In this article, we will be looking at the 10 best dividend paying stocks to buy now. If you want to skip our detailed analysis of dividend investing, you can go directly to the 5 Best Dividend Paying Stocks to Buy Now.
There is no denying that the pandemic-led recession exacerbated the stock market volatility last year. Major dividend-paying companies including American Airlines Group (NASDAQ: AAL), Carnival Corporation & plc (NYSE: CCL), The Walt Disney Company (NYSE: DIS), and AMC Entertainment Holdings, Inc. (NYSE: AMC) cut or suspended dividend payments in 2020, causing havoc for income investors. Meanwhile, dividend-paying stocks like Johnson & Johnson (NYSE: JNJ), The Coca-Cola Company (NYSE: KO), and International Business Machines Corporation (NYSE: IBM) gained traction during the pandemic by keeping and even increasing their dividend payments.
Amid the uncertainty caused by the pandemic, especially after the recent outbreaks of the Delta variant of COVID-19 all over the world, investors are looking into quality dividend-paying stocks to diversify their portfolios for income and reinvestment plans. Dividend investing has gained more traction as indexes like S&P 500 pays an average dividend yield of 1.3%, versus the 10-Year Treasury yield at 1.15%. Moreover, investors are also watching high-yielding stocks included in SPDR S&P Dividend ETF (NYSEARCA: SDY) and ProShares S&P 500 Dividend Aristocrats ETF (BATS: NOBL) which yields at 2.65% and 2.32%, respectively.
Chevron Corporation (NYSE: CVX) is among the dividend-paying stocks that increased dividend payments during the pandemic. In April, Chevron Corporation (NYSE: CVX) increased its dividend payouts by 4% to $1.34 per share from the previous $1.29. The California-based oil company has increased its annual dividend payout in the last 34 years. The stock has gained 20% over the past twelve months.
Drugmakers Johnson & Johnson (NYSE: JNJ) and AbbVie Inc. (NYSE: ABBV) are some of the biggest healthcare companies that benefited during the pandemic. Johnson & Johnson (NYSE: JNJ) shares have increased by 4.3% in the last three months as the FDA approved the company’s single-shot COVID-19 vaccine. Meanwhile, AbbVie Inc. (NYSE: ABBV) has gained 8% year to date, as the drug manufacturer reports a 33.9% increase of its revenue in Q2 2021 to $14 billion, up from $10.2 billion in the same period in 2020. Both Johnson & Johnson (NYSE: JNJ) and AbbVie Inc. (NYSE: ABBV) are distinguished as dividend aristocrats which have increased dividend payouts annually for the last 59 and 49 years, respectively.
Investing is becoming difficult by the day, even for smart money. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and May 29th, 2021 our monthly newsletter’s stock picks returned 206.8%, vs. 91% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
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Our Methodology
We selected the best dividend-paying stocks from the S&P 500 Dividend Aristocrat Index that offer a dividend yield not lower than 2%. These companies have sustained and increased dividend payments for the last several years. We also took into account analysts’ ratings and hedge fund sentiment to pick dividend stocks most popular among the hedge funds tracked by Insider Monkey. These dividend-paying stocks have been ranked on the basis of the hedge fund holders, from the lowest to the highest.
With this context in mind, let’s look at the list of the 10 best dividend-paying stocks to buy now.
Best Dividend Paying Stocks to Buy Now
10. T. Rowe Price Group, Inc. (NASDAQ: TROW)
Number of Hedge Fund Holders: 26
Dividend Yield as of August 2: 2.12%
We start the list of the 10 best dividend-paying stocks to buy now with T. Rowe Price Group, Inc. (NASDAQ: TROW). The Maryland-based asset management firm provides financial services to clients globally. T. Rowe Price Group, Inc. (NASDAQ: TROW) pays an annual dividend of $4.32 per share and yields at 2.12%. The financial firm has increased its annual dividend for the last 35 years.
On August 2, Morgan Stanley maintained an Equal-Weight rating on T. Rowe Price Group, Inc. (NASDAQ: TROW) with a price target of $211 per share. The stock has gained 50% in the previous year.
The company has a market cap of almost $47 billion. In the second quarter of 2021, T. Rowe Price Group, Inc. (NASDAQ: TROW) reported an EPS of $3.31, beating estimates by $0.10. The company’s second-quarter revenue was $1.93 billion, beating revenue estimates by $20.5 million. The shares of T. Rowe Price Group, Inc. (NASDAQ: TROW) grew 13% in the past three months.
At the end of the first quarter of 2021, 26 hedge funds in the database of Insider Monkey held stakes worth $304 million in T. Rowe Price Group, Inc. (NASDAQ: TROW), down from 35 hedge funds in the previous quarter holding stakes worth $361 million.
Just like Johnson & Johnson (NYSE: JNJ), AbbVie Inc. (NYSE: ABBV), Chevron Corporation (NYSE: CVX), The Coca-Cola Company (NYSE: KO), and International Business Machines Corporation (NYSE: IBM), T. Rowe Price Group, Inc. (NASDAQ: TROW) is one of the best dividend-paying stocks to buy now according to market analysts.
9. Essex Property Trust, Inc. (NYSE: ESS)
Number of Hedge Fund Holders: 30
Dividend Yield as of August 2: 2.55%
Essex Property Trust, Inc. (NYSE: ESS) ranks 9th on the list of 10 best dividend-paying stocks to buy now. The REIT owns about 246 apartment communities on the West Coast. Essex Property Trust, Inc. (NYSE: ESS) offers an annual dividend of $8.36 per share and has a dividend yield of 2.55%. The REIT has increased its annual dividend for the last 27 years.
On July 15, KeyBanc analyst Jordan Sadler maintained an Overweight rating on Essex Property Trust, Inc. (NYSE: ESS) and increased the firm’s price target to $341 per share from the previous $300. The stock has gained 53% in the previous twelve months.
The company has a market cap of $21.3 billion. In the second quarter of 2021, Essex Property Trust, Inc. (NYSE: ESS) reported an EPS of $3.04, beating estimates by $0.05. The company’s second-quarter revenue was $350.98. Shares of Essex Property Trust, Inc. (NYSE: ESS) increased 14.5% in the past three months.
At the end of the first quarter of 2021, 30 hedge funds in the database of Insider Monkey held stakes worth $196.9 million in Essex Property Trust, Inc. (NYSE: ESS), which is an increase from 25 hedge funds in the previous quarter holding stakes worth $309 million.
Just like Johnson & Johnson (NYSE: JNJ), AbbVie Inc. (NYSE: ABBV), Chevron Corporation (NYSE: CVX), The Coca-Cola Company (NYSE: KO), and International Business Machines Corporation (NYSE: IBM), Essex Property Trust, Inc. (NYSE: ESS) is one of the best dividend paying stocks to buy now according to market analysts.
8. General Dynamics Corporation (NYSE: GD)
Number of Hedge Fund Holders: 31
Dividend Yield as of August 2: 2.43%
Aerospace and defense company General Dynamics Corporation (NYSE: GD) ranks 8th on the list of 10 best dividend-paying stocks to buy now. The Virginia-based industrial company markets combat vehicles and communication systems. General Dynamics Corporation (NYSE: GD) offers an annual dividend of $4.76 per share and has a dividend yield of 2.43%. The defense company has increased its annual dividend for the last 30 years.
On July 30, Wells Fargo maintained an Overweight rating on General Dynamics Corporation (NYSE: GD) with a price target of $220 per share. On the other hand, Credit Suisse analyst Robert Spingarn kept a Neutral rating on General Dynamics Corporation (NYSE: GD) and increased the firm’s price target to $198 per share from the previous $182, after the defense company announced a strong Q2 quarter. The stock has gained 32% year to date.
The company has a market cap of $55 billion. In the second quarter of 2021, General Dynamics Corporation (NYSE: GD) reported an EPS of $2.61, beating estimates by $0.06. The company’s revenue in the second quarter came in at $9.2 billion, up 17.9% year over year but missing estimates by $97.4 million.
At the end of the first quarter of 2021, 31 hedge funds in the database of Insider Monkey held stakes worth $5.93 billion in General Dynamics Corporation (NYSE: GD), down from 40 hedge funds in the previous quarter holding stakes worth $4.95 billion.
Just like Johnson & Johnson (NYSE: JNJ), AbbVie Inc. (NYSE: ABBV), Chevron Corporation (NYSE: CVX), The Coca-Cola Company (NYSE: KO), and International Business Machines Corporation (NYSE: IBM), General Dynamics Corporation (NYSE: GD) is one of the best dividend-paying stocks to buy now according to market analysts.
In its Q1 2021 investor letter, Oakmark Funds mentioned General Dynamics Corporation (NYSE: GD) and shared their insights on the company. Here is what the fund said:
“The second new U.S. equity purchase was General Dynamics, a leading U.S. defense contractor, and owner of the world’s premier business jet franchise (Gulfstream). We were able to purchase this high-quality and durable business at a meaningful discount to our estimate of its intrinsic value after a series of near-term concerns hurt its share price. Taking a longer-term view, the company’s business jet franchise should benefit from a multi-year investment program in the new, differentiated product. Also, its free cash flow conversion is set to improve materially and the company is poised to benefit from a highly visible ramp-up in revenue related to next-generation nuclear-powered submarines. As these positives come into clearer view, we expect sentiment to improve, along with the company’s share price.”
7. International Business Machines Corporation (NYSE: IBM)
Number of Hedge Fund Holders: 41
Dividend Yield as of August 2: 4.65%
International Business Machines Corporation (NYSE: IBM) ranks 7th on the list of 10 best dividend-paying stocks to buy now. The New York-based tech firm provides IT and cloud solutions globally. International Business Machines Corporation (NYSE: IBM) pays an annual dividend of $6.56 per share and has a dividend yield of 4.65%. The tech company has increased its annual dividend for the last 25 years.
On July 20, Morgan Stanley analyst Katy Huberty maintained an Equal-Weight rating on International Business Machines Corporation (NYSE: IBM) and increased the firm’s price target to $164 per share from $152 previously, highlighting the company’s Cloud & Cognitive Software and Global Business Services segments’ strong Q2 results as evidence of the company’s ability to achieve feasible mid-single-digit revenue growth.
In July, International Business Machines Corporation (NYSE: IBM) strengthened its data and hybrid cloud consulting services by acquiring Maryland-based DevOps consultant firm BoxBoat Technologies and IT firm Bluetab Solutions Group, S.L. During the quarter, International Business Machines Corporation (NYSE: IBM) spent $1.75 billion on acquisitions.
The company has a market cap of $127 billion. On July 19, shares of International Business Machines Corporation (NYSE: IBM) surged 4% as the company reported its best revenue growth in three years. The company’s revenue grew 3% to $18.7 billion in the second quarter, beating revenue estimates by $18.29 billion. International Business Machines Corporation (NYSE: IBM) recorded an EPS of $2.33, beating estimates by $0.04.
At the end of the first quarter of 2021, 41 hedge funds in the database of Insider Monkey held stakes worth $1.35 billion in International Business Machines Corporation (NYSE: IBM), down from 51 hedge funds in the previous quarter holding stakes worth $998 million.
6. Chevron Corporation (NYSE: CVX)
Number of Hedge Fund Holders: 41
Dividend Yield as of August 2: 5.26%
Chevron Corporation (NYSE: CVX) ranks 6th on the list of 10 best dividend-paying stocks to buy now. The California-based energy firm markets and operates crude oil and natural gas reserves all over the world. General Chevron Corporation (NYSE: CVX) pays an annual dividend of $5.36 per share and has a dividend yield of 5.26%. The oil and gas company has raised its annual dividend for the last 34 years.
In the last week of July, Chevron Corporation (NYSE: CVX) stated plans to surpass 600,000 boe/d of production in the Permian Basin by the end of the year. Meanwhile, in the second quarter, the company’s global net oil-equivalent output was 3.13 million barrels per day, up 5% over the previous quarter. The stock has gained 18% in the last twelve months.
On July 23, Piper Sandler analyst Ryan Todd maintained an Overweight rating on Chevron Corporation (NYSE: CVX) and increased the firm’s price target to $137 per share from $126 previously, citing that the company’s Q2 results are “unquestionably positive” for the oil and gas sector. Shares of Chevron Corporation (NYSE: CVX) climbed 20% year to date.
The company has a market cap of $195 billion. In the second quarter of 2021, Chevron Corporation (NYSE: CVX) reported an EPS of $1.71, beating estimates by $0.11. The company’s revenue in the second quarter came in at $37.6 billion, beating revenue estimates by $1.15 billion.
At the end of the first quarter of 2021, 41 hedge funds in the database of Insider Monkey held stakes worth $4.87 billion in Chevron Corporation (NYSE: CVX), down from 50 hedge funds in the previous quarter holding stakes worth $5.39 billion.
Just like Johnson & Johnson (NYSE: JNJ), AbbVie Inc. (NYSE: ABBV), The Coca-Cola Company (NYSE: KO), and International Business Machines Corporation (NYSE: IBM), Chevron Corporation (NYSE: CVX) is one of the best dividend-paying stocks to buy now according to market analysts.
In its Q1 2021 investor letter, ClearBridge Investments mentioned Chevron Corporation (NYSE: CVX) and shared their insights on the company. Here is what the fund said:
“While reducing in health care and consumer staples, we increased our exposure to high-quality names in economically sensitive areas of the market. We added to low-cost, high-quality energy names, (including) Chevron. We are positive on the company’s strong balance sheets, competitive positions, and exposure to economic recovery.”
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Disclosure: None. 10 Best Dividend Paying Stocks to Buy Now is originally published on Insider Monkey.
