In this article, we discuss 10 best dividend stocks to buy in 2022. You can skip our detailed analysis of dividend investment and performance of dividend stocks, and go directly to read 5 Best Dividend Stocks to Buy in 2022.
In 2022, dividend stocks are gaining traction among investors due to the global market crash. Since the start of the year, the S&P 500 is down 17.4% and the tech-heavy NASDAQ fell by 24.8%, presenting an alarming picture of the market for the rest of the year. Analysts suggest investing in dividend stocks, as dividend income represented 40% of the total market returns from 1930 to 2021 and dividend-paying companies are known to have weathered severe market storms in the past.
According to BofA Securities, the S&P 500 is expected to generate minimal returns for the next decade while dividend stocks will contribute significantly to overall returns. The firm further mentioned that companies with strong balance sheets, steady cash flows, and attractive yields can save investors from inflation as they are expected to grow their dividends regularly. In the second quarter of 2022, dividend payments reached a record high as the companies in the S&P 500 paid out $140 billion in dividends, up from $137.6 billion in the previous quarter, as reported by Wall Street Journal. Howard Silverblatt, a senior analyst at S&P Dow Jones Indices, said that he expects dividend payments to grow by another 10% by the end of the year.
Dividend stocks like The Coca-Cola Company (NYSE:KO), Johnson & Johnson (NYSE:JNJ), and The Procter & Gamble Company (NYSE:PG) are popular among investors as they have raised their dividends for a significant period of time. These stocks also offer investors a regular stream of passive income, which is rewarding in the current market situation.
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Our Methodology:
The dividend stocks mentioned below have strong dividend policies and reported solid financials in the first quarter of 2022. The stocks are ranked from the lowest yield to the highest. Our data of over 900 elite hedge funds show that these dividend stocks are also popular among famous hedge funds.
Best Dividend Stocks to Buy in 2022
10. UnitedHealth Group Incorporated (NYSE:UNH)
Dividend Yield as of July 21: 1.27%
UnitedHealth Group Incorporated (NYSE:UNH) is an American healthcare and insurance company that offers related services to consumers.
In Q2 2022, UnitedHealth Group Incorporated (NYSE:UNH) generated $6.9 billion in cash flows from operations. The company’s cash and cash equivalents at the end of the quarter stood at $24.6 billion, up from $19.8 billion during the same period last year. UnitedHealth Group Incorporated (NYSE:UNH) returned nearly $4 billion to shareholders in Q2 in dividends and buybacks. On June 8, the company raised its quarterly dividend by 14% to $1.65 per share, with a yield of 1.27%, as of July 21. The company maintains a 12-year track record of dividend growth and raised its payout by 130% in the past five years.
Following the company’s Q2 results, BMO Capital raised its price target on UnitedHealth Group Incorporated (NYSE:UNH) in July to $610 with a Market Perform rating on the shares.
UnitedHealth Group Incorporated (NYSE:UNH) was the 15th most popular stock among elite funds in Q1 2022, as 103 hedge funds in Insider Monkey’s database owned stakes in the company, worth over $12.8 billion. In the previous quarter, 96 hedge funds owned $13.6 billion worth of stakes in the company.
In addition to The Coca-Cola Company (NYSE:KO), Johnson & Johnson (NYSE:JNJ), and The Procter & Gamble Company (NYSE:PG), UNH is also one of the most prominent stocks in 2022.
Baron Funds mentioned UnitedHealth Group Incorporated (NYSE:UNH) in its Q1 2022 investor letter. Here is what the firm has to say:
“UnitedHealth Group Incorporated is a leading diversified health and well- being company whose divisions include insurance arm United Healthcare and Optum, which offers care delivery and other services. Shares increased on a fourth quarter beat and a reaffirmation of what is likely conservative guidance for 2022. We believe UnitedHealth leads the health care industry in innovation and execution, as evidenced by its strong value proposition leading to Medicare Advantage share gains, strong cost controls, and its leadership position in the shift to value-based care.”
9. American Express Company (NYSE:AXP)
Dividend Yield as of July 21: 1.40%
American Express Company (NYSE:AXP) is a New York-based leading issuer of personal, corporate, and small business credit cards. In addition to this, the company also offers travel-related services to consumers.
American Express Company (NYSE:AXP) raised its dividends for years before ceasing dividend growth in 2020 and 2021 due to the pandemic. However, the company has been making uninterrupted dividend payments for the past 30 years. Its average quarterly free cash flow stands at $2.36 billion in the past five years and it allocates approximately $403 million in dividend payments every quarter. American Express Company (NYSE:AXP) currently pays a quarterly dividend of $0.52 per share, raising it by 20% in March. As of July 21, the stock’s dividend yield came in at 1.40%.
In July, Wells Fargo called American Express Company (NYSE:AXP) one of the most favored stocks in the card issuer but lowered its price target on the stock to $190 due to the ongoing economic risks. The firm kept an Overweight rating on the AXP.
At the end of Q1 2022, 69 hedge funds tracked by Insider Monkey presented a bullish stance on American Express Company (NYSE:AXP), up from 64 in the previous quarter. These stakes hold a collective value of over $33.1 billion. With 151.6 million shares valued at $28.3 billion, Berkshire Hathaway was the company’s leading shareholder at the end of March 2022.
8. Nucor Corporation (NYSE:NUE)
Dividend Yield as of July 21: 1.70%
Nucor Corporation (NYSE:NUE) is an American producer of steel and related products based in North Carolina. The company is also one of the biggest recyclers of scrap in the state.
Nucor Corporation (NYSE:NUE) has shown its financial strength in the first quarter of 2022, generating nearly $2 billion in free cash flow. The company repurchased approximately $930 million worth of stocks during the quarter, at an average share price of $157.3. In the first half of 2022, it spent roughly $2 billion on the capital return program, including dividend payments. Nucor Corporation (NYSE:NUE) has been increasing its payouts every year since 1973. It pays a quarterly dividend of $0.50 per share, with a dividend yield of 1.70%, as of July 21.
As the steel prices have fallen from their March highs, Morgan Stanley lowered its price target on Nucor Corporation (NYSE:NUE) in July to $121 with an Equal Weight rating on the shares.
At the end of Q1 2022, 22 hedge funds in Insider Monkey’s database held stakes in Nucor Corporation (NYSE:NUE), down from 24 a quarter earlier. The collective value of these stakes is over $260.6 million. AQR Capital Management was the company’s leading shareholder in Q1, with roughly one million shares.
ClearBridge Investments mentioned Nucor Corporation (NYSE:NUE) in its Q3 2021 investor letter. Here is what the firm has to say:
“Our active approach also applies to being disciplined in managing positions in companies in more cyclical industries and taking profits during stronger periods of each cycle. We closed a position in steel maker Nucor during the quarter after the shares had more than doubled over the last year as a direct participant in the recovery of the U.S. economy and rebound in industrial activity. At this point in the cycle, we no longer view the risk/reward as compelling and feel more confident in deploying the proceeds in more attractive areas discussed in this and previous letters.”
7. Lowe’s Companies, Inc. (NYSE:LOW)
Dividend Yield as of July 21: 2.20%
Lowe’s Companies, Inc. (NYSE:LOW) is a North Carolina-based retail company that mainly specializes in home improvement.
In Q1 2022, Lowe’s Companies, Inc. (NYSE:LOW) paid over $524 million to shareholders in dividends, up from 430 million paid during the same period last year. The company reported over $3.4 billion in cash and cash equivalents at the end of the quarter, compared with $1.13 billion in the previous quarter. On May 27, Lowe’s Companies, Inc. (NYSE:LOW) declared a quarterly dividend of $1.05 per share, up 31% from the previous quarter. The company has been paying dividends consistently since its IPO in 1961 with a 25-year streak of dividend growth. The stock’s dividend yield was recorded at 2.20% on July 21.
In June, MKM Partners initiated its coverage of Lowe’s Companies, Inc. (NYSE:LOW) with a $190 price target and a Neutral rating on the shares, appreciating the company’s performance in inflation.
With a stake worth over $5.5 billion, 65 hedge funds in Insider Monkey’s database owned positions in Lowe’s Companies, Inc. (NYSE:LOW) in Q1, down from 72 a quarter earlier. Pershing Square held over 10.2 million LOW shares, worth $2.06 billion, becoming the company’s leading stakeholder in Q1.
6. Raytheon Technologies Corporation (NYSE:RTX)
Dividend Yield as of July 21: 2.32%
Raytheon Technologies Corporation (NYSE:RTX) is an American multinational aerospace and defense company that specializes in intelligence services and defense manufacturing.
In Q1 2022, Raytheon Technologies Corporation (NYSE:RTX) generated $37 million in free cash flow while its operating cash flow came in at $476 million. For FY22, the company expects its free cash flow to reach $6 billion. Moreover, it paid $745 million in dividends to shareholders during the quarter, up from $705 million paid during the same period last year. Raytheon Technologies Corporation (NYSE:RTX) pays a quarterly dividend of $0.55 per share, with a dividend yield of 2.32%, as of July 21. The company has been raising its dividends consecutively for the past 28 years.
As per Insider Monkey’s Q1 2022 data, 50 hedge funds owned stakes in Raytheon Technologies Corporation (NYSE:RTX), down from 51 in the previous quarter. The collective value of these stakes is over $2.1 billion.
Just like famous dividend stocks, such as The Coca-Cola Company (NYSE:KO), Johnson & Johnson (NYSE:JNJ), and The Procter & Gamble Company (NYSE:PG), Raytheon Technologies Corporation (NYSE:RTX) is also favored by analysts and investors in 2022.
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Disclosure. None. 10 Best Dividend Stocks to Buy in 2022 is originally published on Insider Monkey.
