In this article, we discuss 5 best dividend paying stocks to buy now. If you want to see more best dividend paying stocks to buy, the risk/reward, and methodology of this list, go directly to 12 Best Dividend Paying Stocks to Buy Now.
5. Johnson & Johnson (NYSE:JNJ)
Dividend Yield as of December 12: 2.54%
Number of Hedge Fund Holders: 85
Johnson & Johnson (NYSE:JNJ) ranks #5 on our list of 12 Best Dividend Paying Stocks to Buy Now given 85 hedge funds in our database were long the healthcare giant. Considering the stability and quality of its business, Johnson & Johnson (NYSE:JNJ) has increased its annual dividend for 60 consecutive years and has a dividend yield of 2.54% at current prices as a result. In terms of EPS, analysts expect Johnson & Johnson (NYSE:JNJ) to earn $10.05 per share in 2022, $10.39 per share in 2023, and $10.78 per share in 2024.
4. Bank of America Corporation (NYSE:BAC)
Dividend Yield as of December 12: 2.69%
Number of Hedge Fund Holders: 97
Bank of America Corporation (NYSE:BAC) is a leading American bank with many competitive advantages and a dividend yield of 2.69% as of December 12. Although its EPS is expected to decline to $3.17 per share in 2022 from $3.50 per share in 2021, analysts nevertheless expect Bank of America Corporation (NYSE:BAC)’s earnings to rise to $3.69 per share in 2023 and $3.97 per share in 2024.
Ariel Investment commented on Bank of America Corporation (NYSE:BAC) in a Q3 2022 investor letter,
We initiated three new positions in the quarter. We added leading financial institution Bank of America Corporation (NYSE:BAC) which serves individual consumers, small and middle-market businesses, and large corporations with a full range of banking, investing, asset management, and other financial and risk management products and services. The current company was formed through various mergers including NationsBank, FleetBoston, US Trust, Countrywide Financial, and Merrill Lynch with the legacy commercial bank to form a national banking powerhouse and bulge bracket investment firm. As one of the ‘Big Four’ U.S. banks it enjoys scale driven cost advantages and economies of scale which provide meaningful competitive advantages and potential for strong returns in the largely commoditized banking industry. A survivor of the financial crisis, BAC has emerged with a solid capital base and stands to benefit from a rising interest rate environment.
3. JPMorgan Chase & Co. (NYSE:JPM)
Dividend Yield as of December 12: 2.98%
Number of Hedge Fund Holders: 110
JPMorgan Chase & Co. (NYSE:JPM) is one of the most widely held banking stocks among the elite institutions we track that also has a dividend yield of 2.98% as of December 12. At the end of Q3, 110 hedge funds in our database owned shares of JPMorgan Chase & Co. (NYSE:JPM).
Vltava Fund commented on JPMorgan Chase & Co. (NYSE:JPM) in a Q3 2022 investor letter,
We regard JPM to be the strongest and best- managed bank in the world. It is a leader in investment banking, commercial banking, credit cards, and asset management. Its size (the largest bank in the USA, with nearly USD 4,000 billion in assets) and diversification give it a strong competitive advantage that is compounded by its cost advantages and the high costs to clients associated with switching banks. JPM’s management prides itself on running the only large bank to avoid major instability over the long term.
JP Morgan’s quality and strength first became fully evident in 2008 under the leadership of its CEO Jamie Dimon. Not only did JP Morgan help to stabilize the market by taking over the failing Bear Stearns in the spring of that year, but throughout the Great Financial Crisis it was the only big US bank that did not require government assistance and it was highly profitable even in the difficult year of 2008.
A well-functioning and efficient bank can be a very good long-term investment, because the interest compounding effect works well here. JPM’s return on equity (ROE) is well into the double digits and this puts it in a good position to continue producing better long-term returns than does the market. JPM has been very profitable even during years when interest rates were close to zero. The current – and perhaps not temporary – return to somewhat more normal, higher interest rates should have a significantly positive impact on the bank’s interest income and overall profitability.
2. Apple Inc. (NASDAQ:AAPL)
Dividend Yield as of December 12: 0.64%
Number of Hedge Fund Holders: 140
Although its dividend yield of 0.64% as of December 12 isn’t as high as most other dividend stocks, Apple Inc. (NASDAQ:AAPL) nevertheless has many attractive qualities. Given its substantial scale and loyal customer base, Apple Inc. (NASDAQ:AAPL) has increased its earnings per share over the years. With its profits, the iPhone maker has bought back a lot of its shares that have increased its EPS further. In terms of profits, analysts expect more growth with the average EPS estimate for Apple Inc. (NASDAQ:AAPL) of $6.10 per share for 2022, $6.2 per share for 2023, $6.81 per share for 2024, and $7.14 for 2025.
1. Microsoft Corporation (NASDAQ:MSFT)
Dividend Yield as of December 12: 1.08%
Number of Hedge Fund Holders: 269
Microsoft Corporation (NASDAQ:MSFT) ranks #1 on our list of 12 Best Dividend Paying Stocks to Buy Now given 269 hedge funds in our database owned shares of the tech giant at the end of Q3. In terms of its dividends, Microsoft Corporation (NASDAQ:MSFT) has increased its annual dividend for 19 straight years and the software maker has a dividend yield of 1.08% as a result. Although it is already a giant company, Microsoft Corporation (NASDAQ:MSFT) has potential especially in AI. Given it invested $1 billion in the nonprofit maker of ChatGPT, OpenAI, in July 2019, Microsoft Corporation (NASDAQ:MSFT) is likely pretty advanced in AI as well.
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