Does making money while you sleep sound appealing? You can do exactly that when you add the right dividend stocks to your investment portfolio. In 2022, there are several profitable options to choose from.
Read on to learn more about these investment vehicles and how to incorporate them into your 2021 investing plan.
Five Recommended US Dividend Stocks for 2022
Now that you get the general idea of what dividend stocks are, it’s time to buy and hold some. Check out our top 5 stock picks for 2021 and their dividend yields:
3M is a US-based company that produces more than 50,000 consumer goods industry products under various brands. It has increased its dividends for 57 consecutive years, and its current dividend yield is 2.98%.
Johnson & Johnson is a highly valued company that produces everything from pharmaceutical products to consumer goods. Its current yield is 2.43%.
As one of the biggest beverage corporations in the world, Coca-Cola isn’t going anywhere. With a long-standing history and a current yield of 3.09%, you can’t go wrong with adding a few shares to your portfolio.
McDonald’s stock is a staple in many investors’ portfolios. In fact, a hypothetical $1,000 investment in 2016 would have doubled by 2021. This fast-food chain is an excellent long-term option. Get in now, and you’ll earn a yield of 2.21%.
JPMorgan Chase is the newest company on our list, with an inception date of December 1, 2000. In its two decades of existence, this company has offered superior financial services to millions of consumers. Its current yield is 2.44%.
What Are Dividend Stocks?
Dividend stocks allow shareholders to own small pieces of a company. They’re like regular stocks, but the companies distribute their earnings in the form of consistent payouts.
Benefits of Investing in Dividend Stocks
On the surface, dividend stocks may not seem as exciting as risky, exploratory crypto schemes. However, they offer a unique combination of benefits that you won’t get from other investment opportunities. Some of these perks include:
- Capital preservation: When you put your hard-earned money into something, you want to ensure it’s safe. Dividend-paying companies are generally more stable and mature than speculative stocks. You can decrease your exposure to risk while still reaping excellent rewards.
- Income streams: Many dividend stocks make quarterly payouts. However, when you play your cards right, you can create a portfolio that provides a monthly income stream with little effort on your part.
- Protection from inflation: Inflation is a scary word. It means your money will depreciate if you don’t invest it. Thanks to the consistent income that dividend stocks offer, you can fight inflation and maintain your money’s purchasing power.
What Are Dividend Aristocrats?
Think of dividends as rewards rather than obligations. Companies don’t have to pay them, but they like to reward their investors for their loyalty.
A company can suspend payouts for many reasons like:
- To dig itself out of financial trouble.
- To cover unforeseen expenses.
- To facilitate funding growth.
Dividend aristocrats are companies you’ll want to get behind. These companies earned their royal title for a good reason — they’ve paid and increased their base payouts every year for at least 25 years in a row.
This quarter-of-a-century commitment is very telling of a company’s potential to keep making payouts down the line.
What is the Average Yield in the Past on US Dividend Stocks?
When discussing the average yield for US dividend stocks, it’s best to look at something that tracks the overall stock market. The S&P 500 index tracker is about as close as you can get to this measurement.
The S&P 500 has a lengthy history. Between 1871 and 1960, its dividend yield never dipped below 3%. And it delivered a yield above 5% for 45 of those years.
The S&P 500 clearly offered some generous payouts to its investors during its early years. However, things changed when the 1990s hit. From 1991 to 2007, the average yield was just 1.90%. After a short-lived spike to 3.11% in 2008, the S&P 500 yield dropped to an average of just under 2% from 2009 to 2019.
Higher dividend yields aren’t always good for investors. They may indicate that a company doesn’t have its priorities straight.
These high payouts reward investors in the short term. But, the company isn’t using the money to grow its operations, which can hinder its long-term growth.
These five companies are yielding high payouts for their investors consistently and reliably. Some are even showing greater growth than major players like Apple and Netflix.
There’s less risk in investing in companies like Coca-Cola and McDonalds, which are adored by consumers decades after opening. Jump on these five dividend stocks today to get your share!
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