In this article, we discuss 10 dividend kings to buy for 2022. If you want to skip our detailed analysis of these stocks, go directly to 5 Dividend Kings to Buy for 2022.
Dividend kings are stocks that have increased their dividend payouts consistently for at least 50 years. Companies with rich dividend histories are often considered to be top picks of investors who rely on income stocks for retirement, since their investment horizons are longer and the payoff is higher as a result.
Kevin Mahn, the president of Hennion & Walsh Asset Management, was interviewed by CNBC on December 13, 2021 and stated that dividend stocks are the best hedge against rising inflation. Investors will seek income-oriented stock opportunities, and the market will see a shift in interest from growth to value stocks, according to the analyst.
Mad Money host Jim Cramer has also reiterated that “the Fed is no longer your friend”, indicating the rising inflation in the US economy. He stresses upon the importance of the right stock picks at this crucial time, and strongly leans towards dividend kings like Lowe’s Companies, Inc. (NYSE:LOW), Target Corporation (NYSE:TGT), and Stanley Black & Decker, Inc. (NYSE:SWK). He suggested buying and holding dividend stocks for maximum gains in the current stock market.
Some of the notable dividend kings heading into 2022 include The Procter & Gamble Company (NYSE:PG), Johnson & Johnson (NYSE:JNJ), and The Coca-Cola Company (NYSE:KO).
Photo by Nathan Dumlao on Unsplash
Our Methodology
We picked the dividend stocks that offer strong fundamentals in 2022, had mostly positive analyst ratings, and have provided consecutive dividend increases for at least 50 years. We have also mentioned the hedge fund sentiment around each stock, which was gauged from the 867 elite hedge funds that were monitored by Insider Monkey in the third quarter of 2021.
Dividend Kings to Buy for 2022
10. Dover Corporation (NYSE:DOV)
Dividend Yield as of January 19: 1.11%
Number of Hedge Fund Holders: 32
Number of Years of Dividend Increases: 66
Dover Corporation (NYSE:DOV) is an Illinois-based conglomerate company that manufactures industrial products, specializing in engineered products, fueling solutions, imaging and identification, pumps and process solutions, and refrigeration equipment. Dover Corporation (NYSE:DOV) is one of the top dividend kings to buy for 2022, offering a dividend yield of 1.11% as of January 19.
Dover Corporation (NYSE:DOV) on November 4 declared a $0.50 per share quarterly dividend, which is a 1% increase from the prior dividend of $0.49. The dividend was paid on December 14, to shareholders of record on November 30.
On December 16, in a bid to focus on clean energy, Dover Corporation (NYSE:DOV) acquired Acme Cryogenics for $295 million in cash, and has also agreed to purchase Engineered Controls International, commonly abbreviated as RegO, for $631 million. Both of these companies specialize in engineered components and services that assist in the production, storage, and distribution of cryogenic gasses used in multiple industrial applications.
Oppenheimer analyst Bryan Blair on January 7 upgraded Dover Corporation (NYSE:DOV) to Outperform from Perform with a $205 price target. The analyst says that Dover Corporation (NYSE:DOV)’s growth and margin accretive clean energy deals have him moving off the sidelines. He says Acme and RegO accelerate the company’s portfolio evolution.
Among the hedge funds tracked by Insider Monkey, 32 funds were bullish on Dover Corporation (NYSE:DOV) in the third quarter of 2021, with stakes totaling $351.2 million. Cliff Asness’ AQR Capital Management is the largest Dover Corporation (NYSE:DOV) stakeholder, with 526,480 shares worth $81.8 million.
9. W.W. Grainger, Inc. (NYSE:GWW)
Dividend Yield as of January 19: 1.29%
Number of Hedge Fund Holders: 28
Number of Years of Dividend Increases: 50
W.W. Grainger, Inc. (NYSE:GWW) is a Chicago-based industry supply company that provides motors, lighting, material handling, fasteners, plumbing, tools, and safety supplies to customers worldwide, in addition to technical support. W.W. Grainger, Inc. (NYSE:GWW) has consistently paid dividends for 50 years, delivering a payout ratio of 33.11%.
On October 27, W.W. Grainger, Inc. (NYSE:GWW) declared a $1.62 per share quarterly dividend, in line with previous. The dividend was paid on December 1, to shareholders of record on November 8. As of January 19, the stock offers a dividend yield of 1.29%.
Oppenheimer analyst Christopher Glynn on November 1 raised the price target on W.W. Grainger, Inc. (NYSE:GWW) to $535 from $500 and kept an Outperform rating on the shares. The analyst noted that W.W. Grainger, Inc. (NYSE:GWW) delivered above normal seasonality, core non-pandemic sales were up 22% year-over-year versus -8% comparison, and the company displayed broad strength across customer demographics. W.W. Grainger, Inc. (NYSE:GWW) also posted solid Q3 earnings and revenue, which were both above consensus.
According to Insider Monkey’s Q3 data, D E Shaw is one of the biggest W.W. Grainger, Inc. (NYSE:GWW) stakeholders, with 90,466 shares worth $35.5 million. Overall, 28 hedge funds reported owning stakes in W.W. Grainger, Inc. (NYSE:GWW), amounting to $306 million.
Like The Procter & Gamble Company (NYSE:PG), Johnson & Johnson (NYSE:JNJ), and The Coca-Cola Company (NYSE:KO), W.W. Grainger, Inc. (NYSE:GWW) is a notable dividend king heading into 2022.
8. Lowe’s Companies, Inc. (NYSE:LOW)
Dividend Yield as of January 19: 1.35%
Number of Hedge Fund Holders: 60
Number of Years of Dividend Increases: 59
Lowe’s Companies, Inc. (NYSE:LOW) is an American home improvement retail chain operating in the United States and Canada. As of 2021, Lowe’s Companies, Inc. (NYSE:LOW) has more than 2000 retail outlets in North America.
Lowe’s Companies, Inc. (NYSE:LOW), on November 12, declared a $0.80 per share quarterly dividend, in line with previous, offering a forward yield of 1.35%. The dividend is payable on February 2, to shareholders of record on January 19.
On January 19, Citi analyst Steven Zaccone raised the price target on Lowe’s Companies, Inc. (NYSE:LOW) to $292 from $270 and kept a Buy rating on the shares. The analyst noted that sentiment has shifted toward “defensive, stable margin businesses” like home improvement and auto parts retail.
Lowe’s Companies, Inc. (NYSE:LOW) announced its FY22 guidance on December 15. The company expects diluted EPS of $12.25-$13.00, versus a consensus of $12.92. Lowe’s Companies, Inc. (NYSE:LOW)’s total sales will equal approximately $95 billion, which represents a 33% sales growth on a two-year basis. A share repurchase program of $12 billion was also disclosed.
Among the hedge funds tracked by Insider Monkey, Bill Ackman’s Pershing Square is the largest Lowe’s Companies, Inc. (NYSE:LOW) stakeholder, with 10.2 million shares worth more than $2 billion. Overall, 60 hedge funds were bullish on the stock in the third quarter of 2021.
Here is what Pershing Square Holdings has to say about Lowe’s Companies, Inc. (NYSE:LOW) in its Q2 2021 investor letter:
“Since the onset of the COVID-19 pandemic, Lowe’s Companies, Inc. (NYSE:LOW) has experienced a significant acceleration in demand driven by consumers nesting at home, higher home asset utilization and the reallocation of discretionary spend. In the three years since Marvin Ellison became CEO, the company has executed a multi-year transformation plan to bolster Lowe’s retail fundamentals, reduce structural costs, expand distribution capabilities, and modernize systems and the company’s online capabilities. This transformation has allowed Lowe’s to meet consumers’ needs during this highly elevated period of demand, and positioned the company for continued success and accelerated earnings growth.
In the second quarter, Lowe’s reported U.S. same-store-sales growth of 2.2%. Growth was bolstered by strength from the critical Pro consumer, where Lowe’s reported growth of 21%, off setting moderating do-it-yourself (“DIY”) demand. While DIY demand has receded from peak-COVID-19 periods, Pro customer demand has accelerated as consumers engage Pro’s for larger renovation projects.
Notwithstanding the headline growth figure, which is impacted by comparisons to COVID-19-affected months from spring of 2020, demand remains extremely elevated relative to baseline 2019 levels. July same-store-sales, the most recent full month for which the company has provided disclosure, were up 31.5% on a two-year basis and management indicated August month-to-date results are substantially similar. More significantly, Lowe’s reported Pro growth of +49% on a two-year basis in Q2, evidence that Lowe’s focus on the Pro is bearing fruit. Share gains with the critical Pro customer will provide a tailwind to growth that should allow Lowe’s to outperform market-level growth going forward.
Even as the robust demand experienced during the height of COVID-19 stabilizes at a new base, the medium and longer-term macro environment remain very attractive for the home improvement sector and Lowe’s in particular. This favorable context for the sector is evidenced by consumers’ enhanced focus and appreciation of the importance of the home, higher home asset utilization, rising home prices, historically low mortgage rates, an aging housing stock, strong consumer balance sheets, and the general lack of new housing inventory.
Against this backdrop, Lowe’s Companies, Inc. (NYSE:LOW) is focused on taking market share and expanding margins. Pro penetration today is still only 25% of revenue as compared to Lowe’s medium-term target of 30% to 35%, providing a runway for continued above market growth. Management continues to execute against various operational initiatives (Lowe’s “Perpetual Productivity Improvement” program) designed to improve the customer experience while enhancing the company’s margins and long-term earnings power. The company’s long-term outlook implies significant opportunity for continued margin expansion and earnings appreciation as it executes its business transformation.
Lowe’s currently trades at approximately 17 times forward earnings. Home Depot, its closest competitor, trades at approximately 22 times forward earnings despite Lowe’s superior prospective earnings growth. We find this valuation disparity to be anomalous in light of Lowe’s strong execution and potential for further operational optimization.”
7. Target Corporation (NYSE:TGT)
Dividend Yield as of January 19: 1.61%
Number of Hedge Fund Holders: 49
Number of Years of Dividend Increases: 54
Target Corporation (NYSE:TGT) is one of the largest American department store chains, providing beauty and health products, clothing, accessories, electronics, food, furniture, pet supplies, and relevant products. Target Corporation (NYSE:TGT) has a rich dividend history, with the company providing increasing dividends for 54 consecutive years. Target Corporation (NYSE:TGT) also beat the market consensus for earnings per share and revenue in the third quarter of 2021.
On January 13, Target Corporation (NYSE:TGT) declared a $0.90 per share quarterly dividend, in line with previous. The dividend is payable on March 10, to shareholders of record on February 16.
JPMorgan analyst Christopher Horvers on January 14 removed Target Corporation (NYSE:TGT) from the firm’s Analyst Focus List while keeping an Overweight rating on the shares with a $292 price target. Although the analyst has near-term concerns on same store sales forecasts, he remains Overweight on a “still solid” customer base, sustained share gains, and the company’s share repurchase support.
Target Corporation (NYSE:TGT)’s management announced on January 16 that U.S. consumers are likely to reduce driving and conclude their shopping into fewer trips as they adjust to pricier gasoline and the highest inflation rate in almost four decades. People are also likely to eat more at home and seek cheaper generic-brand goods in an effort to ease the blow from rising prices, which could impact Target Corporation (NYSE:TGT)’s revenues heading into 2022.
A total of 49 hedge funds were bullish on Target Corporation (NYSE:TGT) in the third quarter of 2021, down from 66 funds in the preceding quarter. Rajiv Jain’s GQG Partners owns 5.50 million shares of Target Corporation (NYSE:TGT), worth $1.25 billion, and is the largest stakeholder of the company.
In addition to The Procter & Gamble Company (NYSE:PG), Johnson & Johnson (NYSE:JNJ), and The Coca-Cola Company (NYSE:KO), Target is a popular dividend stock among hedge funds.
Here is what Nelson Capital Management has to say about Target Corporation (NYSE:TGT) in its Q2 2021 investor letter:
“We added Target (tkr: TGT) to our consumer staples sector. Target Corporation (NYSE:TGT) offers a broad array of products in owned and known brand items at affordable prices. Its omni-channel fulfillment centers allow customers to receive their items via in-store pickup, curbside pickup, same-day shipping and regular shipping while simultaneously reducing operating costs. With a significantly lower valuation than peers and a unique operating strategy, Target is an attractive holding.”
6. Stanley Black & Decker, Inc. (NYSE:SWK)
Dividend Yield as of January 19: 1.72%
Number of Hedge Fund Holders: 37
Number of Years of Dividend Increases: 54
Stanley Black & Decker, Inc. (NYSE:SWK) is a Connecticut-based manufacturer of industrial tools, household hardware, and security products. Stanley Black & Decker, Inc. (NYSE:SWK) has been increasing its dividend payments for 54 consecutive years, and delivers a yield of 1.72% as of January 19.
On October 20, Stanley Black & Decker, Inc. (NYSE:SWK) declared a $0.79 per share quarterly dividend, in line with previous. The dividend was paid on December 21, to shareholders of record on December 1.
Barclays analyst Julian Mitchell raised the price target on Stanley Black & Decker, Inc. (NYSE:SWK) to $232 from $231 and kept an Overweight rating on the shares on January 4. The analyst expects inflation to boost sales for multi-industry companies in Q4, but he sees margin pressure in the near term. The stronger U.S. dollar is also an “emerging headwind”, the analyst told investors in a research note.
As per Insider Monkey’s third quarter database, Pzena Investment Management is the largest Stanley Black & Decker, Inc. (NYSE:SWK) stakeholder, owning over 1 million shares worth $177.5 million. Overall, 37 hedge funds were long Stanley Black & Decker, Inc. (NYSE:SWK) in Q3 2021, down from 44 funds in the preceding quarter.
Stanley Black & Decker, Inc. (NYSE:SWK) is a popular dividend stock according to elite hedge funds, in addition to The Procter & Gamble Company (NYSE:PG), Johnson & Johnson (NYSE:JNJ), and The Coca-Cola Company (NYSE:KO).
Here is what Saturna Capital Sextant Funds has to say about Stanley Black & Decker, Inc. (NYSE:SWK) in its Q3 2021 investor letter:
“Stanley Black & Decker, Inc. (NYSE:SWK) performed well through the first part of the year but struggled over the summer. China accounts for much of its production, and their zero-tolerance approach to pandemic safety measures has led to disruption, compounded by shipping difficulties and rising materials expenses. We still believe one outcome of the pandemic will be a buoyant home improvement market, given that one never knows when the next pandemic lockdown may occur.”
Click to continue reading and see 5 Dividend Kings to Buy for 2022.
Suggested articles:
- Analysts Are Recommending These 10 Dividend Stocks
- Retirement Stock Portfolio: 10 Safe Tech Stocks To Consider
- 10 Best Dividend Aristocrats to Buy for 2022
Disclosure: None. 10 Dividend Kings to Buy for 2022 is originally published on Insider Monkey.
