Investing in dividend stocks is a great way to generate income and build your wealth over time. And with interest rates expected to become low in the coming year, dividend stocks will continue to be attractive investments.
Dividends are one of the best ways to grow your money. They give you regular payments, regardless of the stock market. And they’re not always a risky investment. The best stocks for dividend growth are also some of the safest ones. However, it’s essential to do your research before you invest in any stock.
To help you get started, we’ve compiled a list of the best stocks for dividends in 2022. These companies have solid fundamentals and are well-positioned to continue paying out dividends in the year ahead.
best stocks for dividend growth
If you’re new to dividend investing, you may be wondering which stocks can help you with consistent growth. Though, there are many stocks for annual dividend increases. Below are the 10 dividend growth stocks to buy in 2022.
1. Growth stocks: Johnson & Johnson (JNJ)
Johnson & Johnson is a healthcare company that has been in business for more than 130 years. Thanks to its solid fundamentals and stable earnings growth, Johnson & Johnson is well-positioned to continue paying out dividends in the years ahead. The company has a solid record of dividend growth, and its stock currently offers a dividend yield of 2.55%.
Johnson & Johnson is a reliable dividend stock that investors can count on for income and stability. The company has a long history of success and is well-positioned to continue delivering solid results in the years ahead.
2. High-dividend stocks: Lowe’s (LOW)
Lowe’s is a home improvement retailer with more than 2,000 stores in the United States and Canada. The company has a strong track record of paying dividends and has increased its dividend payout every year for the past 16 years.
Lowe’s is well-positioned to continue paying dividends in the coming year, thanks to its strong fundamentals. The company has a healthy balance sheet with no long-term debt and generates robust cash flow from its operations. Lowe’s also enjoys a loyal customer base, which helps fuel sales growth.
Read More: Investment tips for beginners | Best stocks for long-term investment
3. Dividend growth stocks to buy: Wells Fargo & Co. (WFC)
While the late 2010s were tough on Wells Fargo, the company is now back on solid footing. It has put its legal and regulatory issues behind it and is focused on moving forward.
Wells Fargo is a strong dividend stock to consider for 2022. The company has a long history of paying dividends and currently offers a dividend yield of 2.23%. Wells Fargo is also well-positioned to generate earnings growth in the coming year, thanks to its solid customer base and expanding loan portfolio.
4. Stocks to buy: Lumen Technologies Inc. (LUMN)
Lumen Technologies is a leading provider of fiber-optic networking products and services. The company has a strong track record of paying dividends and has increased its dividend payout for ten consecutive years.
Lumen Technologies is an excellent pick for income investors looking for stability and long-term growth potential. The company has a strong balance sheet, and earnings well cover its dividend. Lumen Technologies also enjoys a loyal customer base, which helps fuel sales growth.
5. Invest in dividend stocks: Target (TGT)
Target is a retail giant with more than 1,900 stores in the United States. The company has a strong history of paying and increasing dividends, and it is well-positioned to continue delivering healthy payouts to shareholders in the years ahead.
Target’s proven track record of generating solid profits and returning cash to shareholders. Over the past five years, the company has generated an average annualized free cash flow (FCF) of $5.7 billion. In addition, it has returned more than $10 billion to shareholders through dividends and share buybacks during that time.
6. Dividend growth stocks: Whirlpool Corp. (WHR)
Whirlpool Corporation (NYSE: WHR) is a major home appliance manufacturer and retailer based in the United States of America and headquartered in Benton Charter Township, Michigan, United States. In addition, the company has manufacturing facilities in countries around the world.
The company has a rich history of paying dividends to shareholders. The company has paid quarterly dividends since 1947 and has increased dividend payments for 23 consecutive years. In Q1 of 2022, Whirlpool paid shareholders $1.75 per share in dividends, which translates to a dividend yield of 3.08%.
7. Best dividend: Coca-Cola (KO)
Coca-Cola is famously one of the world’s most recognizable companies and has a long history of paying dividends. The company has increased its dividend payments for 57 consecutive years, making it an excellent pick for income investors looking for stability.
Coca-Cola is a reliable dividend stock that investors can count on for income and long-term growth potential. The company has a strong balance sheet and generates robust cash flow from its operations. Coca-Cola enjoys a wide moat thanks to its large and loyal customer base.
8. Best dividend stocks: AT&T (T)
AT&T is a telecommunications company that was founded in 1885. It’s one of the world’s largest wireless and wired telephone service providers. The company has a large, diversified customer base and generates significant revenue from its wireless, wireline, and entertainment segments.
AT&T is an outstanding dividend stock because it has a long history of paying dividends, a high yield, and a low payout ratio. The company has paid a dividend yearly since 1887 and has increased its dividend for 33 consecutive years. AT&T’s current yield is 5.31%, and its payout ratio is only 40%.
9. Dividend stocks to buy: Honda Motor Co. Ltd. (HMC)
Honda Motor Co., Ltd. is a Japanese multinational corporation primarily engaged in manufacturing automobiles, motorcycles, and power equipment.
Honda has a long history of paying dividends and currently offers shareholders a dividend yield of 3.64%. The company has also increased its dividend payments for 15 consecutive years, making it an appealing pick for income investors.
Earnings cover Honda’s dividend well, and the company has a strong balance sheet. Honda also enjoys a loyal customer base, which helps to fuel sales growth.
10. Best dividend growth stocks: Bank of America (BAC)
Bank of America is one of the largest banks in the United States. The company has a wide moat and offers various services to its customers, including banking, lending, and investing.
Bank of America has a long history of paying dividends as a solid dividend stock. The company has increased its dividend payments for 15 consecutive years and offers shareholders a current dividend yield of 2.32%.
Bank of America is a reliable dividend stock that income investors can count on for stability and long-term growth potential. The company has a strong balance sheet and generates robust cash flow.
Final Thoughts: Best Stocks for Dividend Growth
Investing in dividends can be a great way to generate income and grow your portfolio. When selecting dividend stocks, it’s essential to consider the company’s history of paying dividends, dividend yield, payout ratio, and growth potential.
The stocks on this list are some of the best dividend stocks to buy for income in 2022 and, thus, are worth considering for your portfolio.
Tips on how to find the best stocks for a dividend yield
Find the Right Stock
Before you start looking for the right stocks for dividend growth, you must decide your goals. If you want to make money, you can buy any stock with a high dividend yield. But if you want to grow your money over time, you must find stocks with high dividend yields that are quality investments. Depending on your goals, you’ll want to find stocks that fit one of the following categories:
Invest in a Quality Company
After you’ve found a stock with a high dividend yield and a high-quality company behind it, you still have to decide if you want to invest in the stock directly or through a dividend reinvestment plan (DRIP). Direct investment means you own the stock and take all the risk. It also means you own the stock outright, so there’s no protection if the share price drops.
DRIPs are managed investment plans where you own small amounts of various stocks, usually in a portfolio. The benefits of investing through a DRIP are that your returns are usually lower than if you owned the stocks outright, but the minimum investment is usually much smaller. We recommend investing through a DRIP if you want a safer approach to dividend growth investing. You’ll have lower risk and lower returns, which is often the goal when trying to grow your money over time.
Pay Attention to the Financials
Now that you’ve decided on a stock and its company, the next step is to do your research. First, you want to ensure you’re investing in the right stock. One way to ensure you’re investing in the right companies is to look at their financials. This includes financial ratios like profit margins, growth rates, and cash flow. By looking at these ratios, you can see how profitable a company is, how much cash it generates, and how likely it is to continue growing its dividend.
One way to better understand a company’s profitability is to look at its profit margin. For example, a profit margin of 2.5% means the company earns 2.5% of every dollar of revenue. A profit margin of 10% means the company is earning 10% of every dollar of revenue.
Do Your Research
Once you’ve done your research, you want to ensure you’re investing in the right companies. You can use the financials and ratios mentioned in the previous section as a guide. Once you’ve done your research and made sure you’re investing in the right companies, you’ll want to follow the rest of these tips.
As you can probably tell, there’s much to do right here. Luckily, dividend growth investing is a long-term investment strategy. That means your investments will take time to pay off. That’s why you need to stay patient. Dividend growth investing is about taking a long-term approach to investing. It’s not a strategy that will work in the short term. So you want to make sure you’re following these tips, investing in quality companies with a long history of growing dividends, and staying patient while your investments grow.