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Top 5 High-Yield S&P 500 Stocks to Buy for 2022

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·5 min read
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U.S. stocks witnessed a banner year in 2021. From fiscal stimulus measures to the Fed’s accommodative monetary policy, all propelled the stock market to record highs. Particularly, the Fed’s initiative to keep interest rates low and pump trillions of dollars into the economy helped growth rebound after taking a beating in 2020. In fact, the broader S&P 500 has already gained more than 20% so far this year.

However, 2022 looks a lot dicey. The Fed is now poised to hike interest rates next year to combat the inflationary burden on the convalescing economy. Moreover, the spread of the Omicron virus variant has raised anxieties about a possible lockdown soon. Such developments don’t bode well for the stock market and stocks are more likely to face bouts of volatility next year.

This calls for investing in dividend players as they are primarily unperturbed by market gyrations. Some of the top dividend players listed in the S&P 500 to consider are Franklin Resources BEN, Evergy EVRG, Federal Realty Investment Trust FRT, NiSource NI and Omnicom Group OMC.

2022 May Prove to be Challenging for US Equities

The relentless increase in consumer prices has at present rattled investors. The increase in inflation was initially considered a temporary phenomenon caused due to supply constraints coinciding with a surge in consumer spending post-lockdown. However, the increase in consumer prices isn’t showing any signs of ebbing and is now becoming a more worrying trend. In fact, in the United States, the consumer price index last month soared to its highest level since 1982 and has ticked up for six months in a row.

Thus, to counter the increase in inflation, the Fed has decided to do away with easy monetary policy and is likely to hike rates at least three times in 2022. But hiking rates will lead to higher borrowing costs, which may endanger the economic recovery vis-à-vis the stock market’s upward trajectory. To top it, bond yields remain elevated at times of higher inflation, damaging the allure of especially growth-oriented stocks.

Simultaneously, the Omicron variant is spreading fast in several parts of the world. The strain has now been found in several areas in the United States, with cases mostly doubling in places with community transmission. Investors, thus, remain concerned that the spread of the new variant may again compel the administration to shut down business activities, hampering economic growth and impacting the stock market.

5 Top Choices

With the Fed becoming more aggressive and Omicron worries, things are undoubtedly unfavorable for the stock market in 2022. However, investors shouldn’t be disheartened. Instead, they should invest in solid S&P 500 dividend players known for a sustainable business model and long track of profitability. These stocks are unfazed by market volatility as well. Here’re five such stocks that boast a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Franklin Resources is a global investment management company. Franklin Resources’ operating revenues and net income are derived from offering investment management and related services to retail mutual funds, institutional and private accounts, and other investment products. Franklin Resources has a Zacks Rank #1. It has a dividend yield of 3.5%, while its five-year average dividend yield is 3.3%. The company’s expected earnings growth rate for the next year is 6.8%.

Evergy provides clean, safe and reliable energy to 1.6 million customers in Kansas and Missouri. Evergy owns, operates and maintains more than 52,800 miles of distribution lines. Evergy has a Zacks Rank #2. It has a dividend yield of 3.4%, while its five-year average dividend yield is 3.1%. The company’s expected earnings growth rate for the next five-year period is 6.1%.

Federal Realty Investment Trust owns, manages, develops and redevelops premium retail and mixed-use properties in the United States. Federal Realty’s retail properties are anchored by supermarkets, drug stores or high-volume, value-oriented retailers, which provide consumer necessities. Federal Realty has a Zacks Rank #2. It has a dividend yield of 3.4%, while its five-year average dividend yield is 3.6%. The company’s expected earnings growth rate for the next year is 6.5%.

NiSource is an energy holding company. NiSource, together with its subsidiaries, provides natural gas, electricity and other products and services in the United States. NiSource has a Zacks Rank #2. It has a dividend yield of 3.3%, while its five-year average dividend yield is 3.1%. The company’s expected earnings growth rate for the next year is 5.9%.

Omnicom Group is one of the world's largest advertising, marketing, and corporate communications companies. Omnicom’s agencies operate in all major markets across the globe and provide an extensive range of services. Omnicom has a Zacks Rank #2. It has a dividend yield of nearly 4%, while its five-year average dividend yield is 3.5%. The company’s expected earnings growth rate for the next year is 4.5%.


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NiSource, Inc (NI) : Free Stock Analysis Report
 
Franklin Resources, Inc. (BEN) : Free Stock Analysis Report
 
Omnicom Group Inc. (OMC) : Free Stock Analysis Report
 
Federal Realty Investment Trust (FRT) : Free Stock Analysis Report
 
Evergy Inc. (EVRG) : Free Stock Analysis Report
 
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