Stocks beat bonds, and these dividend stocks offer reliable yields.
The stock market has gone from bad to worse this summer, with June starting off with a series of sharp declines. Many investors are bailing out of the market as the Federal Reserve takes aggressive action to try to contain the runaway inflation rate. However, for patient investors, these big market declines can make for excellent longer-term entry points. With the market in freefall, however, it pays to be more selective. Strong dividend-paying stocks can be great choices, as they provide steady income. That’s a welcome relief during these trying times in the market. With that in mind, here are 15 of the best dividend stocks to buy for the remainder of 2022, all of which yield 3% or more.
Exxon Mobil Corp. (ticker: XOM)
Energy is one of the few sectors of the market that still has positive technical momentum. That’s in large part due to the prices of oil and natural gas themselves. Both are near decade-long highs. Oil’s move to $120 per barrel has been particularly impressive, given the mounting worries of a recession that could hit demand for oil. In any case, Exxon Mobil remains a stalwart dividend holding. The integrated oil giant maintained its dividend even in 2020, when many rivals had to slash theirs. And now it is earning record profits as the industry has recovered. Indeed, President Joe Biden recently complained that Exxon “made more money than God last year.” Hyperbole aside, Exxon also remains reasonably valued, as it offers a 3.7% dividend yield and trades for less than 10 times forward earnings.
Suncor Energy Inc. (SU)
Suncor shares many of the same positive features as Exxon. For example, it owns a large amount of oil refining and distribution assets, meaning that Suncor’s fortunes aren’t just tied to the raw price of crude oil. And, to that point, refining margins have moved to elevated levels this year, adding profitability to Suncor’s operations. The other big perk for Suncor is that it is big in the Canadian oil sands. These oil sands are long-life assets that can run for decades with barely any decline in production once they are up and running. In a world where governments and ESG investors have placed many limits on new oil production assets, Suncor’s existing already-in-operation production stands out as a major competitive advantage. Suncor shares boast a total return of 65% over the past year through mid-June. Despite that, they still trade for just 7 times forward earnings. Suncor yields 3.8%.
Citigroup Inc. (C)
Citigroup is one of America’s largest banks. Having a large business spanning investment banking, retail banking and international operations, Citigroup is one of the most diversified global financial firms out there. It’s also becoming a popular value stock pick now. That’s because Warren Buffett’s Berkshire Hathaway Inc. (BRK.B, BRK.A) picked up a cool 56 million shares of Citigroup stock last quarter. With Berkshire putting nearly $3 billion into Citigroup, it’s a sign that Buffett is on board with Citigroup’s corporate turnaround. And that vote of confidence is worth a lot, given that Buffett has a long and skillful track record of investing within the American banking industry. Shares trade for about 7 times forward earnings and offer a 4.5% dividend yield.
Pinnacle West Capital Corp. (PNW)
Utility stocks had been one of the effective safe harbors in the topsy-turvy market this year. However, now even the safe havens are getting hit. To that point, shares of Arizona utility company Pinnacle West Capital have dropped 10% recently. That’s a large move for a usually sedate company such as a power utility. Pinnacle West operates the Arizona Public Service Co. and Bright Canyon Energy. The company has faced some short-term setbacks over the past year, including rate disputes with local regulators and some analyst downgrades. However, the longer-term picture should be bright for Pinnacle West, as Arizona has been one of the fastest-growing states in the country, thanks to its favorable weather and taxation policies. As population growth is a primary driver of utility performance, Pinnacle West should be poised to outperform. In the meantime, shares yield a juicy 4.8%.
Banco Latinoamericano de Comercio Exterior SA (BLX)
Banco Latinoamericano de Comercio Exterior, or Bladex for short, is a unique bank. It’s a commercial bank that primarily finances short-term, trade-related loans. Think of short-term loans to support industrial, shipping or other such customers. The bank’s main offices are in Panama, which is logical as it is a free-trade hub and home of the Panama Canal. Its board of directors is full of various heads of central banks around Latin America, and the bank exists in large part to promote the free flow of commercial goods around the region. Bladex is not exposed to the housing market or other traditional banking activities. Rather, it can achieve growth as Latin American economies pick up steam. That’s likely to happen given the massive jumps in the prices of copper, oil and agricultural products, which are key Latin American exports. BLX pays a 7.1% dividend.
Life Storage Inc. (LSI)
Real estate investment trusts, or REITs, can work well during inflationary times. That’s especially true for self-storage owners such as Life Storage. Generally, storage units are rented on a month-to-month basis, and operators can raise prices quickly to adjust to changing market conditions. In addition, these businesses don’t typically require much staff to operate, meaning that inflation’s impact on labor costs is modest. REITs also tend to carry a lot of long-term debt on their balance sheets in order to finance their properties. During a big burst of inflation, such as what’s occurring now, the value of those obligations is inflated away to a significant degree. This sets up a virtuous cycle in which storage operators have more rent coming in as they raise prices, while inflation diminishes the value of REITs’ obligations. Life Storage shares are down to 16 times funds from operations, and yield 3.9%.
Washington Trust Bancorp Inc. (WASH)
Investors understandably often pick big banks like Citigroup for dividends. However, in many cases, smaller regional banks are often more stable than the national titans. For example, Rhode Island-based Washington Trust Bancorp was founded in 1800 to serve mills sprouting up along the Pawcatuck River. The economy has changed a lot since then, but Washington Trust keeps humming along. It’s paid dividends for more than a century and managed to grow its profitability and keep the dividend going even during the Great Recession. The bank’s conservative nature has served it well and has positioned it for decades of future success. In fact, during the 2008 financial crisis, Washington Trust was able to take market share locally, as it still had excess reserves to lend while the bigger banks had to cut back their operations. Washington Trust shares currently offer a generous 4.5% yield and trade at 12 times forward earnings.
Pfizer Inc. (PFE)
Pfizer is a leading pharmaceuticals company. It enjoyed a windfall from its COVID-19 vaccine; however, PFE stock barely rallied despite the surge in earnings. Now, Pfizer is putting some of its cash to work with its recently announced $12 billion acquisition of Biohaven Pharmaceuticals Holding Co. Ltd. (BHVN). Biohaven brings Pfizer a major line of drugs for treating migraines. This will also help offset some upcoming patent expirations for Pfizer while rounding out its overall drug lineup. Meanwhile, health care companies typically stand up as recession-resistant holdings during hard times. With their recent sell-off, Pfizer shares now sell for less than 8 times forward earnings, while paying a dividend yield of 3.3%.
Southern Co. (SO)
Southern is a rapidly transforming power utility. Historically, Southern generated the vast majority of its electricity from coal; however, it has pivoted to natural gas, nuclear and renewables in recent years. Southern has experienced significant cost overruns on some of these new generation facilities, such as its nuclear power plants. It also had to delay some solar installations due to shortages of panels and electrical gear in that industry. This has, arguably, created a meaningful buying opportunity for Southern stock, as the company retains a large operating footprint in a number of electricity markets with generally favorable regulators. Southern is up to a 4% dividend yield now, and shares seem reasonably valued at 19 times this year’s projected earnings.
Dow Inc. (DOW)
Dow is a large, diversified chemicals company. After its recent mergers and acquisitions activities, Dow now finds itself with more than 35,000 employees who produce three main categories of goods: packaging and specialty plastics, industrial intermediates and infrastructure, and performance materials and coatings. These are not particularly glamorous products, but they are absolutely essential to creating the modern landscape as we know it. The need for chemicals has only increased in recent years, and pricing is up as well, with the current inflationary environment. Dow is earning record profits, and shares trade for just 7 times this year’s estimated earnings. The company offers a 4.5% dividend yield to its shareholders, and it is also buying back stock to further juice the company’s total returns.
Equity Residential Properties Trust (EQR)
Equity Residential is one of the country’s largest apartment REITs. Equity Residential has been in business for decades now, and has paid a regular dividend dating back to 1992. The company’s apartment investments have been increasingly profitable in recent years. With the surge in the housing market, Equity Residential has been able to raise rents at its properties at an unusually quick pace. The value of its underlying buildings is also on the rise, as the housing market as a whole has lifted off. Meanwhile, as with other REITs, Equity Residential enjoys the effects of inflation whittling away the value of its debt obligations. The housing market will likely slow down dramatically in 2022, but over the longer term, there’s still a structural shortage of units, and millennials are a strong demographic force to bolster the industry. Down about 23% year to date through June 13 — even after including dividends — EQR stock is now attractive at a starting 3.6% dividend yield.
V.F. Corp. (VFC)
V.F. Corp. is a clothing and footwear company known for brands such as Vans, The North Face and Timberland. The company is also a dividend aristocrat, meaning that it has increased its dividend for at least 25 consecutive years. That’s rather impressive for a company in a cyclical and fast-moving industry such as apparel. V.F. Corp. has been able to pull it off since it acquires its brands on the cheap and then transforms them under its ownership. For example, it bought both Vans and The North Face for far lower valuations than what they are worth in today’s market. VFC stock has been plunging in recent weeks as consumer sentiment has soured. Large retailers have recently announced poor quarterly earnings, driven in large part by a decline in demand for discretionary items such as apparel. This will hit V.F. Corp to an extent, but its diversified lines of business will help soften the blow. Meanwhile, shares now yield 4.4%.
Clorox Co. (CLX)
Hygiene and sanitation products company Clorox has been taken to the cleaners. The company appeared to be entering an era of growing prosperity in 2020 as sales surged during the pandemic. However, the sales surge disappeared in 2021; meanwhile, Clorox’s operating costs soared amid the historic wave of inflation. This has caused Clorox’s earnings to plunge far below pre-pandemic levels, and the stock has dropped accordingly as well. However, at the end of the day, people still need bleach, laundry detergent and other such products. Clorox will get its supply chain issues resolved in due time, and the ongoing inflation wave is allowing Clorox to lift its prices quickly, which will fix its profit margins. Clorox’s dividend yield is now up to 3.6% as well.
Whirlpool Corp. (WHR)
Whirlpool is a leading manufacturer of home appliances, such as refrigerators, washing machines and microwaves. The company enjoyed a dramatic increase in sales starting in the back half of 2020. With people stuck at home, there was a huge rush to upgrade one’s appliances. Whirlpool stock initially rallied sharply as traders factored Whirlpool’s record profits into their outlooks for the company going forward. Now, however, people are worried about a slowdown in the housing market and inflation and supply chain issues for Whirlpool. Those are valid concerns, though it’s worth noting that Whirlpool has much of its manufacturing in Mexico, rather than Asia, and thus has had fewer logistics problems due to the proximity of its supply chain. Whirlpool shares are now selling for less than 7 times forward earnings and offer a 4.4% dividend yield.
First American Financial Corp. (FAF)
First American Financial is the nation’s second-largest title insurance company. When purchasing a home, in order to obtain a mortgage, buyers must get title insurance, which makes sure that there are no defects with the deed or title for a property. This form of insurance is closely tied to the housing market. Title insurers make money on both new home purchases and also refinancing transactions. Understandably, investors have been dumping title insurance stocks given the sharply higher interest rate environment. However, enough is enough. FAF stock has slid to less than 6 times earnings with its latest sell-off. And while 2022 will be a slow year for the business, the long-term fundamentals for the housing market, such as demographics, are favorable. Housing will pick back up and FAF stock will recover. For now, shares yield 3.7%.
15 of the best dividend stocks to buy for 2022:
— Exxon Mobil Corp. (XOM)
— Suncor Energy Inc. (SU)
— Citigroup Inc. (C)
— Pinnacle West Capital Corp. (PNW)
— Banco Latinoamericano de Comercio Exterior SA (BLX)
— Life Storage Inc. (LSI)
— Washington Trust Bancorp Inc. (WASH)
— Pfizer Inc. (PFE)
— Southern Co. (SO)
— Dow Inc. (DOW)
— Equity Residential Properties Trust (EQR)
— V.F. Corp. (VFC)
— Clorox Co. (CLX)
— Whirlpool Corp. (WHR)
— First American Financial Corp. (FAF)
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Update 06/14/22: This story was published at an earlier date and has been updated with new information.