In this article, we will discuss the 10 best DRIP stocks to buy in 2022.
With inflation on the rise and an alarming market situation, investors fall back on dividend stocks since they tend to fare well during times of economic uncertainty. Dividend stocks are a key contributor to any long-term investor’s portfolio, simply because of their ability to generate stable passive income regardless of market fluctuations and provide an inflation hedge. DRIPs refer to dividend reinvestment plans and are the next best thing to a dividend-paying stock. Companies offer dividend reinvestment plans to attract investors and drive their success as DRIPs can become a powerful compounding tool. Investors can reinvest dividend earnings into more shares of the company, and then be paid an increased dividend the next time.
This March, the Federal Reserve System approved a 0.25% hike in interest rates, for the first time since December 2018. With the FED expected to raise interest rates in May and June in the upcoming meetings, and a 40% chance of the global economy being set for a recession next year, dividend stocks are falling on investors’ radars more than ever. A CNBC survey polled 400 money managers on what they will be buying in 2022. 30% of the respondents voted to invest in stocks that pay high dividends for the rest of 2022, followed by 26% of respondents that are betting high on the financial services sector to be lucrative during a rising rate environment.
Among the most popular DRIP stocks, we have Johnson & Johnson (NYSE:JNJ), Exxon Mobil Corporation (NYSE:XOM), and The Coca-Cola Company (NYSE:KO). Read on to learn about more DRIP stocks to buy in 2022.
Photo by Dan Dennis on Unsplash
Our Methodology
To come up with the 10 best DRIP stocks to buy in 2022, we went through the S&P 500 Dividend Aristocrats Index and then looked for stocks that have a forward dividend yield of above 2%. We derived the hedge fund sentiment for each stock using Insider Monkey’s database, which as of the fourth quarter of 2021, tracks over 900 elite hedge funds. We also mentioned the analyst ratings along with each stock’s dividend history.
Best DRIP Stocks To Buy in 2022
10. Realty Income Corporation (NYSE:O)
Number of Hedge Fund Holders: 30
Dividend Yield as of April 25: 4.03%
We picked Realty Income Corporation (NYSE:O) because it is one of the few companies that offer high-frequency dividends. The company is known as The Monthly Dividend Company and is also a prominent name among the S&P 500, and is dedicated to providing investors with reliable monthly income. The company’s monthly dividends are supported by the cash flow from over 6,500 real estate properties.
This April, Realty Income Corporation (NYSE:O) announced that its board of directors has declared a monthly cash dividend of $0.247 per share in line with previous. The dividend is payable on May 13, to investors of record at the close of business on April 29. The stock’s forward yield as of April 25 is 4.03%. Realty Income Corporation (NYSE:O) is ranked among the 10 best DRIP stocks to buy in 2022 because it has been increasing its dividends consistently for the past 25 years, and has an annual payout ratio of 302.66%.
By the end of the fourth quarter of 2021, 30 hedge funds were long Realty Income Corporation (NYSE:O) with collective stakes of roughly $398.85 million. This is compared to 22 positions in the preceding quarter with stakes worth $275.03 million. The hedge fund sentiment for Realty Income Corporation (NYSE:O) is positive and the stock is gaining popularity among investor circles and analysts. On March 15, Wolfe Research analyst Andrew Rosivach upgraded Realty Income Corporation (NYSE:O) to Outperform from Peer Perform.
As of December 31, Glendon Capital Management is the largest stakeholder in Realty Income Corporation (NYSE:O) and owns over 1.8 million shares of stock. This equates to stakes of $132.9 million, covering 6.99% of Glendon Capital’s 13F portfolio.
Like Johnson & Johnson (NYSE:JNJ), Exxon Mobil Corporation (NYSE:XOM), and The Coca-Cola Company (NYSE:KO), Realty Income Corporation (NYSE:O) is one of the best DRIP stocks to buy in 2022.
9. AFLAC Incorporated (NYSE:AFL)
Number of Hedge Fund Holders: 31
Dividend Yield as of April 25: 2.52%
On February 2, 2022, AFLAC Incorporated (NYSE:AFL) reported market-beating earnings for the fiscal fourth quarter of 2021. The company reported earnings per share of $1.33, beating estimates by $0.07. Moreover, the company generated revenues of $5.43 billion, outperforming market estimates by $193.09 million. The stock is among the 10 best DRIP stocks to buy in 2022 and as of April 25, the company has consistently increased its dividends for the past 39 years, has returned investors 15.83% over the past twelve months, and has a forward dividend yield of 2.52%.
On April 6, 2022, Piper Sandler analyst John Barnidge raised his price target on Aflac Incorporated (NYSE:AFL) to $72 from $70 and reiterated an Overweight rating on the shares.
Hedge funds are betting big on AFLAC Incorporated (NYSE:AFL). 31 hedge funds held long positions in AFLAC Incorporated (NYSE:AFL) at the end of the fourth quarter of 2021. The total value of their stakes came to $290.24 million, up from $223.94 million in the previous quarter with 34 positions.
As of December 31, 2021, Ariel Investments is the most bullish hedge fund in AFLAC Incorporated (NYSE:AFL), owning over 1.5 million shares of stock which equate to a stake value of $89.85 million.
8. 3M Company (NYSE:MMM)
Number of Hedge Fund Holders: 41
Dividend Yield as of April 25: 4.0%
3M Company (NYSE:MMM) is a diversified technology company serving worldwide and operating through four business segments: Safety and Industrial; Transportation and Electronics; Health Care; and Consumer. The stock is one of the best DRIP stocks to buy in 2022 because as of April 25, the company boasts a forward dividend yield of 4.0%, has been consistent with dividend increases for the past 63 years, and a 5-year dividend CAGR of 5.65%.
On January 25, 2022, 3M Company (NYSE:MMM) reported earnings for the fiscal fourth quarter of 2021 in which it beat both EPS and revenue estimates. The company reported earnings per share of $2.31, beating estimates by $0.29, and generated revenues of $8.61 billion, outperforming estimates by $31.63 million. Shortly after, Wells Fargo analyst Joseph O’Dea raised his price target on 3M Company (NYSE:MMM) to $184 from $175 and maintained an Equal Weight rating on the shares.
This February, 3M Company (NYSE:MMM) increased its quarterly common stock cash dividend to $1.49 for the first quarter of 2022, which was payable on March 12 to investors of record on February 18.
At the close of Q4 2021, 3M Company (NYSE:MMM) was spotted on 41 hedge fund portfolios. The total stakes of these hedge funds amounted to $156.16 million. This is compared to 46 positions in the prior quarter with stakes worth $162.48 million.
As of the end of last December, Fisher Asset Management is the most prominent shareholder in 3M Company (NYSE:MMM). According to Insider Monkey’s data, the fund’s stakes sat at $1.02 billion which accounts for 0.57% of its investment portfolio.
7. Emerson Electric Co. (NYSE:EMR)
Number of Hedge Fund Holders: 43
Dividend Yield as of April 25: 2.20%
Emerson Electric Co. (NYSE:EMR) has been consistent in providing its investors with stable income for the past 64 years, which is why it is one of the best DRIP stocks to buy in 2022. As of April 25, the stock offers a handsome forward yield of 2.20% and boasts an annual payout ratio of 46.99%.
This February, Emerson Electric Co. (NYSE:EMR) released its earnings report for the fiscal first quarter of 2022 in which it beat EPS estimates by $0.04. The company registered an EPS of $1.05 and reported revenues of $4.47 billion, up 7.50% year over year from $4.16 billion.
On February 3, 2022, Citi analyst Andrew Kaplowitz raised his price target on Emerson Electric Co. (NYSE:EMR) to $123 from $120 and maintained a Buy rating on the shares, in light of the company’s “strong” Q1 results for 2022. The analyst believes Emerson Electric Co. (NYSE:EMR) to be well-positioned to benefit from a recovering global economic environment.
Emerson Electric Co. (NYSE:EMR) is being eyed by hedge funds. At the close of Q4 2021, 43 hedge funds were long Emerson Electric Co. (NYSE:EMR) with combined stakes of $1.47 billion. This is compared to 41 hedge funds in the third quarter of 2021, with stakes worth $671 million. The hedge fund sentiment for the stock is positive.
As of end-December, Two Sigma Advisors is the leading shareholder in Emerson Electric Co. (NYSE:EMR) with stakes worth $250.28 million in the company. The investment covers 0.62% of the hedge fund’s Q4 2021 portfolio.
Emerson Electric Co. (NYSE:EMR) offers an attractive dividend reinvestment plan. Other companies that are offering DRIPs include Johnson & Johnson (NYSE:JNJ), Exxon Mobil Corporation (NYSE:XOM), and The Coca-Cola Company (NYSE:KO).
6. PepsiCo, Inc. (NYSE:PEP)
Number of Hedge Fund Holders: 60
Dividend Yield as of April 25: 2.50%
Moving on, PepsiCo, Inc. (NYSE:PEP) has been consistent with hiking dividends for well above 40 years, which makes it rank among the 10 best DRIP stocks to buy in 2022. As of April 25. The stock offers a forward yield of 2.50%, has a 5-year dividend CAGR of 7.39%, and has gained 20.47% over the past twelve months.
On February 10 PepsiCo, Inc. (NYSE:PEP) released its earnings report for the fiscal fourth quarter of 2021 in which it announced market-beating earnings. The company registered an EPS of $1.53, beating EPS estimates by $0.01. Moreover, the company reported quarterly revenues of $25.25 billion, up 12.44% year over year, beating revenue estimates by $1.01 billion. Following its earnings release, PepsiCo, Inc. (NYSE:PEP) announced that its board of directors has authorized a new share repurchase program of $10 billion which will fare through February 2026, and they also increased the company’s annual dividend by 7% to $4.60 per share, up from $4.30 per share. The dividend is payable in June 2022.
On April 12, 2022, Deutsche Bank analyst Steve Powers raised his price target on PepsiCo, Inc. (NYSE:PEP) to $173 from $171 and reiterated a Hold rating on the shares.
PepsiCo, Inc. (NYSE:PEP) is gaining popularity among elite hedge funds. According to Insider Monkey’s database, by the end of the fourth quarter of 2021, 60 hedge funds held long positions in the company, with collective stakes of more than $4.64 billion. This is compared to 61 positions in the previous quarter, with stakes worth $4.43 billion. The hedge fund sentiment for the stock is positive.
As of the end of last December, Terry Smith’s Fundsmith LLP is the most prominent shareholder in PepsiCo, Inc. (NYSE:PEP) with stakes worth $1.80 billion. The investment covers 4.41% of Fundsmith LLP’s 13F portfolio.
ClearBridge Investments mentioned PepsiCo, Inc. (NYSE:PEP) in their fourth-quarter 2021 investor letter:
“The pandemic created opportunities for us to be more aggressive in a variety of areas of the market. We were opportunistic throughout the year. After a strong year for equities, we sought to bolster more defensive areas of the portfolio and added to PepsiCo, increasing our exposure to a high-quality and stable name.”
5. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 67
Dividend Yield as of April 25: 2.27%
The Procter & Gamble Company (NYSE:PG) is not only a dividend aristocrat, but it is a dividend king as well. The company has rewarded investors with regularly increased dividends for well above 60 years and has been paying dividends for 131 years. Its company’s Shareholder Investment Program is a direct stock purchase and dividend reinvestment plan, requiring an initial minimum investment of $250. The stock is ranked among the top DRIP stocks to buy in 2022 and as of April 25, The Procter & Gamble Company (NYSE:PG) has a forward yield of 2.27% and has appreciated by 24.09% over the past twelve months.
This April, The Procter & Gamble Company (NYSE:PG) reported market-beating earnings for the fiscal third quarter of 2022. The company reported earnings per share of $1.33, beating estimates by $0.04. Moreover, the company reported revenues of $19.38 billion for the quarter, up 7.02% year over year, and beat revenue estimates by $687.76 million.
On April 22, 2022, Barclays analyst Lauren Lieberman raised her price target on The Procter & Gamble Company (NYSE:PG) to $176 from $167 and maintained an Overweight rating on the shares.
According to Insider Monkey’s database, at the close of the fourth quarter of 2021, 67 hedge funds were long The Procter & Gamble Company (NYSE:PG) with stakes of $6.61 billion. This is compared to 69 hedge funds in the third quarter of 2021 with stakes worth $6.41 billion. As of December 31, 2021, GQG Partners is the largest shareholder in the stock, owning over 7.5 million shares of stock which equate to a stake value of roughly $1.23 billion.
4. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 70
Dividend Yield as of April 25: 2.70%
The Coca-Cola Company (NYSE:KO) has been consistent with hiking its dividends for more than 50 years, and as of April 25, the stock has a forward dividend yield of 2.70% and has gained 21.27% over the past six months. On February 10, The Coca-Cola Company (NYSE:KO) reported earnings for the fiscal fourth quarter of 2021. The company generated revenues of $9.47 billion, up 10.08% year over year, and beat revenue estimates by $570 million. Moreover, the company registered an EPS of $0.45 and outperformed the market consensus by $0.04.
This March, JPMorgan analyst Andrea Teixeira raised her price target on The Coca-Cola Company (NYSE:KO) to $68 from $65 and reiterated an Overweight rating on the shares.
The Coca-Cola Company (NYSE:KO) is an investor’s favorite DRIP stock. At the end of the fourth quarter of 2021, 70 hedge funds held stakes in The Coca-Cola Company (NYSE:KO) worth more than $28.6 billion. This is compared to 61 hedge funds in the previous quarter with total stake of $25.13 billion.
As of December 31, 2021, Berkshire Hathaway is the most prominent hedge fund having stakes in The Coca-Cola Company (NYSE:KO). Warren Buffett’s hedge fund owns 400 million shares of stock which equate to a stake value of $23.68 billion.
Here is what ClearBridge Investments had to say about The Coca-Cola Company (NYSE:KO) in the firm’s fourth-quarter 2021 investor letter:
“Over the last year, we have repositioned our portfolio to navigate the course we see ahead. We added to more defensive areas of the portfolio like consumer staples (Coca-Cola). While the next month or two will likely prove choppy on account of the Omicron variant, we believe that Omicron, like Delta, represents a speed bump on the way to recovery rather than a true change in course. We see strong economic momentum continuing in 2022 and we expect interest rates to rise. After a decade of remarkably low rates, we would not be surprised if this change in direction is accompanied by some fits and starts in the markets. With our emphasis on pricing power, purposeful sector exposure, valuation discipline, and a strong dividend profile, we believe we are well-positioned for the year ahead.”
3. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 71
Dividend Yield as of April 25: 4.13%
Exxon Mobil Corporation (NYSE:XOM) has been consistent with benefitting its investors by providing them stable dividends for over 39 years, boasting an average annual growth rate of 6%. As of April 25, the stock’s forward yield sits at 4.13%, with its trailing twelve-month returns peaking at 47.23%. It is one of the best DRIP stocks to buy in 2022.
On February 1, 2022, Exxon Mobil Corporation (NYSE:XOM) reported that its earnings per share for the fiscal fourth quarter of 2021 came to $2.05, beating EPS estimates by $0.11. The company reported quarterly revenues of over $84 billion, up 82.56% year over year, and beat revenue estimates by $6.24 billion.
This April, Truist analyst Neal Dingmann raised his price target on Exxon Mobil Corporation (NYSE:XOM) to $84 from $75 and reiterated a Hold rating on the shares. The analyst views the stock to benefit from soaring commodity prices, effectively driving lucrative shareholder returns.
Exxon Mobil Corporation (NYSE:XOM) is rising in popularity among analysts and hedge funds investors. At the close of the fourth quarter of 2021, 71 hedge funds were long Exxon Mobil Corporation (NYSE:XOM) with stakes of $5.38 billion. This is compared to 64 positions in the third quarter of 2021, with stakes of $4.64 billion.
As of December 31, 2021, GQG Partners is the most prominent shareholder in Exxon Mobil Corporation (NYSE:XOM). The fund’s stakes in the company amounted to $1.98 billion which represents 4.91% of GQG Partners’ 13F portfolio.
Saturna Capital shared its insights on Exxon Mobil Corporation (NYSE:XOM) in the firm’s fourth-quarter 2021 investor letter. Here is what the firm had to say:
“Few companies maintain their position at the top for more than a decade or two. One that did was Exxon, which appeared decennially from 1980 through 2010. In 2019 it was ranked 10th, but as of writing has dropped to 39th place.”
2. AbbVie Inc. (NYSE:ABBV)
Number of Hedge Fund Holders: 82
Dividend Yield as of April 25: 3.64%
AbbVie Inc. (NYSE:ABBV) discovers, develops, manufactures, and sells pharmaceuticals worldwide. The company offers investors the option to purchase additional shares, commission-free, through a dividend reinvestment or optional cash investments as part of its dividend reinvestment plan. Moreover, AbbVie Inc. (NYSE:ABBV) has increased its dividends by more than 250% since 2013 and is a member of the S&P Dividend Aristocrats Index. The stock is among the top DRIP stocks to buy in 2022.
This February, AbbVie Inc. (NYSE:ABBV) released a report which detailed the company’s earnings for the fiscal fourth quarter of 2021. The company registered an EPS of $3.31, beating expert estimates by $0.03. Moreover, the company’s revenues grew 7.42% year over year and came to $14.89 billion. On February 17, 2022, AbbVie Inc. (NYSE:ABBV) declared a quarterly cash dividend of $1.41 per share of common stock which is payable on May 16, to investors of record on April 15.
On April 12, 2022, Barclays analyst Carter Gould raised his price target on AbbVie Inc. (NYSE:ABBV) to $174 from $150 and reiterated an Equal Weight rating on the shares.
AbbVie Inc. (NYSE:ABBV) is rising in popularity among elite hedge funds. As of the fourth quarter of 2021, 82 hedge funds held long positions in AbbVie Inc. (NYSE:ABBV) with stakes of $374.43 million. Of these, Berkshire Hathaway was the top stakeholder, owning over 3 million shares of stock which make up 0.12% of Warren Buffett’s hedge fund portfolio.
Miller Howard Investments, an investment management firm, published its third-quarter 2021 investor letter in which it mentioned AbbVie Inc. (NYSE:ABBV). Here is what the firm had to say:
“While optimistic about a recovery, we continue to balance our cyclical holdings with dividend-payers in stable, less economically-sensitive industries. We hold three pharmaceutical companies, (which includes) AbbVie (ABBV). All three have strong cash flows and balance sheets, making their high dividends reasonably safe. The investment controversy surrounding these pharma companies is whether they can develop or acquire new products to replace their current blockbuster drugs. The low valuations on these stocks reflects what we believe to be undue pessimism by investors on the prospects for new drugs.”
1. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 83
Dividend Yield as of April 25: 2.49%
Johnson & Johnson (NYSE:JNJ) is a favorite DRIP stock pick of legendary value investors. The company offers a commission-free dividend reinvestment plan to registered shareholders which allows for the reinvestment of all or a portion of dividends into additional shares of common stock.
On April 19, 2022, Johnson & Johnson (NYSE:JNJ) reported earnings for the fiscal first quarter of 2022 in which the company beat EPS estimates by $0.10. The company reported earnings per share of $2.67 and generated revenues of $23.43 billion, up 4.95% year over year from $22.32 billion. As of April 25, the stock’s trailing-twelve-month returns are up 12.55% and the company boasts 59 years of consistent dividend increases, with a 5-year dividend growth rate of 5.79%.
On April 19, Johnson & Johnson (NYSE:JNJ) announced that its board of directors has authorized a dividend increment of 6.6%, bringing its quarterly common stock cash dividend to $1.13, from $1.06. The dividend is payable on June 7, to investors of record at the close of business on May 23. Moreover, this April, Credit Suisse analyst Matt Miksic raised his price target on Johnson & Johnson (NYSE:JNJ) to $205 from $200 and reiterated an Outperform rating on the shares.
As of December 31, Terry Smith’s Fundsmith LLP remains the most bullish on Johnson & Johnson (NYSE:JNJ), owning more than 7.2 million shares of the stock. This amounts to a stake value of $1.23 billion, which covers 3.01% of Terry Smith’s investment portfolio.
See also 10 Best Oil Stocks to Buy Amid Post-COVID Demand Boom and Price Volatility and 10 Best Dividend Stocks for Long Term.
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Disclaimer: None. 10 Best DRIP Stocks To Buy in 2022 is originally published on Insider Monkey.
