As any savvy investor knows, dividend stocks can be a great way to build long-term wealth. Not only do they provide a regular income stream, but they also tend to be more stable than growth stocks. That’s why today we’re going to look at the best dividend stocks for the long-term investor. These are companies with a history of paying consistent dividends, and that are likely to continue doing so for the foreseeable future. So without further ado, here are the 10 best dividend stocks for the long-term investor to consider in 2022.
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In This Article
1. Walgreens
- Dividend yield: 4.10%
- Payout ratio: 27.78%
- PE ratio: 8.87
- 1-year total return: -9.98%
- 5-year dividend growth: 27%
- Current ratio: 0.83
Walgreens is one of the largest drug store chains in the United States, with over 9,000 locations across the country. The company has been in business for over 100 years and is a trusted name in the healthcare industry. Walgreens has a strong history of dividend growth, and the company currently offers a dividend yield of 4%. Given its track record of dividend growth and its position as a leading healthcare retailer, Walgreens is an attractive dividend stock to consider in 2022. The company’s dividend payout ratio is relatively low, meaning that there is room for further dividend increases in the future.
2. Lowe’s
- Dividend yield: 1.53%
- Payout ratio: 24.92%
- PE ratio: 15.08
- 1-year total return: 2.12%
- 5-year dividend growth: 128%
- Current ratio: 1.02
Lowe’s is a home improvement retailer with more than 2,200 stores across the United States, Canada, and Mexico. The company offers a wide range of products and services, including appliances, tools, hardware, décor, and more. Lowe’s also provides installation services for several of its product categories. In recent years, Lowe’s has been investing heavily in its online presence and has seen strong growth in its e-commerce sales. The company is well-positioned to continue this momentum in the coming years.
3. Abbvie
- Dividend yield: 3.60%
- Payout ratio: 80.62%
- PE ratio: 11.49
- 1-year total return: 48.29%
- 5-year dividend growth: 120%
- Current ratio: 0.79
Abbvie is a dividend stock that offers investors a high yield and a record of consistent dividend growth. The company has a strong history of profitability and a diversified business model that has helped it weather various challenges in the past. In addition, Abbvie has an attractive valuation and is expected to continue to grow earnings at a solid clip in the coming years. While there may be some risks to the story (e.g., potential patent expiration), the overall outlook for the company remains quite positive. As such, Abbvie looks like an appealing dividend stock to consider owning in 2022.
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4. Target
- Dividend yield: 1.44%
- Payout ratio: 22.41%
- PE ratio: 16.23
- 1-year total return: 21.66%
- 5-year dividend growth: 50%
- Current ratio: 0.99
Target is a popular discount retailer with a loyal customer base. Target is often recognized for its innovative design solutions. Its stores are designed to be easily accessible and welcoming, with bright red Bullseye logos that guide shoppers to their destination. The store offers a broad range of merchandise, including apparel, home goods, and also has a strong online presence. One of the reasons to consider Target as a dividend stock in 2022 is its history of dividend growth. Target has increased its dividend for 39 consecutive years, making it a Dividend Aristocrat. This demonstrates the company’s commitment to rewarding shareholders with income.
5. 3M
- Dividend yield: 3.96%
- Payout ratio: 58.5%
- PE ratio: 14.16
- 1-year total return: -21.50%
- 5-year dividend growth: 28.6%
- Current ratio: 1.71
When it comes to dividend stocks, 3M is a strong contender. With a history of increasing dividends for 60 consecutive years, 3M is a reliable source of income for investors. In addition, 3M has a diversified business portfolio, which helps to reduce risk. Given the current state of the economy, many investors are looking for safe, dividend-paying stocks like 3M. And with a dividend yield of 3.96%, 3M is an attractive option for income-seeking investors. For these reasons, 3M is a stock to consider buying in 2022.
6. Johnson & Johnson
- Dividend yield: 2.46%
- Payout ratio: 57.14%
- PE ratio: 17.42
- 1-year total return: 12.61%
- 5-year dividend growth: 26%
- Current ratio: 1.35
Johnson & Johnson (JNJ) is a large multinational healthcare company that manufactures and markets consumer products, pharmaceuticals, and medical devices. The company has a long history of paying dividends, and its shares have outperformed the market over the long term.
One of the key reasons to consider Johnson & Johnson as a long-term dividend stock is the company’s financial strength. JNJ has consistently generated strong cash flow, and it has a AAA credit rating from S&P Global Ratings. This financial strength provides the company with the flexibility to continue paying dividends even during periods of economic downturn. Moreover, JNJ has increased its dividend for 60 consecutive years, making it one of only a handful of companies to achieve this feat.
Another reason to buy JNJ as a long-term dividend stock is the company’s diversified business operations. JNJ’s three core businesses – consumer products, pharmaceuticals, and medical devices – provide exposure to different end markets and help to insulate the company from macroeconomic headwinds. Moreover, JNJ’s global reach provides the company with a competitive advantage, as it is able to tap into growth markets outside the U.S.
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7. Verizon
- Dividend yield: 4.93%
- Payout ratio: 47.65%
- PE ratio: 9.97
- 1-year total return: -4.93%
- 5-year dividend growth: 10.72%
- Current ratio: 0.78
Verizon is a great choice for investors looking for a long-term dividend stock. The company has a strong history of paying and increasing its dividends, and it currently yields 4.9%. The company’s strong financial position means that it should be able to continue paying and increasing its dividends in the future. In addition, Verizon is well-positioned to benefit from the continued growth of the 5G industry. 5G is expected to grow at a CAGR of 65.8% between 2021 and 2030, and Verizon is well-positioned to capitalize on this growth. So if you’re looking for a long-term dividend stock, Verizon is a great choice.
8. Realty Income
- Dividend yield: 4.03%
- Payout ratio: 327.01%
- PE ratio: 43.29
- 1-year total return: 12.94%
- 5-year dividend growth: 21%
- Current ratio: 0.73
Realty Income Corporation (O) is a publicly-traded real estate investment trust (REIT) specializing in the acquisition of net-lease properties across the United States. REITs are highly popular among investors because of the high dividends they payout to shareholders. The law requires REITs to pay a minimum of 90% of their net income as dividends to shareholders each year in order to keep their REIT classification. However, a REIT’s balance sheet may frequently include multiple big non-cash expenses such as depreciation, resulting in a significantly lower dividend payout than the company’s real cash flow. As a result, income-seeking investors should look for a REIT that provides a large dividend over the legal minimum. That’s why some REITs have over 100% payout ratios and in this case, Realty Income has a whopping 327% payout ratio.
The company’s business model is focused on generating dependable monthly cash dividends for shareholders, making it an attractive option for income-seeking investors. Realty Income has a strong track record of dividend growth, with its 5-year dividend growth being 21%. Furthermore, the stock offers a compelling yield of 4%, making it an attractive option for income investors looking to build a long-term position.
It’s worth noting that investing in REITs is more complex than in other dividend stocks and I suggest doing thorough research before investing.
9. Morgan Stanley
- Dividend yield: 3.30%
- Payout ratio: 31.17%
- PE ratio: 12.33
- 1-year total return: 11.37%
- 5-year dividend growth: 250%
- Current ratio: 1.93
When it comes to finding a long-term dividend stock, Morgan Stanley is a great choice. Not only is the company financially stable, but it also has a history of increasing its dividend payout. In addition, Morgan Stanley is well-positioned to benefit from rising interest rates and a growing economy.
One of the reasons to buy Morgan Stanley as a long-term dividend stock is the company’s strong financial position. Despite the challenges posed by the pandemic and the conflict in Eastern Europe, Morgan Stanley reported steady profits in the first quarter of 2022. This financial strength provides Morgan Stanley with the ability to weather economic storms and continue paying dividends to shareholders.
Another reason to consider Morgan Stanley as a long-term investment is the company’s history of increasing its dividend payout. Over the past decade, Morgan Stanley has raised its dividend by an average of 7% per year. This track record of dividend growth provides income investors with confidence that they will continue to receive rising dividends in the future.
10. Microsoft
- Dividend yield: 0.91%
- Payout ratio: 24.49%
- PE ratio: 25.77
- 1-year total return: 7.47%
- 5-year dividend growth: 58%
- Current ratio: 2.25
Microsoft is a blue-chip stock that has been paying dividends since 2003. The company’s strong financials, solid track record of dividend growth, and recent share price pullback make it an attractive dividend stock to buy in 2022. Microsoft has a AAA credit rating and is one of the most cash-rich companies in the world, with over $125 billion in cash and equivalents on its balance sheet at the end of 2021. This gives the company plenty of financial flexibility to continue growing its dividend at a healthy pace. Microsoft’s dividend has grown by an average of 16% per year over the last decade, and the company has increased its payout for 17 consecutive years. Given Microsoft’s strong financial position and history of dividend growth, investors can expect the company to continue increasing its dividend at a healthy clip in the coming years. While Microsoft shares are not dirt cheap at current levels, they are trading at a reasonable valuation relative to the company’s long-term growth prospects. For these reasons, Microsoft is an attractive long-term dividend stock to buy in 2022.
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Bottom Line
It’s worth noting that it’s difficult to find a stock that meets 100% of your criteria. Every stock you pick will have its caveats and it’ll be up to you to decide whether you can live with the risk. Sometimes you’ll find a stock with a good dividend yield and payout ratio but the company has lots of debt and a current ratio of less than 1.
One such stock is Walgreens. There are two things to be wary of when it comes to Walgreens. The first is it has a negative 1-year total return. However, if you compare it to the industry performance(-10.08%), it seems like it’s just a bad year for the entire industry. The second concern is that the company has a high debt compared to its assets. It doesn’t mean that it’s a bad stock, just make sure you take a look at its financials to see whether this debt is manageable.
Another great stock is Morgan Stanley, which has excellent fundamentals but whose future growth potential is limited. Morgan Stanley has a low moat and analysts expect the company to have negative revenue growth this year. This might change next year but meanwhile, it’s up to you to choose whether to pick this stock now while it’s on a discount or wait for its revenue growth prospects to improve.
So that’s my list of the 10 best dividend stocks for the long-term investor to consider buying in 2022. More stocks that didn’t make my list but are also worth considering are:
- Apple
- Costco
- Home Depot
- Proctor & Gamble
