In this article, we discuss 10 dividend challengers for 2022. To check out some more dividend stocks in this list, click 5 Dividend Challengers for 2022.
Dividend challengers are companies that offer five to nine years of consecutive dividend growth. While it may not seem like a significant period of increasing dividends, it identifies dividend growth stocks who have the potential for continuing rising payments to shareholders because of solid operations. These companies have strong underlying business fundamentals, but not the highest yields since these firms are still in the growth phase.
Dividend paying stocks are an important tool to protect money against inflation, which makes them appealing for investors, especially in the current macro environment. Inflation results in higher prices, which in turn increases the revenues, earnings, and dividends for most companies, especially when consumer income grows in-line with higher prices to negate the net impact.
While dividend challengers may not have a history of multiple years of dividend growth, they indicate a commitment of companies to increase shareholder returns. In a volatile market, investors protect their assets by diversifying their investment portfolios, and it is always an attractive idea to own stocks that pay you to hold them. The notable dividend aristocrats and dividend kings today all started out as dividend challengers at one point in time, which is why it is important for investors to closely note the operational and financial performance metrics of these companies.
Some of the most notable dividend stocks on the radar of institutional and retail investors alike include Johnson & Johnson (NYSE:JNJ), Altria Group, Inc. (NYSE:MO), and The Coca-Cola Company (NYSE:KO).
Source: PixaBay
Our Methodology
We selected companies that offer dividend growth of at least five years for the list of dividend challengers for 2022. Positive analyst ratings and strong hedge fund sentiment served as classifiers as well. Dividend yields as of April 22 are mentioned for each stock.
Dividend Challengers for 2022
10. Stifel Financial Corp. (NYSE:SF)
Number of Hedge Fund Holders: 23
Dividend Yield as of April 22: 1.86%
Number of Years of Consecutive Dividend Increases: 6
Stifel Financial Corp. (NYSE:SF) was founded in 1890 and is headquartered in St. Louis, Missouri. It operates as a financial services and bank holding company, offering asset management, financial services, investment banking, and investment management.
Stifel Financial Corp. (NYSE:SF) has consecutively increased its dividends for six years in a row, and the stock delivers a dividend yield of 1.86% as of April 22. The company announced on January 26 a $0.30 per share quarterly dividend, a 100% increase from its prior dividend of $0.15. The dividend was paid on March 15, t0 shareholders of record on March 1.
On March 30, Stifel Financial Corp. (NYSE:SF) announced that it will offer equity grants to about half of its employees, to eventually make all employees company shareholders. Approximately 4,200 current employees will receive one-time stocks worth $5,000 per person. All Stifel Financial Corp. (NYSE:SF) employees that qualify will eventually achieve equity ownership in the company with this program.
JMP Securities analyst Devin Ryan on January 27 maintained an Outperform rating on Stifel Financial Corp. (NYSE:SF) and raised the firm’s price target on the shares to $100 from $93. The analyst cited the company’s Q4 earnings beat, along with its comp ratio of 57.5% that came in above his 56.0% estimate.
According to Insider Monkey’s Q4 database, 23 hedge funds were bullish on Stifel Financial Corp. (NYSE:SF), compared to 20 funds in the earlier quarter. Israel Englander’s Millennium Management is the biggest stakeholder of the company, with 2.6 million shares worth $185.8 million.
In addition to Johnson & Johnson (NYSE:JNJ), Altria Group, Inc. (NYSE:MO), and The Coca-Cola Company (NYSE:KO), Stifel Financial Corp. (NYSE:SF) is a notable dividend stock to look out for.
9. Invitation Homes Inc. (NYSE:INVH)
Number of Hedge Fund Holders: 31
Dividend Yield as of April 22: 2.04%
Number of Years of Consecutive Dividend Increases: 5
Invitation Homes Inc. (NYSE:INVH) is a single-family home leasing company, based in Dallas, Texas. The company is one of the hottest names in the current housing market, and it has consistently increased its dividend payouts for the last five years. Invitation Homes Inc. (NYSE:INVH)’s dividend yield on April 22 stood at 2.04%.
Invitation Homes Inc. (NYSE:INVH) declared on April 22 a per share quarterly dividend of $0.22, in line with previous. The dividend is payable on May 27, to shareholders of the company at the close of business on May 10. The company’s cash and cash equivalents at the end of 2021 stood at $610.2 million, up from $213.4 million in the prior year. This indicates possible dividend increases in 2022, continuing the streak of rising dividends.
On April 20, Jefferies analyst Linda Tsai initiated coverage of Invitation Homes Inc. (NYSE:INVH) with a Buy rating and a $48 price target. The company has the potential for growth since it has amassed a notable share in a fragmented market, according to the analyst, who forecasts that Invitation Homes Inc. (NYSE:INVH) can increase core FFO per share at an average growth rate of 9.8% through FY24.
Among the hedge funds tracked by Insider Monkey, 31 funds held stakes in Invitation Homes Inc. (NYSE:INVH) at the end of the fourth quarter of 2021, worth $854.8 million, compared to 36 funds in the preceding quarter, holding stakes in the company valued at $824.5 million. Greg Poole’s Echo Street Capital Management is the biggest position holder in Invitation Homes Inc. (NYSE:INVH), with 4.3 million shares worth roughly $196 million.
Here is what Baron Real Estate Fund has to say about Invitation Homes Inc. (NYSE:INVH) in its Q1 2021 investor letter:
“The Fund also has investments in REITs that would benefit from this movement out of urban areas into suburban areas. We expect single-family rental REIT Invitation Homes, Inc. to benefit as more people opt for single-family home rentals rather than apartment rentals.”
8. Yum! Brands, Inc. (NYSE:YUM)
Number of Hedge Fund Holders: 36
Dividend Yield as of April 22: 1.86%
Number of Years of Consecutive Dividend Increases: 5
Yum! Brands, Inc. (NYSE:YUM) has a track record of increasing dividends for the last five years, which merits its inclusion in our list of 10 dividend challengers for 2022. Yum! Brands, Inc. (NYSE:YUM) franchises quick service restaurants globally, including brands like KFC, Pizza Hut, Taco Bell, and The Habit Burger Grill.
In 2021, Yum! Brands, Inc. (NYSE:YUM)’s revenue for the year came in at $6.5 billion, compared to $5.6 billion in the prior year. Yum! Brands, Inc. (NYSE:YUM)’s net income in 2021 stood at $1.5 billion, up from the 2020 net income of $904 million, reflecting an increase of 74.23%.
On February 7, Yum! Brands, Inc. (NYSE:YUM) declared a $0.57 per share quarterly dividend, a 14% increase from its prior dividend of $0.50. The dividend was distributed to shareholders on March 11. The company offers an attractive dividend payout ratio that lies between 40% to 45%.
Citi analyst Jon Tower initiated coverage of Yum! Brands, Inc. (NYSE:YUM) on April 12 with a Buy recommendation and a $156 price target. The analyst observed that the stock’s recent underperformance overstates the current risk to estimates given the company’s KFC Russia exposure.
According to Insider Monkey’s Q4 data, 36 hedge funds held long positions in Yum! Brands, Inc. (NYSE:YUM), collectively owning stakes worth $811.2 million, compared to 38 funds in the earlier quarter, holding stakes in Yum! Brands, Inc. (NYSE:YUM) amounting to $757.6 million. Alkeon Capital Management is the largest position holder in the company, with 2.30 million shares worth $320.75 million.
7. Sun Communities, Inc. (NYSE:SUI)
Number of Hedge Fund Holders: 37
Dividend Yield as of April 22: 1.88%
Number of Years of Consecutive Dividend Increases: 6
Sun Communities, Inc. (NYSE:SUI) is a US-based real estate investment trust that holds a portfolio of manufactured housing communities, recreational vehicle resorts, and marinas.
2022 marks the company’s sixth year of consecutive dividend growth. Sun Communities, Inc. (NYSE:SUI) declared on March 29 a $0.88 per share quarterly dividend, a 6% increase from its earlier dividend of $0.83. The dividend was distributed to shareholders on April 15.
On April 20, JMP Securities analyst Aaron Hecht initiated coverage of Sun Communities, Inc. (NYSE:SUI) with an Outperform rating and a $220 price target. The analyst expects Sun Communities, Inc. (NYSE:SUI)’s growth to generate “outsized value creation”. Based on market capitalization, it is the largest listed real estate investment trust in the United States that prioritizes leasing affordable living and recreational properties, the analyst told investors in a bullish thesis. He believes Sun Communities, Inc. (NYSE:SUI)’s asset classes are “ideally positioned to outperform in this environment”.
According to Insider Monkey’s Q4 data, 37 hedge funds placed long calls on Sun Communities, Inc. (NYSE:SUI), up from 33 funds in the preceding quarter. Jeffrey Furber’s AEW Capital Management is a significant stakeholder of the company, with 724,701 shares worth over $152 million.
Here is what ClearBridge Mid Cap Strategy has to say about Sun Communities, Inc. (NYSE:SUI) in its Q3 2021 investor letter:
“Our commitment to constantly improve the risk/reward of the portfolio kept us active during the third quarter in repositioning to capitalize on opportunities we have previously sourced and de-risked. We initiated a position in Sun Communities, a U.S. real estate investment trust (REIT) that specializes in investing in manufactured housing communities, recreational vehicle (RV) resorts and marinas. As the economy works through housing supply constraints, Sun’s manufactured housing communities are increasingly appealing to younger, lower income populations in prime growth locations through the Sun Belt. Additionally, Sun’s expanded RV park offerings have seen healthy demand from increasing numbers of retiring baby boomers purchasing RVs as well as greater numbers of road trips in the wake of COVID-19.”
6. Prologis, Inc. (NYSE:PLD)
Number of Hedge Fund Holders: 37
Dividend Yield as of April 22: 1.87%
Number of Years of Consecutive Dividend Increases: 9
Based in San Francisco, California, Prologis, Inc. (NYSE:PLD) is a real estate investment trust that primarily invests in industrial warehouses, serving customers across the business-to-business and retail/online fulfillment segments.
Prologis, Inc. (NYSE:PLD) has raised its dividends for 9 years in a row, making it a notable dividend challenger for 2022. On February 25, Prologis, Inc. (NYSE:PLD) announced a $0.79 per share quarterly dividend, a 25.4% increase from its prior dividend of $0.63. The dividend was paid to shareholders on March 31.
On April 19, the company posted its Q1 2022 results, reporting a FFO per share of $1.09, topping analysts’ consensus estimates by $0.02. The revenue of $1.22 billion climbed 6.1% year-over-year and exceeded Street forecasts by $130 million. Prologis, Inc. (NYSE:PLD) raised its 2022 guidance, announcing core per share FFO between $5.10 and $5.16, versus a consensus of $5.04. The stock gained 2.5% in pre-market trading after the results and positive 2022 outlook was published.
Deutsche Bank analyst Derek Johnston on April 22 lifted the firm’s price target on Prologis, Inc. (NYSE:PLD) to $184 from $179 and maintained a Buy rating on the shares. The analyst observed industry leading operating metrics across Prologis, Inc. (NYSE:PLD)’s Q1 results.
According to the fourth quarter database of Insider Monkey, 37 hedge funds held bullish positions in Prologis, Inc. (NYSE:PLD), compared to 32 funds in the earlier quarter. A significant shareholder of the company is Phill Gross and Robert Atchinson’s Adage Capital Management, with 818,419 shares worth $137.7 million.
One of the income stocks on the radar of elite investors is Prologis, Inc. (NYSE:PLD), just like Johnson & Johnson (NYSE:JNJ), Altria Group, Inc. (NYSE:MO), and The Coca-Cola Company (NYSE:KO).
Third Avenue Management mentioned Prologis, Inc. (NYSE:PLD) in one of its letters. Here is what they said about PLD in their Q1 2021 investor letter:
“Prologis, Inc. (a U.S.-based real estate investment trust that is the largest owner of modern logistic facilities with a platform that expands more than 950 million square feet of space in 19 countries globally) completing $2.0 billion USD of debt placements at a weighted average interest rate of 0.9% with an average term of more than 13 years. In the process, the company has further solidified one of the most compelling capital structures in the real estate industry with a prudent loan-to-value ratio of approximately 25% that primarily comprised fixed-rate debt at an average cost of 1.8% for a term that exceeds 10 years. As a result, the long-tenured management at Prologis (including one of the true leaders in the real estate space CEO Hamid Moghadam) have set up the company for what could be a very rewarding period ahead as incremental rental income and asset management fees seem likely to accrue disproportionately to shareholders on the “bottom-line” with its interest costs locked-in.”
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Disclosure: None. 10 Dividend Challengers for 2022 is originally published on Insider Monkey.
Correction: The article was updated on May 2 at 13:41 PM ET to correct company information for Sun Communities, Inc. (NYSE:SUI). The previous version of the article incorrectly stated that Sun Communities is a Canadian company.
