It is very easy for retirees to become distracted by fixed income opportunities in a market where growth stocks remain the main focus. After a 27% gain in 2021, things are already off to a good start, propelled by some fast-growing, non-dividend-paying players, such as EV manufacturer Tesla (NASDAQ:).
But if you' If you're in the market to secure a steady stream of income for your golden years, it's important not to overlook those boring names that quietly but reliably send dividend checks to investors year after year, without missing a beat. . According to Janus Henderson Investors, companies and a recovering economy are putting global dividends on track for a record year. The money manager in November raised his estimate of total payouts to $1.46 trillion for 2021. Companies plan to spend even more on share buybacks and dividends in 2022, according to a recent report in the Wall Street Journal. . Many companies have recovered from the blow that the coronavirus pandemic has dealt them, giving them plenty of leeway to reward their shareholders, as quoted by Howard Silverblatt, a senior index analyst at S&P Jones Indices in the WSJ report.
Income stocks are also gaining momentum as rising inflation expectations and rising yields from high dividend payers make them a more attractive investment. To take advantage of this economic backdrop, we've shortlisted three top dividend stocks that could be a great addition to any income-generating portfolio in the long run.
1. JPMorgan Chase
Banks are purely a cyclical trade, closely linked to the direction of the economy. Right now, those factors have turned favorable for bank stocks, given the prospects for higher interest rates and robust economic growth. Among banking stocks, for income investors, we like JPMorgan Chase (NYSE:), the largest US-based lender, for the strength of its balance sheet and the quality of its operations.
In its most recent earnings report, JPM delivered its results as the economy continues to grow – despite the dampening effect of COVID variants and supply chain disruptions. posted a 52% increase in investment banking fees, increasing its profitability. Combined with the government's massive infrastructure spending plans and a phasing out of monetary stimulus, banks could see a significant increase in credit demand. year in which companies and individuals use up the liquidity accumulated during the pandemic.
Shares of JPM closed yesterday at $167.83, yielding an annual dividend yield of 2.38%. That equates to a current payout of $1 per quarterly dividend, which has risen about 18% per year for the past five years.
2. Broadcom
If you plan to combine growth with a steadily growing dividend flow, it makes sense to focus on mature companies in the technology sector. Semiconductor giant Broadcom (NASDAQ:) fits those criteria perfectly. It stands out for its generous payout policy.
Over the past decade, Broadcom's dividend has soared, from just under $0.10 per share in 2011 to quarterly pending payments of $4.10. At $670.92 as of Tuesday's close, the stock is yielding 2.54%.
This impressive growth was supported by a smart acquisition strategy and an exploding demand for connected devices, such as smartphones. Broadcom is a major supplier of semiconductors that filter radio signals and provide Wi-Fi connections in smartphones, including the iPhone. It also dominates the market for switches, which are machines that route traffic between data center computer servers.
With the growing use of cloud computing and the introduction of 5G phones, Broadcom is well positioned to continue its business and provide increasing income for its long-term investors. According to Goldman Sachs, Broadcom is best positioned in difficult times for the chip industry, which is unable to meet rising demand. The note about the company said:
“Management's intense focus on differentiation and leadership is reflected in the company's gross margin. Broadcom not only generates the highest gross margins in our coverage universe, but has done so over the years with little variability… despite the cyclicality inherent in the semiconductor industry. "
3. Exxon Mobil
As energy demand continues to recover from its collapse in 2020, some of the largest stocks have regained momentum. NYSE 🙂 has surged, up nearly 60% in the last year. While the best time to buy quality oil stocks is certainly behind us in the current cycle, some of these names are still a steal for yield-hungry investors. For example, Exxon's annual dividend yield of 5.79% is about three times greater than the 2% average yield of the S&P 500. After a strong recovery in energy prices since the pandemic-induced slump in 2020, these companies are also in a much better position to cover their payouts from their own money generation rather than borrowing from the market. During the third quarter, the Irving, Texas-based company generated $12 billion in cash, enough to cover XOM's quarterly dividend of $0.88 per share.
Of the major oil companies, Exxon is the preferred choice of analysts at Goldman Sachs, who view its dividend yield, which is the highest among US energy companies, as "mispriced relative to sustainable free cash flow. ”
