If you are interested in investing long-term in stocks, the best option is to invest in dividend stocks. Dividend stocks are companies that pay earnings to shareholders on a regular basis providing you with a passive income. If you want to invest now, take a look at the best dividend stocks 2022 of our choosing:
- Enbridge Inc.
- Chevron Corporation
- Antero Midstream
- Lumen Technologies Inc. (LUMN)
- Seagate Technology Holdings PLC (STX)
Learn More About the 5 Best Dividend Stocks in 2022
A vast majority of dividend companies are well-established, meaning they have enough profit that they can share with their shareholders. Most dividend yields are paid quarterly, but there are companies that pay dividends on a monthly or yearly basis. When looking at the best dividend stocks in 2022, you need to search for companies with stable growth and income and look at the dividend payout ratio.
This is the measure of total dividends divided by net income, and it shows investors how much of the net income is returned to the shareholders and how much the company invests in further growth. If the dividend yield is over 100% or is negative, this may be an indicator that the company is borrowing money to pay dividends. Now let’s take a closer look at each of the five best dividend stocks to invest in.
Enbridge is an oil and gas company that is in charge of maintaining pipelines and transmission of oil and gas throughout North America. Even though the current gas and oil market situation may seem like a risky place to invest, investors shouldn’t be worried about investing in Enbridge. The demand for oil and gas transportation will not go anywhere anytime soon. The company also has several long-term contracts that should make investors happy. Even though the dividend yield is high at 5.88%, this shouldn’t be a concern since the company produces stable and predictable cash flow. Here are statistics data for Enbridge Inc:
- Market cap – 93.56B,
- Dividend Yield – 5.88%,
- Price – $46.17.
Chevron is a leading company in producing crude oil and natural gas. With a market cap of 348.79B Chevron is increasing its revenues and has more cash than ever in the history of the company. This rise is primarily due to smart management, which decreased operating costs while increasing production. Chevron has proven that the oil industry is among the stable ones despite the current gas prices and increasing demand for renewable energy sources. The company’s ability to distribute the cash has lured so many dividend investors to buy shares. Here are statistical data for Chevron:
- Market cap – 348.79B,
- Dividend Yield – 3.11%,
- Price – $117.52.
Antero Midstream is another oil company that deals in natural gas gathering and processing. The company also does water delivery for partner company Antero Resources. With a high dividend yield of 8.23%, it is a promising company to invest in and earn stable passive income. Even though the high dividend yield may seem like a red flag, investors shouldn’t be worried because of Antero’s operation model – 100% of all contracts are at a fixed fee, meaning that any shift in the oil price shouldn’t affect the company profits. Take a look at Antero Midstream statistics:
- Market cap – 5.23B,
- Dividend Yield – 8.23%,
- Price – $10.94.
Lumen Technologies Inc. (LUMN)
If you are looking for a new tech company to invest in, Lumen Technologies is a good place to start. The company deals with communications and technology, providing its customers an integrated platform with cloud connectivity, security solution, and network assets alongside voice and collaboration tools, helping businesses utilize their data and adopt new technologies. The company has many contracts with other businesses and has huge potential for future growth. And with a high dividend yield of 8.73% and a small price of $11, it is a safe place to invest in the long term. Here are the statistical data for Lumen:
- Market cap – 11.83B,
- Dividend Yield – 8.73%,
- Price – $11.45.
Seagate Technology Holdings PLC (STX)
Seagate Technology Holdings is a leading company that provides hard disk drives for data storage to other companies and businesses. Even though the memory storage businesses have generally decreased in past decades, in the last two years, it has proven to have a lot of potentials. Since technology has developed, the demand for memory storage has also increased. The company has shown financial health and growth potential. Take a look at Seagate data:
- Market cap – 17.8B,
- Dividend Yield – 3.34%,
- Price – $82.85.
Where to Start Investing in Dividend Stocks?
Nowadays, investing in stocks has never been easier and more approachable to everyone. Anyone can learn how to invest in stocks. You can easily invest in stocks online from the comfort of your home. There are many platforms or brokers you can choose from and start investing today. When looking at how to invest in the best dividend stocks in 2022, you need to think about your current needs.
For example, if you are a beginner, you would want to find a broker that has excellent educational tools about the market and financial advice. Also, if you don’t have too much money to invest, it would be good to find a broker that allows fractional share investment or even better ETFs. Also, when picking a broker, see what other investment options you have. Do they have mutual funds or crypto trading?
Another thing that could be useful if you are a beginner is to see what the minimum account deposit is and how much you will pay in other fees. Here are the top platforms you can sign up for and start investing in stocks and other securities:
- TD Ameritrade,
- Fidelity Investments,
- Interactive Brokers.
What to Consider When Looking For Best Dividend Stocks?
Aside from the things we have mentioned above, there are other things you need to know about stocks before you start investing. While this terminology may seem complicated, it will make much more sense once you start trading and investing. So let’s start by explaining some basic terminology when it comes to stocks trading and what to look for when choosing the right stock:
- Payout ratio – This is the amount of money a company will pay per share in dividends, which is divided by its earnings per share.
- History of raises – If a company’s dividend rises year after year, this is a good sign, meaning the company has financial health and steady growth.
- Steady revenue and profit growth – When looking for a dividend stock to invest in for the long term, steady revenues are the most important thing to look for. If a company has erratic revenue, one year up, then down the next, it is a red flag that there are some troubles.
- High yield – High yield doesn’t necessarily mean this is a good investment. Only when other criteria are met, a high yield can be considered good.
When Investing in Dividend Stocks, Patience Is the Key
Dividend stocks are long-term investments meaning you shouldn’t be that much concerned about changes in stock prices. You should find a company that has financial health and stability, meaning it will be able to pay dividends to its shareholders. Also, you should think about that company’s future potential. If you believe the company will last in years to come and remain a leader in the market, then investing will most definitely bring back profit.
When looking for dividend stocks, it would also be good to find companies that allow dividend reinvestment programs. This means you can reinvest your dividend in more stocks as soon as the dividend is paid.
If you decide to invest in a dividend stock, you must be patient and sometimes wait for this investment to return. In some cases investing in stocks that have lower yields is a better option if the company shows financial stability and steady dividend payments. High yields can indicate problems in the company, meaning they have increased yields to lure more investors. In conclusion, investing in stocks means you need to be careful and invest smart with calculated risks.