Best dividend stocks | The Ultimate List For 2022 And Beyond
Last Updated on January 12, 2022
This article will be about the best dividend stocks for this year.
We will discuss some of the best dividend stocks that are worthy of consideration this and for the next year and what investors can expect from these companies.
Key-takeaways when choosing the best dividend stocks
- Find companies with a dividend yield of 3% or more.
- Make sure you understand the company’s financials.
- Consider the stock’s history of dividend increases/decreases.
- Check out the company 10-year chart.
- Find stocks that have outperformed their sector.
Introduction | What is a stock dividend
First, let’s get familiar with what a dividend stock is. A dividend stock is an investment that yields income from dividends rather than capital appreciation.
In other words, it is a company that pays out a portion of its earnings to shareholders periodically in the form of dividends.
Dividend stocks are typically shares of companies that have paid out a significant amount of their earnings as dividends for many years and have also increased their dividend payments year over year.
Dividends are also taxed at different rates than capital gains, so they are usually taxed less than investments in other types of stocks.
The benefits of owning these stocks are that they tend to be less volatile than non-dividend stocks and offer protection from market downturns because dividends usually increase when the market becomes less attractive.
As a beginner or novice investor, it can be difficult to choose which companies will grow in the future and which ones will not.
Hopefully, this article will make your decision a little easier when looking at all these great companies with high yields.
Why should you invest in US dividend stocks?
The stock market is volatile, and there are other investment opportunities, but US dividend stocks offer investors stability because they regularly pay out their profits.
As the world grows more globalized, it’s no longer an option for Americans to invest in Europe or Asia. Many countries have different markets and investment policies.
So while some people may be tempted to invest in emerging markets, US dividend stocks offer a safer alternative.
What to look for in dividend stocks
If you have a good understanding of how dividends work, the following few basic ideas might assist you in selecting great dividend-paying stocks for your portfolio:
Payout ratio
The payout ratio is the amount paid out in dividends divided by earnings per share. In other words, it shows you what proportion of profits a company pays back to shareholders. A low payout ratio (60 percent or less) indicates that the dividend is likely to continue.
History of raises
It’s a positive development when a firm raises its dividend year after year, especially when it can continue to do so during recessions and other difficult economic situations like the COVID-19 epidemic.
Steady revenue and earnings growth
When looking for the greatest dividend stocks to invest in for the long run, stability in the firms you’re considering is essential. Revenue that swings up one year and then down the next might be a symptom of distress.
Durable competitive advantages
This is by far the essential feature. A unique technology, significant barriers to entry, high customer switching costs, or a renowned brand name are only a few examples of potential competitive advantages that can come in many forms.
High yield
This is, without a doubt, the last on the list. When comparing dividend yields, ensure that the company is healthy and the payout is consistent before assuming it’s a good investment. A higher yield is clearly preferable to a lower one when the other four criteria are satisfied.
The best dividend stocks for this year
The best dividend stocks also have sustainable earnings, strong balance sheets, and low debt levels.
Some of the best dividend stocks for the year are Altria Group Inc (NYSE: MO), PepsiCo Inc. (NYSE: PEP), and Coca-Cola Co. (NYSE: KO).
This is a list of the best dividend stocks for the year 2021. It includes companies known for dividend payouts, dividend-rich portfolios, and strong business fundamentals.
#1 Annaly Capital Management Inc. (NLY)
Annaly Capital Management Inc. is a closed-ended investment company. The firm primarily invests in debt instruments, mortgage-backed securities, and other fixed-income securities.
The company’s forward dividend yield is 10.23%. The payout ratio is 40.6%. The stock price is $8.60 at writing this report and has a market cap of $12 billion.
The company pays out 40.6% of its earnings as dividends, which is more than the industry average of 33%. Its price is $8.60 and has a market cap of $12.4 billion, which means you are getting an annual return on your investment of 31%.
- The high dividend yield of 10.23% is designed to keep your portfolio growing over the long term without sacrificing too much in terms of potential investment returns.
- The payout ratio of 40.6% means you can be confident that your dividends will cover the cost of operation and provide a healthy profit for you.
- A market cap above $12 billion and returns of 31% prove this is one reliable investment opportunity.
#2 TFS Financial Corp. (TFSL)
It is a global investment company providing financial services to North America, Latin America, Europe, Asia Pacific, and the Middle East. The company was founded in 1998 and is based in Toronto, with its main office located at Toronto-Dominion Centre on King Street West. TFS has over 120 offices worldwide across the globe, including Canada, China, Mexico, and India. TFS offers a variety of securities, including corporate securities such as preferred shares and stocks of public corporations; treasury instruments including bonds of public corporations; cash equivalents such as money market funds; certificates of deposit; US Treasury notes.
TFS Financial Corp. (TFSL) is a U.S.-based company with a market capitalization of $5.5 billion and its shares trading at $19.72 per share, with a predicted forward dividend yield of 5.68%.
The company manages its dividend by not retaining earnings. It has a 72.7% payout ratio, so it needs to reinvest all earnings into its business to cover dividends for shareholders.
- Currently trading at $19.72, these shares are giving investors a 5.68% dividend yield now and will likely continue to grow as the company is bought out by larger players shortly.
- The attractive long-term total return of 40%.
#3 New Residential Investment Corp. (NRZ)
New Residential Investment Corp., also known as NRZ, is a real estate investment trust that owns several commercial properties in the U.S. These properties are primarily parking garages leased to various businesses. The company currently has a $4.6 billion market cap, and its shares are priced at $9.86 with an 8% forward dividend yield and a 54% payout ratio.
The company invests in commercial and residential properties throughout North America, Europe, and Asia. NRZ’s operations span a wide range of asset classes, including office buildings, industrial parks, shopping malls, hotels and resorts, single-family homes, and land development projects.
- High payout ratio of 54.3%.
- Lowest price in the market with a market cap of $4,600,000,000.
- The high 1-year total return of 37%.
#4 Lowe’s (NYSE:LOW)
This home depot company may not appear to be a particularly desirable stock. True, until you enjoy dividend growth.
The firm has paid a dividend every year for 46 years, and it has continuously increased the amount. During the last decade, it has boosted the payout by 471 percent.
Lowe’s is a significant number: the typical U.S. house is 37 years old. The next generation of DIYers will spend a lot of money at Lowe’s.
#5 Walgreens Boots Alliance (NYSE:WBA)
Walgreens is a global retail pharmacy chain that is undergoing a major recovery.
In the short term, plans will reduce expenses, boost digital sales, and, perhaps significantly, offer health care clinics in hundreds of its retail outlets.
Becoming a more integrated healthcare company should help make this profitable company even more profitable, fueling its already-generous dividend to even higher levels.
With a dividend yield of more than 3% as of this writing and 45 years of yearly payout growth, there’s a lot to like about Walgreens stock for dividend investors.
Why should you invest in a dividend stock as the market reaches new heights?
When it comes to investing in stocks, one is usually advised to invest in a dividend stock. This type of investment is usually a safer option because dividend payments are typically made regularly and can help with market volatility.
A dividend stock is classified by the company’s ability to pay out dividends. Dividend stocks typically have fixed dividends per share and are not risky since they have steady cash flows. In turn, investors can receive periodic payments from these stocks.
In addition, many dividend stocks have low-risk profiles and track records of returning capital to shareholders in the form of dividends or share repurchases over time.
Top 10 highest paying dividends companies in the world
Many of today’s companies are on the hunt for the perfect business model – one that generates high returns while being easy to sell.
The list of profitable companies with dividends includes many of the largest publicly-traded companies in the world.
These are the following:
- Apple Inc.
- Berkshire Hathaway.
- Alphabet Inc.
- Microsoft Corporation.
- Amazon.com Inc.
- Johnson & Johnson Company.
- Exxon Mobil Corp.
- Procter& Gamble Co.
- JPMorgan Chase & Co.
- Wells Fargo & Co.
Conclusion
Do not forget this article above is just one of the many articles we have on our website’s blog section, where you can find many other interesting reads.
The most important thing to do is find stocks that have a dividend yield of 3% or more.
Also, it is important to look into what type of company it is and how it has performed in recent years.
After this, you should make sure you understand the company’s financials and consider their history of dividend increases/decreases before deciding whether or not to invest in them.
Please don´t forget that we do not offer any financing advice, trade at your own risk. The stock market can be very volatile!
Auto Advantage Finance pre-approved loans | Apply if you have bad credit
How Often Does Money Get Printed
Business Loans: The Complete Guide and Their Many Uses
About Author
Miguel Casal
Miguel Casal was born in 1989. He is a well-known entrepreneur and business management professional with over fifteen years of experience in the industry. He has been involved in many successful ventures, including founding and running several businesses that have grown into international corporations.