In this article, we discuss 10 dividend stocks for college students that Redditors recommend. You can skip our detailed analysis of the current investing environment, and go directly to read Redditors Recommend These 5 Dividend Stocks for College Students.
Experienced investors understand the importance of compounding returns, which means the longer the investment, the better. Analysts are of the view that investing earlier in life can give more time for the money to grow and saves one from sudden market upheavals just like the one we are confronted with today.
With rising costs around the world, teenagers are worried about their college-related plans, as high school graduates’ average loan for 2022 stands at $39,500, according to CNBC. In another survey conducted by Junior Achievement USA, nearly 70% of the participants mentioned that the rising education costs have affected their post-graduation plans. As a result of this, many college students are now exploring different ways to manage their education-related budgets.
In 2020, retail trading won big time, which improved online trading platforms and made investing more accessible than ever. This has also provided an opportunity for college students who are now picking up investing through user-friendly investing apps. Winnie Sun, a financial advisor at Sun Group Wealth Partners, mentioned in an interview with CNBC that diversifying your investment portfolio is very important for beginner investors because it keeps the balance. She further mentioned that stocks belonging to different sectors that pay dividends are enough to generate a stable income, which would grow after some years. Some of the important stocks in this regard are The Coca-Cola Company (NYSE:KO), Exxon Mobil Corporation (NYSE:XOM), and The Procter & Gamble Company (NYSE:PG), which have not only raised their dividends for years but have also outperformed the broader market in 2022 so far.
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Our Methodology
We carefully studied different Reddit forums like r/dividends, r/investing, r/wallstreetbets and r/stocks to shortlist some of the most famous dividend stocks Redditors are recommending for college students and young people with low budgets. These dividend stocks are expected to keep giving both in terms of dividends and share price gains. That’s why these are good bets for 20-somethings who want to invest their money now for long-term gains.
Redditors Recommend These 10 Dividend Stocks for College Students
10. Apple Inc. (NASDAQ:AAPL)
Dividend Yield as of August 16: 0.53%
Apple Inc. (NASDAQ:AAPL) is one of the best stocks for college students because of the company’s long-term growth prospects. In the past five years, the stock has delivered a 321.4% return to shareholders, while its 12-month returns came in at 12.5%, as of the August 21 close.
In Q2 2022, Apple Inc. (NASDAQ:AAPL) reported stronger-than-expected results, posting revenue of nearly $83 billion, up 2% from the same period last year. The company generated over $23 billion in operating cash flow and had over $27.5 billion available in cash and cash equivalents at the end of the quarter.
Apple Inc. (NASDAQ:AAPL) has been raising its dividends consistently for the past 9 years. Currently, it pays a quarterly dividend of $0.23 per share, with a dividend yield of 0.53%, as of August 16.
In August, Morgan Stanley raised its price target on Apple Inc. (NASDAQ:AAPL) to $180 with an Overweight rating on the shares, appreciating the company’s net revenue growth.
Of the 900+ elite funds tracked by Insider Monkey, 131 hedge funds owned stakes in Apple Inc. (NASDAQ:AAPL) in Q1 2022, down from 134 in the previous quarter. These stakes are collectively valued at over $182 billion. Berkshire Hathaway was the tech giant’s largest stakeholder in Q1.
In addition to The Coca-Cola Company (NYSE:KO), Exxon Mobil Corporation (NYSE:XOM), and The Procter & Gamble Company (NYSE:PG), Apple Inc. (NASDAQ:AAPL) is also one of the most prominent stocks for a diversified dividend portfolio.
Wedgewood Partners mentioned Apple Inc. (NASDAQ:AAPL) in its recently-published Q2 2022 investor letter. Here is what the firm has to say:
“Apple grew revenues +9%, driven by +17% growth in the Services segment. While iPhone revenues grew a modest +5%, it was on an exceptional year ago comparison of +66%. iPhone continues to capture most industry smartphone profits by focusing on high-end price tiers. Apple is taking nearly two-thirds of the revenue share in the premium ($400 and above) smartphone segment. Further, most of the growth was driven by expansion in the “ultra-premium” price tier of $1000 or more per unit.[1] As we have highlighted in the past, Apple’s relentless focus on the development and integration between hardware (especially integrated circuits) and software continues to add significant value for customers of its products and services. We expect this favorable competitive dynamic to continue for the foreseeable future.
9. Microsoft Corporation (NASDAQ:MSFT)
Dividend Yield as of August 16: 0.85%
Microsoft Corporation (NASDAQ:MSFT) is one of the most stable tech companies that pay dividends to shareholders. It offers a quarterly dividend of $0.62 per share, raising it by 11% in September 2021. The company maintains a 15-year track record of consistent dividend growth. As of August 16, the stock’s dividend yield came in at 0.85%. Microsoft Corporation (NASDAQ:MSFT) has long-term growth prospects due to its diversified revenues, which puts it in a good place for expansion.
Though Microsoft Corporation (NASDAQ:MSFT) missed Street estimates on various accounts in its fiscal Q4 2022 results, the company’s revenue of $51.8 billion showed a 12.4% year-over-year growth. The company’s operating cash flow stood at over $24.6 billion while its free cash flow came in at $17.7 billion. During the quarter, it paid $12.4 billion to shareholders and dividend payments amounted to over $4.6 billion.
In July, BMO Capital lifted its price target on Microsoft Corporation (NASDAQ:MSFT) to $320 with an Outperform rating on the shares. The firm mentioned that though its results were not up to the mark, the management affirms double-digit constant currency growth and strong booking for the next fiscal year.
Microsoft Corporation (NASDAQ:MSFT) was the second-most popular stock amongst elite funds in Q1 2022, as 259 hedge funds in Insider Monkey’s database owned stakes in the tech company, down from 262 a quarter earlier. These stakes hold a value of over $65.6 billion.
Carillon Tower Advisers mentioned Microsoft Corporation (NASDAQ:MSFT) in its Q1 2022 investor letter. Here is what the firm has to say:
“Stock selection contributed the most while sector allocation was also positive. An underweight to communication services and an overweight to energy helped performance, while an underweight to consumer staples and an overweight to materials detracted. Stock selection was strong within healthcare and materials but was weak within information technology and industrials. Microsoft (NASDAQ:MSFT) reported positive results driven by personal computing strength, but analysts were especially positive on its growth outlook for its Azure cloud-computing services.”
8. Waste Management, Inc. (NYSE:WM)
Dividend Yield as of August 16: 1.49%
Waste Management, Inc. (NYSE:WM) is a Texas-based waste management company that provides waste and environmental services to consumers. The company is a suitable option for college students because of its strong financials, steady cash flow, and exposure to growing markets worldwide. In addition to this, there is a great push by consumers to reduce waste, which makes WM a long-term investment.
In Q2 2022, the company’s net cash provided by operating activities stood at $1.05 billion, and its free cash flow was $503 million. The company returned $539 million to shareholders, $269 million of which represented dividend payments. This shows that its dividend payments are stable for the upcoming quarters.
Waste Management, Inc. (NYSE:WM) currently pays $0.65 per share in quarterly dividends. The company has been steadily raising its dividends for the past 15 years with a 5-year dividend CAGR of about 6%. The stock’s dividend yield stood at 1.49%, as of August 16.
At the end of Q1 2022, 40 hedge funds in Insider Monkey’s database owned stakes in Waste Management, Inc. (NYSE:WM), up from 35 in the previous quarter. These stakes hold a consolidated value of over $4 billion. Bill & Melinda Gates Foundation Trust owned the largest stake in the company in Q1, worth nearly $3 billion.
Diamond Hill Capital mentioned Waste Management, Inc. (NYSE:WM) in its Q1 2022 investor letter. Here is what the firm has to say:
“We also initiated a position in Waste Management (NYSE:WM), one of the largest providers of waste collection services in the US. We believe it is a high-quality business with ownership of key landfill assets that provide pricing power over the long term. Its stock was trading at a discount to our estimate of intrinsic value due to short-term market concerns over an increase in growth investments—we expect these investments to be value-creating over the long term.”
7. The Kroger Co. (NYSE:KR)
Dividend Yield as of August 16: 2.12%
An American retail company, The Kroger Co. (NYSE:KR) delivered an 8.6% year-to-date returns to shareholders, while its 12-month returns came in at 12.9%, as of the market close of August 15. On June 23, the company announced a 23% hike in its quarterly dividend to $0.26 per share. This was the company’s 16th consecutive year of dividend growth. Moreover, ever since it has reinstated its dividends in 2006, the company’s dividend CAGR came in at 14%, becoming an attractive option for college students. As of August 16, the stock’s dividend yield was recorded at 2.12%.
In Q1 2022, the company generated $357 million in free cash flow and over $1.1 billion in operating free cash flow. The company ended the quarter with over $245 million in cash, with total assets amounting to over $12.2 billion. During the quarter, The Kroger Co. (NYSE:KR) paid $154 million in dividends to shareholders, up from $138 million paid during the same period last year.
In August, RBC Capital appreciated The Kroger Co. (NYSE:KR)’s global snacks business, as the US cereal situation is recovering quickly. In view of this, the firm maintained its Sector Perform rating on the stock.
At the end of Q1 2022, 45 hedge funds tracked by Insider Monkey owned $5.1 billion worth of stakes in The Kroger Co. (NYSE:KR). In the previous quarter, 41 hedge funds owned stakes in the Ohio-based company, valued at over $4.1 billion.
6. Discover Financial Services (NYSE:DFS)
Dividend Yield as of August 16: 2.17%
Discover Financial Services (NYSE:DFS) is an American financial services company that specializes in different types of loans and accounts. The company generated 70% of its revenue from credit cards and has a sector leading net income margin of 44%. In addition to this, the company holds a strong dividend history, growing its dividends every year since 2011. Currently, it pays a dividend of $0.60 per share every quarter and has a dividend yield of 2.17%, as recorded on August 16.
In Q2 2022, Discover Financial Services (NYSE:DFS) reported an operating cash flow of over $1.6 billion, up from $1.5 billion in the prior-year quarter. The company’s free cash flow also jumped to $1.56 billion, from $1.49 billion in the same period last year. It showed its commitment to shareholder return during the quarter, repurchasing 5.8 million shares for $601 million.
In July, BofA set a $120 price target on Discover Financial Services (NYSE:DFS) with a Buy rating on the shares, appreciating the company’s strong fundamentals. Analysts and investors are also positive about other major dividend stocks like The Coca-Cola Company (NYSE:KO), Exxon Mobil Corporation (NYSE:XOM), and The Procter & Gamble Company (NYSE:PG).
The number of hedge funds tracked by Insider Monkey owning stakes in Discover Financial Services (NYSE:DFS) stood at 33 in Q1 2022, the same as in the previous quarter. The consolidated value of these stakes is over $394 million. Ken Griffin and Israel Englander were the company’s most prominent stakeholders in Q1.
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Disclosure. None. Redditors Recommend These 10 Dividend Stocks for College Students is originally published on Insider Monkey.
