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10 Best Dividend Stocks to Buy Now

·6 min read

In this article, we will discuss the 10 best Dividend stocks to buy now. You can skip our detailed discussion on dividend investments and the historical performance of dividend stocks, and go directly to read 5 Best Dividend Stocks to Buy Now.

With heightened concerns about a potential recession and rising inflation, investing wisely in the dividend industry could help investors protect their portfolios from turbulent developments. 

With dividend stocks, many companies provide investors quarterly payouts with the potential for capital gains. Additionally, the power of compounding can significantly increase earnings when investors wisely reinvest dividend money. 

Quality dividend companies are consistently profitable and have long histories of increasing their payouts. With the market lower, many quality dividend companies, including some companies who are Dow Jones components, offer opportunities to investors who have a long-term outlook. The Dow Jones includes the 30 most significant market leaders on the American stock exchange, including many blue chips that are both large cap and well known.

Many Dow Jones stocks have durable businesses that could continue to grow profits even if the Federal Reserve raises interest rates that could increase borrowing costs. Given their low valuations, the shares of many Dow Jones components could increase even if rising interest rates make dividend yields less compelling.

Getty Images

Methodology

In order to identify the best dividend stocks to buy right now, we use the collective wisdom of nearly 900 hedge funds tracked by Insider Monkey. We started with the highest yielding Dow Jones stocks as listed by SPDR Dow Jones Industrial Average ETF Trust  holdings and then sorted these stocks by the number of hedge funds in our database with long positions in each stock. We also included their dividend yields based as of September 3.

So, according to hedge funds, here are the 10 best dividend stocks to buy right now:

10 Best Dividend Stocks to Buy Now

10. Walgreens Boots Alliance, Inc. (NASDAQ:WBA)

Number of Hedge Fund Holders: 40

Dividend Yield: 5.44%

Walgreens Boots Alliance, Inc. (NASDAQ:WBA) is an integrated healthcare, pharmacy and retail leader with a strong dividend history.

In July, Walgreens Boots Alliance, Inc. (NASDAQ:WBA) announced that it would increase its quarterly dividend payable September by 0.5% to 48 cents per share, which gives it one of the highest dividend yields among stocks listed in the Dow Jones index. As a result of the dividend increase, Walgreens Boots Alliance, Inc. (NASDAQ:WBA) has raised its dividend for 47 consecutive years.

Walgreens Boots Alliance, Inc. (NASDAQ:WBA) is also popular with hedge funds. According to Insider Monkey’s Q2 data, 40 hedge funds had stakes in Walgreens Boots Alliance, Inc. (NASDAQ:WBA). The total value of the holdings is $599.01 million. 

Much like Cisco Systems, Inc. (NASDAQ:CSCO), Intel Corporation (NASDAQ:INTC), and JPMorgan Chase & Co. (NYSE:JPM), Walgreens Boots Alliance, Inc. (NASDAQ:WBA) is a widely held dividend stock among hedge funds.

9. International Business Machines Corporation (NYSE:IBM)

Number of Hedge Fund Holders: 40

Dividend Yield: 5.16%

International Business Machines Corporation (NYSE:IBM) is a global tech company operating in 171 countries with a long dividend history. 

International Business Machines Corporation (NYSE:IBM) has paid consecutive quarterly dividends every year since 1916 and the company has also raised its dividend every year for the last 28 years.

As a result of the increases, International Business Machines Corporation (NYSE:IBM) has a quarterly dividend of $1.65 per share.

When looking at the institutional investors followed by Insider Monkey, Citadel Investment Group, managed by Ken Griffin, holds the biggest position in International Business Machines Corporation (NYSE:IBM). Citadel Investment Group has a $420.87 million position in the stock, comprising 0.1% of its 13F portfolio.

40 hedge funds in Insider Monkey's database had International Business Machines Corporation (NYSE:IBM) in a bullish position at the end of the second quarter of 2022. These hedge funds held shares in the firm worth about $948.31 million.

Here is what St. James Investment Company had to say about the past sales strength of International Business Machines Corporation in its Q4 2021 investor letter:

“IBM was not the first company to build computers. The distinction belongs to Sperry-Rand’s subsidiary UNIVAC, which introduced the first commercially successful computers in the early 1950s. In this era, IBM did possess the largest research and development department in the business machines industry and quickly caught up, introducing cost-competitive computers a few years after UNIVAC. By the late 1950s, IBM held the dominant market share in computers. IBM also touted a vastly superior sales organization, which used a sales tactic called “paper machines” (the equivalent of today’s “vaporware”). If a competitor’s product was selling well in a market segment that IBM had yet to penetrate, the company would announce a competing product and start taking orders for the “paper machine” long before it was available.

One cannot overstate how powerful IBM was in the computer industry in the 1950s and 1960s. Every competitor rightly worried that if their product worked too well for too long, it was only a matter of time before an army of IBM salesforce representatives mobilized. In their easily recognizable uniforms of starched white shirts, red ties, and blue suits, IBM marketers marched on their customers and offered a more expensive, but much more defensible, choice. “Nobody gets fired for buying IBM” was a common phrase. Even competitors acknowledged that the company excelled at sales. As a UNIVAC executive once complained, ‘It doesn’t do much good to build a better mousetrap if the other guy selling mousetraps has five times as many salesmen.’” 

While International Business Machines Corporation (NYSE:IBM) isn't as dominant as it was before, the company is still very profitable and its new innovations could help its dividend growth.

8. Dow Inc. (NYSE:DOW)

Number of Hedge Fund Holders: 45

Dividend Yield: 5.68%

Headquartered in Michigan, US, Dow Inc. (NYSE:DOW) is a commodity chemical company that is well positioned to profit from the European gas crisis, which could make competitors BASF and Covestro lose competitiveness. 

Although some analysts are bearish due to slowing demand, Dow Inc. (NYSE:DOW) has a low forward P/E ratio of 7.37. Dow Inc. (NYSE:DOW) also has one of the highest yields in the Dow Jones index at 5.68% as of September 3.

The company has a quarterly dividend of $0.70 per share and a forward payout ratio of 41.76%.

According to Insider Monkey’s Q2 data, 45 hedge funds had stakes in Dow Inc. (NYSE:DOW). The total value of the holdings is $871.52 million. 

7. 3M Company (NYSE:MMM)

Number of Hedge Fund Holders: 54

Dividend Yield: 4.9%

3M Company (NYSE:MMM), a global manufacturer with headquarters in Minnesota, is another blue chip stock with a strong dividend history. Given its durable businesses, the company has increased its dividend for 65 years and shares of the company have increased substantially. As a result of the increases, 3M Company (NYSE:MMM) has a quarterly dividend of $1.49 per share. 

Although Bank of America analyst Andrew Obin recently lowered his price target on 3M Company (NYSE:MMM) to $140 from $165, the average analyst estimate is still $147.46 and 3M Company (NYSE:MMM) still has one of the highest dividend yields in the Dow Jones with a yield of 4.9% as of September 3.

As of August 30, 2022, Ken Fisher’s Fisher Asset Management is the largest shareholder in 3M Company (NYSE:MMM), in our database and holds a stake worth $801.79 million. The investment covers 0.56% of Fisher Asset Management's 13F portfolio.

According to Insider Monkey’s Q2 data, 54 hedge funds had stakes in 3M Company (NYSE:MMM). The total value of the holdings is $1.38 billion.

6. Amgen Inc. (NASDAQ:AMGN)

Number of Hedge Fund Holders: 55

Dividend Yield: 3.2%

Amgen Inc. (NASDAQ:AMGN) develops cutting-edge human treatments and focuses on serious systemic diseases. The biotech company is also a Dow Jones component that has increased its dividend for 11 consecutive years. As a result of the increases, Amgen Inc. (NASDAQ:AMGN) pays a quarterly dividend of $1.94 per share.

In August, Christopher Raymond of Piper Sandler maintained Amgen Inc. (NASDAQ:AMGN) at an overweight rating and raised the price target from $260 to $265.

According to Insider Monkey’s Q2 data, 55 hedge funds also had stakes in Amgen Inc. (NASDAQ:AMGN) with the total value of the holdings at $2.17 billion.

ClearBridge Investments mentioned Amgen Inc. (NASDAQ:AMGN) in its Q3 2021 investor letter. Here is what the firm has to say:

“In health care, Amgen, a biotechnology company, has endured several pipeline setbacks recently, including a slow transition of its Lumakras treatment into first-line lung cancer, a slower than expected development of its treatment for myeloma as well as the company’s asthma treatment Tezepelumab missing its primary endpoint in a Phase III study. We remain positive on the stock, with Amgen’s investments in biosimilars and its pipeline part of our long-term thesis.”

Alongside Amgen Inc. (NASDAQ:AMGN), Cisco Systems, Inc. (NASDAQ:CSCO), Intel Corporation (NASDAQ:INTC), and JPMorgan Chase & Co. (NYSE:JPM) are also widely held dividend stocks among hedge funds.

Click to continue reading and see 5 Best Dividend Stocks to Buy Now.

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Disclosure: None. 10 Best Dividend Stocks to Buy Now is originally published on Insider Monkey.