There are many investment strategies when it comes to the stock market, and one of them is building up a stock portfolio that is filled with dividend stocks. You may be wondering what stocks pay dividends.
Today, we are going to take a deeper look into dividend stocks and how you can use them to generate a monthly income.
We’ll also reveal specific stocks that currently pay dividends. We advise that you do your own research before adding any of the stocks we mention to your portfolio.
How Dividend Stocks Work
Companies can raise money to expand operations, launch new products, pay down debt and to generally invest in their growing company by selling shares in their business (stock).
When investors buy shares of stock in a company, they own a small part of that company.
Successful companies may reward their shareholders by paying “dividends” to them out of the profits the company earns.
Do All Stocks Pay Dividends?
Not all companies pay out dividends, but over 3,000 do. That means there are plenty of stocks to research and sift through when choosing the best stocks paying dividends.
We’ll take a look at some good stocks that pay dividends within this article.
Dividend Stock vs. Dividend Funds
Individual stocks can pay dividends, as can mutual funds. Let’s take a look at some of the differences between a dividend stock and a dividend fund.
- Individual (one company)
- Typically managed by the investor
- Allows for creating your own portfolio to diversify
- Dividends are results of profitable operations
- No internal fees
- Consists of a group of stocks
- Typically managed by a professional money manager
- Allows for diversification
- Dividends are generated by underlying assets
- Internal fees
I personally feel doing your own research and building your own diversified portfolio of individual dividend stocks is best.
If this option is overwhelming to you, however, then go with the dividend-paying mutual fund.
The important thing is that you are actively investing and growing your money.
How Do You Know Which Stocks Pay Dividends?
To find out if a particular company pays dividends, go online to finance.yahoo.com and enter the company name or its ticker symbol. This site will also tell you the “ex-dividend” date.
This is the date at which time anyone who owns shares of stock is eligible to receive the next dividend payout, which is typically about a month after that date.
Even if the shareholder sells shares after the ex-dividend date, he or she will still receive that dividend.
To see a list of all dividend-paying companies, use the “stock screener” at www.finviz.com.
The screener has a “dividend yield” scan field. You can specify the yield percentage to scan by (over 1%, over 2%….over 9%).
This screener also has several dozen parameters to help narrow your search further. You to specify market cap, stock price, industry, and much more.
If you’d like to learn more about the various stock charts, watch our video below.
List of Stocks Paying Dividends
Here is a list of stocks paying dividends as of the date of writing this article.
This is not a comprehensive list, as there are literally thousands of dividend stocks to choose from.
- Dillard’s Inc. (DDS)
- Home Depot Inc (HD)
- Microsoft Corp (MSFT)
- Sherwin-Williams Co (SHW)
- FedEx Corp (FDX)
- Alexander’s Inc (ALX)
- Tractor Supply Co (TSCO)
- Caterpillar Inc (CAT)
- Cigna Corp (CI)
- Ameriprise Financial Inc (AMP)
- Lockheed Martin Corp (LMT)
- Abbott Laboratories (ABT)
- AT&T (T)
- Clorox (CLX)
- Johnson & Johnson (JNJ)
- Procter & Gamble (PG)
- Universal Health Realty Trust (UHT)
When Do Stocks Pay Dividends?
The majority of top stocks that pay dividends do so on a quarterly basis.
There are others, however, that opt to pay shareholders monthly, semi-annually or annually.
You can opt to keep your dividend payment and use it as income, or reinvest it to continue to grow your wealth.
Which Stocks Pay a Monthly Dividend?
You may be looking for a list of stocks that pay monthly dividends instead of quarterly or annually.
Here are a few stocks that pay a monthly dividend at the time of writing this article.
This is not a comprehensive list.
- Banco Bradesco S.A. (BBD)
- Phillips Edison & Company, Inc. (PECO)
- Gladstone Investment Corporation (GAIN)
- Horizon Technology Finance Corp (HRZN)
- Shaw Communications (SJR)
- STAG Industrial (STAG)
- Main Street Capital (MAIN)
- SL Green Realty Corp. (SLG)
- Blackrock Capital Allocation Trust (BCAT)
- Oxford Lane Capital (OXLC)
- Eagle Point Credit (ECC)
- Global Water Resources (GWR)
- ARMOUR Residential REIT (ARR)
- Orchid Island Capital (ORC)
- Chatham Lodging (CLDT)
- Dynex Capital (DX)
Which Stocks Pay The Most Dividends?
When running a scan for dividend-paying stocks in finviz.com, you’ll note the type of industry and sector companies are in that are paying high dividends.
REITS, for example, will be numerous among high-paying stocks. REITS, or Real Estate Investment Trusts, are businesses that borrow money at low rates and for short terms.
Then they lend money out long-term and at higher interest rates, thus earning a profit.
Marc Lichtenfeld, Chief Income Strategist at The Oxford Club and author of “Get Rich With Dividends” writes that Abor Realty Trust, Flushing Financial, Omega Healthcare Investors, and AbbVie are among his high-yielding dividend stock picks.
Abor Realty Trust (ticker symbol ABR) invests in mortgages. It has not only paid regular dividends for the last nine years, but also raised them every year!
Abor is a REIT, and currently paying a 9.4% dividend yield.
Omega Healthcare Investors (ticker symbol OHI) owns nursing and assisted living facilities.
AbbView (ABBV) is a pharmaceutical company. It pays $1.30 per share quarterly, which is $5.20 annually, which is a 4.88% yield.
What Are Dividend Aristocrats?
These are companies in the S&P 500 Index that pay dividends and have raised those dividends yearly for at least 25 years in a row.
These are typically well-established, large cap companies, which makes them a good starting point when choosing the best stocks paying dividends..
These companies are often recession-proof, and are found in such industries as construction, health care, retail sales and oil/gas.
According to U.S. News & World Report, 2022’s Dividend Aristocrat List contains 65 stocks.
This list of stocks paying dividends includes:
- Aflac Inc. (AFL)
- Chevron Corp. (CVX)
- The Coca-Cola Co. (KO)
- ExxonMobil Corp. (XOM)
- Hormel Foods Corp. (HRL)
- Lowe’s Cos. Inc. (LOW)
- McDonald’s Corp. (MCD)
- Sherwin-Williams Co. (SHW)
- Walmart Inc. (WMT)
What To Look For When Buying Dividend-Paying Companies
Obviously, you want to own stocks that pay good dividends, perhaps 5% and higher. CTO Realty (CTO) pays 7%, for example.
You also want companies that are solid, have good cash flow (to ensure they can pay dividends), and whose stock price is one that you can afford.
You want to buy a lot of shares, and if a stock’s price is $400 per share, that will severely limit how many shares most of us can afford.
Also, look for companies that have a long history of paying out dividends. Pepsico (PEP), for example, has been paying dividends for 48 years!
Can You Get Rich From Dividend Stocks?
Yes, you can get rich from dividend stocks, but this takes time and knowledge.
You need to be consistent and take advantage of compounding (see Growth Through Compounding below).
The earlier you start investing, the better. I wish this lesson was taught more in high schools.
Of course, there are always risks when it comes to the stock market.
Choosing the wrong stocks or following questionable investment strategies touted by non-professionals can lead to ruin.
Always do your homework before choosing which dividend stocks you want to invest in. Don’t simply rely on someone else’s recommendation.
Growth Through Compounding
Similar to investing in certificates of deposit (CDs), collecting regular dividends and re-investing them puts the financial miracle of compounding to work, as your “money makes money.”
Generally, you will want to buy share of stock in companies that are strong and are well-known for paying high-yield dividends.
Hopefully, the shares of stocks you own will increase in value over time, giving your portfolio additional value.
If you had invested $1,000 in Mastercard in 2009, by 2022 you could have accumulated over $25,000.
Warning: What You Need to Watch Out For
It’s always wise to take time to regularly review your stock portfolio. There are some things you’ll want to watch out for.
1. Dividends Can Be Cut
Just because a company offers their shareholders a dividend now, doesn’t mean they will continue to do so in the future.
Check the status of stocks you hold. If any stop offering dividends, you may wish to replace them with another company.
Of course, the stock dividend may have simply beed reduced. In that case, you may wish to keep it, but add another company to your list to make up the difference.
2. Are Dividend Stocks Taxed?
Yes, dividend stocks are subject to taxes. It can get quite complicated, so I highly recommend reading this article by Investopedia for a more comprehensive answer. Is Dividend Income Taxable?
How you are taxed is dependent upon whether the dividends are qualified or non-qualified.
Qualified Dividends: Those who make approximately $80,000 or less won’t have to pay tax on the dividends.
Those who fall between the 22% and 35% tax bracket will have to pay a tax rate of 15%.
Those who fall above the 35% tax bracket will be responsible to pay following the 20% tax rate.
Non-Qualified Dividends: These dividends are taxed at the same rate as the individual’s traditional income, which is based on the tax bracket you fall under.
Top Stocks That Pay Dividends for 2022
First, I need to point out again that we are not financial advisors. Do your own research or speak with a professional before making any investment decisions.
These top stocks that pay dividends for 2022 are stocks we suggest researching and considering for your portfolio.
1. Lowe’s (LOW)
Current Price: $195.45
Market Cap: 124.918 Billion
Ex-Dividend Date: July 19
Forward Dividend & Yield: 4.20 (2.14%)
2. Lumen Technologies Inc.
Current Price: $11.64
Market Cap: 12.025 Billion
Ex-Dividend Date: May 27
Forward Dividend & Yield 1.00 (8.46%)
3. Johnson & Johnson (JNJ)
Current Price: $176.42
Market Cap: 464.232 Billion
Ex-Dividend Date: May 23
Forward Dividend & Yield 4.52 (2.55%)
4. Starwood Property Trust, Inc.
Current Price: $23.53
Market Cap: 7.452 Billion
Ex-Dividend Date: March 30
Forward Dividend & Yield 1.92 (8.16%)
5. Walgreens Boots Alliance, Inc. (WBA)
Current Price: $43.14
Market Cap: 37.263 Billion
Ex-Dividend Date: June 30
Forward Dividend & Yield 1.91 (4.43%)
In Conclusion: What Stocks Pay Dividends
Investing in good companies with the purpose of having a stream of passive income is a wise decision.
This “buy and hold” strategy frees you from worrying about the day-to-day fluctuations in the stock market, though it is prudent to pay attention to the market in general in the event major changes take place.
In such cases, you may want to replace some stocks in your portfolio with others that are in different sectors or industries.
There’s no guarantee that a company will continue to pay dividends.
It might cut back on the amount paid or stop completely, which is why it is important to do your due diligence in researching companies you select for your dividend income portfolio, and to pay attention to them.
It is difficult for investors who do not have a lot of capital to become wealthy from dividends alone.
However, over time (especially good if you are young), collecting regular high-yield dividends will amass a tidy sum of money.
You can also regularly purchase more shares of great companies to build your portfolio.
Do you have a favorite Dividend Stock that you are currently watching? Let us know in the comments below!