One of the best ways to secure your financial future is to invest. While investing one of the best ways is to invest in the best dividend stocks for the long term. It may have been tempting over the past few years to deviate from a long-term approach and chase quick returns. All told, the S&P 500 finished the year up about 25%.
That said, it’s undeniable that many investors are starting to think about getting a bit more defensive in the new year. It’s not just the threat of price inflation or disruptions from omicron. But it is also the hard reality that after 31% gains in 2019 and 18% gains in 2020, there might not be another huge year ahead of us for stocks.
You may want to consider some of the following dividend stocks that offer stability and income that could serve as a firm foundation for your portfolio regardless of growth trends in 2022.
When picking dividend stocks, don’t just reach for the highest yield today. It’s important to select both current incomes and must be the best dividend stocks for the long term. These 5 dividend stocks to buy will put an income portfolio on the right path in 2022.
Lowe’s Companies (LOW)
Home improvement giant Lowe’s (LOW) isn’t the biggest kid on the block, with a market value of “only” $170 billion when compared with bigger peer Home Depot. That is more than twice that amount. However, value investors know there can sometimes be a big advantage to investing in companies that may have a lower profile.
In other words, Home Depot may be valued at a higher figure on Wall Street, but that’s in part because investors are paying a significant premium for shares.
While supply-chain disruptions as well as the lingering impact of the pandemic have created some near-term challenges, the bottom line is that a booming housing market in the U.S. is always good for home improvement. People can cash out the equity in their homes for big projects. At least, they feel emboldened to spend on smaller ones as they know they’ll get a nice payday when it comes time to sell.
LOW has a dividend yield of 1.24%, paying $3.20 dividends annually. Lowe’s has continuously increased its dividend over the years due to which it comes in the list of best dividend stocks for the long term.
The value proposition of LOW stock is strong right now, and won’t be going away anytime soon. That makes it worth a look for 2022 if you’re interested in value stocks.
FedEx Corporation (FDX)
If, like many of your fellow Americans, you’ve been doing a ton of online shopping over the last few weeks. You have likely had your fair share of boxes from FedEx (FDX) arrive on the porch. And while many consumers only rely on this shipping service occasionally. The bottom line is that writing a check to FedEx for shipping services is a daily occurrence for many businesses if they want to compete in the current retail environment.
With nearly $100 billion in annual revenue and a run rate of about 3 billion packages delivered last fiscal year, FedEx is an integral part of the global economy. That makes it one of the best dividend stocks for the long term to own in 2022 and beyond. While the mix of sales may ebb and flow based on consumer tastes, the underlying need to transport goods from point A to point B will never go away.
Delivery can admittedly be a low-margin business, but profits are hardly stagnant. FDX has predicted to report $20.37 in earnings per share this year for more than the double-digit growth rate. Furthermore, EPS are set to jump another 11% or so in the next fiscal year, too.
FDX has a dividend yield of 1.16%, with the current annual dividend price of $3 per share.
Throw in a $1.5 billion accelerated stock buyback plan to provide a tailwind for share prices and there’s a lot to like about this dominant delivery company as we enter 2022.
Huntsman Corporation (HUN)
Diversified chemicals company Huntsman (HUN) is a prime example of the kind of value stock that many investors are drawn to. That’s because it offers investors exposure to a rather sleepy but reliable business that throws off steady income, even if it may not ever see shares double in short order.
Huntsman generates more than $8 billion in annual revenue by serving a wide array of customers with products including polyurethane, epoxies, resins, insulation, and dyes. This fuels an above-average dividend yield of 2.15% that is highly sustainable at only about 20% or so of next year’s total earnings per share.
To top it off, shares are trading for a bargain valuation when compared with other picks on Wall Street. It may be hard for some investors to get excited about a midsized chemicals company in the age of artificial intelligence and self-driving cars. But the fact that Huntsman isn’t flashy should be a large part of the appeal to investors looking for the best value stocks to round out a low-risk portfolio in 2022.
HUN stock would be a safe bet considering its low volatility and high dividend yield. Apart from that, the stock’s growth can be a great factor in the years to come making it one of the best dividend stocks for the long term.
South Jersey Industries (SJI)
South Jersey Industries (SJI) engages in the purchase, transmission, and sale of natural gas. The company currently pays a 5.5% dividend yield and is expected to continue its long history of slow but steady normalized earnings growth.
Turning from the West to the East Coast, SJI is the second last pick on the list of the best dividend stocks for 2022.
The key to the long-term growth of SJI is based on its carbon-friendly projects. SJI recognizes that to achieve its goal of 100 percent carbon reduction by 2040, working collaboratively with organizations that share the same mission is critical.
In that regard, SJI has collaborated with REV LNG to break ground on hour Renewable Natural Gas facilities in Michigan. REV LNG has led early-stage development for SJI and will preside over the construction of the RNG facilities, expected to be operational by late 2022. After these developments, SJI is also making its place in the category of best dividend stocks for the long term.
Given New Jersey’s relatively subdued population growth, South Jersey doesn’t grow too quickly. That’s probably fine with most income investors, however. South Jersey trades at less than 15 times forward earnings. Meanwhile, shares pay a 5% dividend yield heading into 2022. The stock is down about 15% from 52-week highs, offering decent relative value, as well.
Bristol-Myers Squibb (BMY)
Bristol-Myers Squibb (BMY) discovers, develops, licenses manufactures, and markets biopharmaceutical products worldwide.
It’s been a pretty tough year for pharmaceutical and biotech companies. Unless a firm has a COVID-19 vaccine or treatment angle, there hasn’t been a lot of investor appreciation for the sector. However, falling stock prices across the sector have started to create some opportunities heading into 2022. Bristol-Myers stock, for instance, has slipped 20% since the summer.
Given that decline, shares are now selling for just 7 times forward earnings. With such a knockdown valuation, it might seem the business is in trouble. But management actually forecasts revenue growth of a few percent per year through 2025. Combine any growth with a rock-bottom price-earnings ratio, and good things tend to happen. This means the company expects to continue growing its top line through the beginning of the Revlimid patent cliff.
From a historical perspective, the company’s adjusted earnings-per-share have grown at a compound rate of 12.9% per year over the last decade. Whereas, much of that growth occurred over the past three years as adjusted earnings-per-share more than doubled from $3.01 in 2017 to $6.44 in 2020.
The company is digesting several large mergers, but Bristol-Myers Squibb should establish a consistent earnings trajectory going forward and obtain a higher valuation. BMY currently yields 3.7%. It is a good dividend stock if you are looking for the best dividend stocks for the long term.