Dividends can be a great way to add income to your portfolio, and many seek it out in times of high inflation and discussions of a possible recession. Dividend stocks or dividend funds can help you generate consistent passive income from some of the most economically powerful companies.
Here are 10 dividend stocks to consider for your portfolio and how to invest in them.
How to Invest in Dividend Stocks and Funds
When looking for ways to pay dividends on a regular basis, you generally have two options: dividend-paying stocks and funds that hold dividend-paying stocks. This is how everyone works.
Investing in dividend stocks is no different than investing in any other stock. You need a brokerage account that can be easily set up with an online broker to trade. Once your account is established and funded, you can choose which dividend stocks to invest in. Your broker can even help you identify high-paying stocks through their research products.
If you’re not quite sure which dividend stock to choose, a dividend fund may be a better option for you. Dividend-focused mutual funds and exchange-traded funds (ETFs) hold a basket of dividend-paying stocks. Some of these funds focus on stocks with high dividend yields, while others focus on companies that continue to pay and increase dividends over time.
When choosing a fund, you don’t need to worry about keeping track of every stock in your portfolio closely, as the fund’s diversification should protect you from overinvesting in a single stock.
High dividend stocks
All dividend and yield information as of August 10, 2022.
1. JPMorgan Chase (JPM)
JPMorgan is one of the largest U.S. banks, led by respected CEO Jamie Dimon. The bank weathered the 2008 financial crisis better than most, and its shares have more than quintupled since then, while also paying shareholders a handsome dividend.
Dividend Yield: 3.5%
Annual dividend: $4.00 per share
2. Exxon Mobil (XOM)
Exxon Mobil is the largest oil and gas company in the United States, with roots dating back to John D. Rockefeller’s Standard Oil empire. In 2022, ExxonMobil set a goal to achieve zero or offset greenhouse gas emissions from its operations by 2050, in response to investor and public pressure on the company’s role in climate change.
Dividend Yield: 3.9%
Annual dividend: $3.52 per share
3. United Parcel Service (UPS)
UPS is known for its brown trucks that deliver millions of packages every day. The courier giant operates in more than 220 countries and regularly shares profits with shareholders.
Dividend Yield: 3.1%
Annual dividend: $6.08 per share
4. Verizon Communications (VZ)
Verizon is a leading provider of communications and technology services. Together with AT&T and T-Mobile, they provide most of the cellular service in the US. Verizon has more than $130 billion in revenue in 2021.
Dividend Yield: 5.8%
Annual dividend: $2.56 per share
5. AT&T (T)
AT&T is another leading telecommunications company that generates steady cash flow for shareholders. The company recently divested some assets and slashed its dividend by nearly half as it focused on 5G investments and paid down a heavy debt load.
Dividend Yield: 6.1%
Annual dividend: $1.11 per share
6. Pfizer (PFE)
Pfizer is a pharmaceutical giant that researches and develops medicines to treat a variety of diseases and conditions. The company generated more than $80 billion in revenue in 2021 and paid shareholders more than $8.7 billion in cash dividends.
Dividend Yield: 3.2%
Annual dividend: $1.60 per share
7. Intel (INTC)
Intel is one of the world’s leading semiconductor companies, and its chips power most of the technologies we use every day. The company plans to invest billions of dollars in new capacity to keep pace with competing chipmakers. From 2015 to 2019, Intel returned roughly 90% of its free cash flow to shareholders.
Dividend Yield: 4.1%
Annual dividend: $1.46 per share
8. Philip Morris International (PM)
Philip Morris sells cigarettes and smoke-free products in more than 180 countries outside the United States. While the company still generates substantial profits from the sale of tobacco products, it is moving toward a greater focus on smokeless products, which, while not risk-free, pose fewer health risks than cigarettes.
Dividend Yield: 5.1%
Annual dividend: $5.00 per share
9. Angle (CVX)
Chevron, a leading energy company, has developed a plan that will leverage its strengths in traditional energy sources such as oil and gas to deliver strong returns to its shareholders and enable it to lead a low-carbon future. The company has a strong balance sheet and a history of returning cash to shareholders.
Dividend Yield: 3.7%
Annual dividend: $5.68 per share
10. Cisco Systems (CSCO)
Cisco offers a variety of networking, security, and cloud solutions, with 2021 revenue approaching $50 billion. The company is extremely profitable, generating more than $15 billion in operating cash flow each of the past three years. In 2021, nearly one-third of its cash flow goes to dividends.
Dividend Yield: 3.4%
Annual dividend: $1.52 per share
Нижняя граница
Dividend stocks or mutual funds can be a great way to generate extra income. Remember, if you keep these securities in a taxable brokerage account, you will have to pay tax on the income received even if you reinvest these dividends. If you want to avoid taxes, you must hold shares in a tax-advantaged account such as an IRA or 401(k).
Be sure to research all dividend stocks carefully before investing. Some of today’s high-spending companies may be forced to cut payments if their business suffers.
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