Are These The Best Dividend Stocks To Buy In 2022?
Dividend stocks continue to grab the headlines in the stock market today. Seeing that major indices performed poorly during the first half of the year, some may be looking for more conservative investments in their portfolio. You see, nobody likes a bear market. But a bear market can also be a blessing for those looking to build a passive income.
Like bonds, dividend yield increases when stock prices decline. That said, investing in some of the top dividend stocks would offer investors the opportunity to build a more defensive portfolio. These companies normally have more stable returns and could provide some relief to investors to protect their portfolios during these times of uncertainty.
Although they may not be immune to the current downturn in the stock market, investing in some of the more established companies is considered a top inflation-fighting investment. What’s more, the broad-based sell-offs in the market also create more opportunities to buy good stocks at discount. Without keeping you in suspense, let’s check out this list of best dividend stocks to buy in 2022 right now.
Best Dividend Stocks To Invest [Or Avoid] In 2022
- Realty Income Corporation (NYSE: O)
- Microsoft Corporation (NASDAQ: MSFT)
- Bank of America (NYSE: BAC)
- PepsiCo, Inc. (NASDAQ: PEP)
- Merck & Co. Inc. (NYSE: MRK)
Realty Income is the gold standard of triple net lease REITs. For those unfamiliar, a triple net lease is a form of real estate lease agreement where the tenant or lessee is responsible for all the ongoing expenses of the property. The REIT is a bellwether in one of the most resilient niches of the commercial real estate industry. The company owns more than 6,700 properties, most of which are occupied by retail tenants. That makes up 80% of the portfolio holding. Meanwhile, Realty Income’s balance sheet is investment-grade rated. This simply means it could have easy access to cheap debt financing, giving it a low cost of debt capital.
Not only does the company offer a dividend every month, but its current dividend yield also stands at around 4.31%. So, what’s the secret sauce behind its strong track record as a monthly dividend stock? It’s a simple, steady, and expanding business. It possesses a very high-quality real estate portfolio with their top 20 clients qualifying as recession-resistant. And these tenants should continue to do well and bring in a stable revenue stream for the company. With a solid dividend yield, would you include O stock on your watchlist today?
Microsoft is one of the largest companies by market capitalization in the U.S. stock market but has a growth rate that many other mid-cap companies would be envious of. The company develops and supports a range of software products, services, and other solutions. Its Windows Azure is one of the top public cloud computing platforms available today. Consumers can access a range of cloud services that include basic computing, storage, analytics, and networking. Hence, providing users with the flexibility to use their preferred tools to meet their goals.
More impressively, the tech goliath continues to post strong growth and expects revenue growth of 14% in the upcoming quarter. Also, Microsoft is likely to announce a dividend increase, as it has maintained its current quarterly payout of $0.62 per share over the past four quarters. With Azure owning a 21% market share in the fast-growing cloud computing market, the company still has a considerable growth runway. And when you have solid growth prospects, a dividend hike is likely to be in the cards. Thus, would you consider MSFT stock a solid choice when it comes to top dividend stocks to buy?
Bank Of America
Bank of America is a major financial institution with operations across Consumer Banking, Global Wealth & Investment Management, Global Banking, and Global Markets. The fundamentals help with the bull case for Bank of America as it beats on both the top and bottom lines in its most recent quarter. What’s more, the company managed to grow its deposit base by 10% year-over-year.
After Bank of America passed its stress test, the lender aims to lift its dividend payout by 5% to $0.22 per share, beginning later this quarter. Safe to say, this is a testament to the bank’s responsible growth strategy over the past decade. It has undoubtedly put the bank in a strong position to support its clients and deliver for its shareholders. With all that in mind, does BAC stock warrant more attention among investors?
PepsiCo has weathered the stock market storm relatively well this year. Investors have been attracted to the beverage giant thanks to its stable business and rising dividend payment. For those uninitiated, Its portfolio of brands includes Pepsi-Cola, Mountain Dew, Quaker, and Cheetos among others. Impressively the company has also generated more than $89 billion in net revenue in 2021 on these brands that each generate more than $1 billion in estimated annual retail sales. PepsiCo is slated to announce its second fiscal quarter results on Tuesday.
Pepsi has also been raising its annual dividend payout for its 50th consecutive year. And it’s likely that this dividend growth streak could continue for many more years. On May 3, 2022, the company announced a dividend of $1.15 per share, increasing by 7% year-over-year. Better yet, the company also has a sufficient buffer to keep its dividend commitment in the event of a temporary weakness in profits. All things considered, would you invest in PEP stock ahead of its quarterly report?
To sum up the list, we have Merck, a multinational pharmaceutical company. It has been a leader in the industry for over 130 years and has brought many life-saving medicines and vaccines to millions of people. It also continues to be at the forefront of research to prevent and treat diseases that threaten both people and animals. This would include cancer, infectious diseases, and emerging animal diseases. Over the past year, MRK stock has risen by about 20%. Besides, Merck offers an annual dividend yield of 2.97%.
According to a report from the Wall Street Journal, Merck is in advanced takeover talks with Seagen (NASDAQ: SGEN). The deal could value the cancer specialist at around $40 billion or over $200 per share. The companies reportedly hope to unveil a deal prior to Merck’s second-quarter earnings report due on July 28. In any case, this acquisition could make a lot of sense for Merck as it would beef up its cancer-drug portfolio considerably. As the story unfolds, will you be keeping an eye on MRK stock?