insider Monkey’s database held shares in JPMorgan Chase & Co. (NYSE:JPM) with the total value of those stakes exceeding $5.8 billion.
You can also take a look at 10 Best Dividend Stocks of All Time and 10 Best Vanguard ETFs to Invest In.
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Disclosure: None. 10 Best Dividend Stocks to Buy Now is originally published on Insider Monkey.
