A question that stock investors are eventually faced with is whether they want to load up their portfolios with value stocks or with the highest dividend yield stocks. The choice ultimately boils down to the psychology, and investment philosophy is adhered to. The condition of the economy, and demographic factors such as age also play into this decision. Those that prefer dividend stocks look to avoid price volatilities in the short term. However, even those chasing growth have been increasingly turning towards dividend stocks, given the wider uncertainties plaguing the markets. With inflation hikes and a looming recession, buying money-maker stocks could smoothen out the circumstances for many investors. Moreover, those that pick undervalued dividend kings could benefit from value growth, in addition to high dividend yields, resulting in a win-win opportunity. In light of this, we present the highest-paying dividend stocks, that are a must-buy in 2022.
Duke Energy Corporation
We start off our list of stocks with the utilities giant, Duke Energy Corporation (NYSE: DUK). With a market capitalization of $85 billion, Duke Energy stands as one of America’s largest electric utility companies. There is little about DUK which makes it exciting with innovative breakthroughs or revolutionary tech advancements. For those seeking dividend kings, however, this aspect makes the stock an ideal money maker, and not one prone to price swings. Demand for electric utility remains largely stable even in the face of the most tumultuous macroeconomic headwinds and during recessions. The stock, therefore, is ideal for holding during times of crisis, and capturing value in the form of dividend payments.
Duke Energy presently offers a dividend yield of 3.8%, which annually amounts to over $4 per share. The management has consistently pushed dividend increases above the US Fed’s inflation goal of 2% each year, which is placing it among stocks with the highest dividend yield. As a result, DUK is great at preserving one’s purchasing power amid broader circumstances. Moreover, its exposure to nuclear energy offers it growth potential, in a context where governments are actively pushing for an end to oil reliance. In light of all these factors, Duke Energy is perhaps one of the best defensive dividend stocks one could consider investing in.
Crown Castle Inc.
The second stock on our list of stocks with the highest dividend yield is of the IT-specialized REIT, Crown Castle Inc. (NYSE: CCI). Crown Castle is one of the leading names in the wireless infrastructure realm, which boasts strong and diversified income. Just as the case with electric utilities, the communication industry offers a powerful moat against economic uncertainty.
The primary earning for Crown Castle comes through the leasing of its cell towers. Revenue originating from this source amounts to almost two-thirds of total sales and holds a gross margin of an incredible 70%. This indicates CCI as being a true value creator for its shareholders, whilst capitalizing upon incredible demand for communication and internet.
Similarly, over 30% of its revenue is attributed to the dynamically growing fiber domain. This allows the company to profit significantly in the most densely populated zones within its target market. Additionally, its fiber infrastructure segment adds significant upside potential to its robust, money-making business model.
In terms of dividend, CCI is an extremely compelling pick. Although its dividend yield stands at 3.3%, this has a growth rate which is calculated as being an impressive 10.6%. This is far above inflationary standards. In comparison, the average dividend growth rate on REITS is a mere 5.2%. Such incredible growth is possible through the dynamic management of Crown Castle which is constantly innovating and keeping track with new technologies in the ICT space.
JPMorgan Chase & Co.
Number three on our list is America’s largest bank, and a renowned name in the global financial systems, JPMorgan Chase & Co (NYSE: JPM). The company has a balance sheet that reports a financial position of a staggering $2.87 trillion. A figure of this magnitude indicates its ability to pay its shareholders an annually increasing dividend with relative ease. It is impossible to understate the position, JPMorgan occupies with respect to the global financial network. It is amongst the leading names in both investment and retail banking, as well as wealth and asset management, and global markets.
For its 2021 final year results, JPM reported earnings per share of $15.40, compared to the previous year’s $8.89. A jump of such an immense proportion indicates booming business opportunities being capitalized upon. Despite such tremendous fundamentals, the stock is down by almost 30% since the start of the year. This presents a great buying opportunity for those that find JPM attractive.
In terms of dividends, JPM presently yields at 3.46% and has been consecutively upping these payments since 2015 which is placing among the best stocks with the highest yield. Buying the stock now, while it is still at a significant discount would be a tremendous bargain for dividend chasers. As its share prices match up to its robust fundamentals, this dividend yield would come back closer to the industrial average.
Next up we present the giant investment manager, BlackRock Inc (NYSE: BLK). BlackRock holds an extremely resilient business model, through which it serves institutional, intermediary and individual investors. Over the years, the company has enjoyed tremendous performance and has established itself as one of the big-name players in financial services. In the last 10 years, the company has more than doubled its revenue, with its total assets under management exceeding the $10 trillion figure. Earnings per share has grown even faster than revenue, owing to share buyback programs and structural optimization by management to boost profitability.
Blackrock has been paying out growing dividends for the last 20 years. Furthermore, its yield stands at almost 2.8%. This is not the highest yield amongst some of the names we have presented on this list, but its robust fundamentals make it a highly safe stock to include within any investor’s dividend stock portfolio. Moreover, the company pays out a mere 45% of its earnings as dividends and retains 55% for growth and reinvestment. This is great for those who also hold concern about the long-term money-making potential of the stock.
The final stock on our list, but far from being the least is one of the leading names in the global information storage industry, Iron Mountain Inc. (NYSE: IRM). Iron Mountain is essentially a specialized REIT, and supports over 225,000 clients across the world.
Given the nature of the industry that IRM caters to, it is supported by strong tailwinds that are seeing global industries speed up their push towards digitization. This momentum dramatically picked up pace since the Covid-19 outbreak. Its positioning as a leader in this market has helped it capitalize on these opportunities, and enjoy stellar growth. In the last 12 months, Iron Mountain grew by 20%, in a period where the S&P 500 fell by almost 7%. Its revenue climbed by an impressive 15% in the first quarter of 2022, on a year-on-year basis. The management is confident that it will maintain this double-digit growth trend throughout 2022.
Looking at the stock from a dividend standpoint only enhances its overall attractiveness. The stock’s dividend yield is almost 5%, whereas its 4-year average yield is calculated as being above 7%. Its trailing payout ratio stands at almost 70%, which means most of the profit this star player earns is going out as dividends. The stock has all the markings of a dividend king that one cannot ignore for their portfolio.
For those looking to cash in on a regular income that is both steadily growing and sustainable, there is no better place to start than a stellar, dividend-paying portfolio. The best stocks of this class are those that ensure through growth that investors maintain their purchasing power throughout the pressures of inflation. It also ensures modest growth of their capital while they enjoy their dividend income. Each of the stocks mentioned in this article strike this core balance, and hence is a must-buy for 2022.