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The best dividend stocks for 2022
10 investment ideas to help pad your portfolio during this market downturn.
This year has been a year of high inflation, turmoil and overwhelmingly bearish sentiment — an environment where dividend-paying stocks can shine. Which is why we pulled together a list of some of the best dividend stocks for 2022.
Dividends increase the rate of compound gains, which can help a portfolio grow faster. They can also provide a dependable source of income to mitigate losses that occur from a decline in share price — especially in a bear market. Below is a list of 10 US-based dividend stocks ordered by annual dividend yield as of July 2022.
To learn how we complied this list, read our editorial methodology.
10 dividend stocks to watch in 2022
How we choose the best dividend stocks
We analyze Yahoo Finance analysts’ ratings and Dividend.com’s stock screener, choose only S&P 500 stocks that represent solid buying opportunities for long-term investors looking to ride out the current bear market.
We screen for:
- Dividends of at least 3%, to help put a dent in the historically high inflation — at least five years of dividend growth, to provide investors’ portfolios with stability in what’s been a largely volatile market.
- Year-to-date stock performance that’s better than the S&P 500, which is down about 17% so far this year as of August 2022.
- An analyst rating of Buy or better, which could signal a good buying opportunity at current levels.
How to buy the best dividend stocks
To buy shares, choose a broker that best aligns with your needs as an investor. Use the table below to compare online brokers by fees, asset types and minimum deposit.
It’s important to consider how each stock will fit into your portfolio and investment goals. Investors should select high-quality companies and weigh the following factors when choosing the best dividend stocks:
Dividend yield. Dividend yield is a financial ratio that measures a stock’s annual dividend payment expressed as a percentage of the stock’s current price. For example, a stock that trades at $75 and pays a dividend of $3 each year has a dividend yield of 4%.
The dividend yield moves inversely to the stock price. Generally speaking, if the dividend rate doesn’t change, the yield rises when the stock price falls and falls when the stock price rises. A high yield typically means more income per dollar invested. But a rise in yield may not be a good thing if the stock price is plummeting.
Dividend payout ratio. This tells you how much of a company’s income it’s paying out in dividends. A low payout ratio could mean a company is reinvesting most of its earnings into expanding operations, while high dividend payout ratios could represent a steady income stream. Too high a payout ratio could be unsustainable, though. Investors should look for companies that can sustain their payout even in short-term declines.
Dividend growth rate. Investors should look at how quickly the company has raised its dividend in the past. While it’s no guarantee, a history of strong dividend growth could mean future dividend growth is likely.
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