As they routinely distribute a percentage of the company’s cash flow to investors, dividend stocks might be a great choice for investors searching for income. The top dividend stocks even increase their dividends over time when their parent companies’ revenues increase.
Investors can multiply returns by reinvesting dividends. Unfortunately, dividends are only as good as the firms that pay them, so dividend investors must carefully choose their stocks. Owners of the top nine dividend-paying S&P 500 firms have at least received their regular income payments despite the challenging year for the market.
Lumen Technologies Inc.
In 2020, the American telecoms firm CenturyLink changed its name to Lumen Technologies. In an effort to sell off some of its holdings, Lumen sold its Latin American operations to Stonepeak for $2.7 billion on August 1. Lumen announced in August 2021 that Apollo Global would purchase its traditional telecom operations for $7.5 billion.
Although Lumen stock has lost more than 50% of its value over the previous five years. Morningstar analyst Matthew Dolgin believes that after its divestitures are through, the company will have great potential. He claims Lumen shares are inexpensive, but patience is needed to invest in the firm. LUMN stock, which closed on August 1st at $11.03 and has a “buy” rating and fair value estimate of $16. Which is available on Morningstar.
Dividend yield (TTM, or following 12 months): 9.1%
Altria Group Inc.
One of the biggest cigarette corporations in the world is Altria. Altria, according to Morningstar analyst Philip Gorham, is no longer a pure-play tobacco corporation. According to Gorham, Altria’s 10.2% ownership in the world’s largest alcohol corporation, Anheuser-Busch InBev SA, accounts for around 15% of the company’s estimated value (BUD).
Additionally, the corporation has invested in Cronos Group Inc. and Juul during the past few years. Including other vaping and cannabis assets (CRON). According to Gorham, the U.S. cigarette market is experiencing a secular decline. However, for the time being, it is still appealing due to its profitability. MO stock, which ended on August 1 at $44.05, has a “buy” rating from Morningstar and a fair value estimate of $45 per share.
Dividend yield (TTM) 8.2%
Pioneer Natural Resources Co.
The Permian Basin in West Texas is where Pioneer Natural Resources’ main operations are for oil and gas exploration and production. Stewart Glickman, an analyst at CFRA Research, claims that Pioneer is expanding Permian production at very affordable well costs.
He claims that the purchase of Parsley Energy by the business for more than $7 billion in 2021 will help to address Pioneer’s unusually short reserve life in comparison to peers. Rising oil and gas prices in 2022 are undoubtedly beneficial for Pioneer. But according to Glickman, rising oil service expenses will likely have a negative impact on margins in the near future. PXD stock, which closed at $228.10 on August 1, has a “buy” rating from CFRA with a $295 price target.
Dividend yield (TTM): 4.4%
Vornado Realty Trust
An office real estate investment trust, or REIT, called Vornado Realty Trust focuses on renovating office buildings, retail stores, and properties in metropolitan central business districts. According to Morningstar analyst Suryansh Sharma, the remote work environment has put pressure on Vornado and also other commercial real estate owners.
After two years of primarily remote work, employers are finding it difficult to entice employees back to the office. Sharma predicts that physical business occupancy would gradually increase but that it might not reach pre-pandemic levels any time soon. Sharma claims that Vornado shares still have a lot of value. VNO stock, which closed at $30.10 on August 1, has a “buy” rating and a $43 fair value estimate from Morningstar.
Dividend yield (TTM): 7%
Simon Property Group Inc.
Another REIT that owns and manages shopping malls, as well as community and leisure centers, is Simon Property Group. Unfortunately, the post-pandemic recovery that Simon’s investors were looking for hasn’t materialized for them yet in 2022. The stock has had the worst performance on our list so far this year, down 32% as of August 1.
For long-term investors, the weakening presents a buying opportunity, according to Bank of America analyst Jeffrey Spector. Fortunately, Spector notes that Simon’s advice is restrained and could encourage organic growth. SPG stock, which ended at $108.63 on August 1, has a “buy” rating and a $123 price objective from Bank of America.
Dividend yield (TTM): 5.7%
Oneok Inc.
Oneok is a midstream oil and gas company in the United States that focuses on handling natural gas liquids. Natural gas prices have soared to their highest levels since 2008 as a result of Russian supply cuts. This is excellent news for American gas demand.
According to Glickman, well-completion work has increased in Oneok’s core operating regions. However, it may portend the arrival of a fresh surge in demand for gas processing. Oneok, according to Glickman, has room to enhance its cash flow, and plant additions will result in even higher volume. OKE stock, which ended at $59.12 on August 1, has a “buy” rating from CFRA with a price target of $76.
Dividend yield (TTM): 6.3%
Devon Energy Corp.
Since Russia’s invasion of Ukraine, Devon Energy, a U.S. oil and gas exploration and production business, has profited from skyrocketing energy costs. The best-performing stock on our list as of August 1 is Devon, whose stock has increased 39.8% this year. In addition to increasing its dividend, extra cash flow allowed Devon to acquire RimRock Oil and Gas in July for $865 million.
The RimRock deal, according to Bank of America analyst Doug Leggate, might be a sign that more significant acquisitions are imminent. The DVN stock, which accordingly ended the day’s trading at $61.57, has a “neutral” rating and an $80 price target from Bank of America.
Dividend yield (TTM): 4.3%
Kinder Morgan Inc.
One of the biggest midstream energy firms in the United States, Kinder Morgan focuses mostly on natural gas and liquids. 40% of the natural gas transported in the United States by Kinder Morgan is for export, with the remaining 50%.
According to Glickman, Europe could see a shortage of liquid natural gas, and the recent increase in oil prices may also increase demand for connected gas processing and logistics. According to Glickman, an economic slowdown in the United States is the main worry for Kinder Morgan investors.
In 2022, there is still room for share buybacks at Kinder Morgan. KMI stock, which ended at $17.90 on August 1, has a “neutral” rating from CFRA with a $20 price target.
Dividend yield (TTM):Â 6.1%
AT&T Inc.
The telecommunications, media, and technology businesses of AT&T are diverse. Expanding consumer payment cycles, cautious management commentary on inflation, and accelerating declines in AT&T’s business wireline revenues, according to Bank of America analyst David Barden, overshadowed what would have otherwise been a strong fundamental performance for AT&T’s core businesses in the second quarter.
According to Barden, AT&T is experiencing positive customer growth momentum, adding 1.058 million net postpaid subscribers during the quarter. Additionally, by selling off its WarnerMedia businesses, AT&T has simplified its operations. T stock, which ended at $18.73 on August 1, has a “buy” rating and a $25 price target from Bank of America.
Dividend yield (TTM): 8.5%
