Dividends can be a great way to give your investment portfolio a boost of income, which is something many people are looking for during periods of high inflation and amid talk of a possible recession. Dividend stocks or dividend funds can help you earn regular passive income from some of the strongest companies in the economy.
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 you’re looking for ways to receive regular dividend payments, you generally have two options: stocks that pay dividends and funds that hold stocks that pay dividends. Here’s how each one works.
Investing in a dividend stock is no different than investing in any other stock. You’ll need a brokerage account, which can easily be set up through an online broker, in order to place a trade. Once your account is set up and funded, you can choose which dividend stocks to invest in. Your broker may even be able to help you identify stocks with large payouts through its research offering.
If you’re not quite sure which dividend stocks to choose, a dividend fund may be a better option for you. Mutual funds and exchange-traded funds (ETFs) focused on dividends hold a basket of stocks that pay dividends. Some of these funds focus on stocks with high dividend yields, while others look for companies that have consistently paid and grown their dividends over time.
By choosing a fund, you won’t have to worry about closely tracking the individual stocks in the portfolio because the fund’s diversification should shelter you from having too much exposure to a single stock.
All dividend and yield information is as of August 10, 2022.
1. JPMorgan Chase (JPM)
JPMorgan is one of the largest banks in the U.S. and is run by highly-respected CEO Jamie Dimon. The bank navigated the 2008 financial crisis better than most, and its stock has appreciated more than 5-fold since then, all while paying a sizable dividend to shareholders.
Dividend yield: 3.5 percent
Annual dividend: $4.00 per share
2. Exxon Mobil (XOM)
Exxon Mobil is the largest oil and gas company in the U.S. and can trace its roots back to John D. Rockefeller’s Standard Oil empire. In 2022, Exxon set a goal to reduce or offset greenhouse-gas emissions from its operations to zero by 2050 in response to pressure from investors and the public about the company’s role in climate change.
Dividend yield: 3.9 percent
Annual dividend: $3.52 per share
3. United Parcel Service (UPS)
UPS is known for its brown trucks that deliver millions of packages each day. The delivery-giant does business in more than 220 countries and has consistently shared profits with shareholders.
Dividend yield: 3.1 percent
Annual dividend: $6.08 per share
4. Verizon Communications (VZ)
Verizon is a leader in communication and technology services. Along with AT&T and T-Mobile, they provide the majority of mobile-phone services in the U.S. Verizon generated more than $130 billion in revenue in 2021.
Dividend yield: 5.8 percent
Annual dividend: $2.56 per share
5. AT&T (T)
AT&T is another telecommunications leader that generates solid cash flow for shareholders. Recently, the company has divested some assets and cut its dividend by nearly half as it focuses on 5G investments and paying down its heavy debt load.
Dividend yield: 6.1 percent
Annual dividend: $1.11 per share
6. Pfizer (PFE)
Pfizer is a pharmaceutical giant that researches and develops drugs to be used in the treatment of a variety of diseases and conditions. The company generated more than $80 billion in revenue in 2021 and paid out over $8.7 billion in cash dividends to shareholders.
Dividend yield: 3.2 percent
Annual dividend: $1.60 per share
7. Intel (INTC)
Intel is one of the leading semiconductor companies in the world, and its chips help to power much of the technology we use every day. The company plans to invest billions of dollars in new capacity as it tries to keep pace with rival chip-makers. Intel returned about 90 percent of its free cash flow to shareholders from 2015 to 2019.
Dividend yield: 4.1 percent
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 U.S. Though the company still generates significant profits from sales of tobacco-related products, it’s moving towards a greater focus on smoke-free products that, while not risk-free, present less of a health risk than cigarettes.
Dividend yield: 5.1 percent
Annual dividend: $5.00 per share
9. Chevron (CVX)
Chevron is a leading energy company that has outlined a plan it says will produce high returns for shareholders from its advantages in traditional energy such as oil and gas, and allow it to lead in the lower-carbon future. The company boasts about its strong balance sheet and history of returning cash to shareholders.
Dividend yield: 3.7 percent
Annual dividend: $5.68 per share
10. Cisco Systems (CSCO)
Cisco provides a variety of networking, security and cloud solutions and generated nearly $50 billion in revenue in 2021. The company is very profitable and has earned more than $15 billion in operating cash flow each of the past three years. Almost one-third of its cash flow was used for dividends in 2021.
Dividend yield: 3.4 percent
Annual dividend: $1.52 per share
Dividend stocks or funds can be a great way to earn additional income. Keep in mind that if you own these securities in a taxable brokerage account, you’ll need to pay taxes on the income you receive, even if you reinvest those dividends. If you want to avoid taxes, you’ll need to own the shares in a tax-advantaged account such as an IRA or 401(k).
Be sure to research any dividend stocks carefully before investing. Some companies with high payouts today may be forced to cut the payments if their business suffers.
Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.