A dividend in the stock market refers to the portion of profit given by the publicly listed companies to its shareholders. The dividend given by the companies is majorly in three forms: cash, shares of the company and cash equivalent. The dividend is a way in which the companies share their profits with the shareholders.
The board of the company is the central body that decides whether to distribute the profits by issuing dividends or use that capital for future expansion and growth. The stock values of the company change significantly after the announcement of dividends.
Dividend stocks deliver a fraction of the corporation’s profit to investors on a regular basis. A stock dividend is a payment to the respective shareholders of the company, which consists of additional shares of the same company rather than cash rewards. For example, if a company issues a stock dividend of 10%, then each shareholder would get a fraction of 0.10 per share. A shareholder having 100 shares would receive 10 additional shares.
A company can pay dividends both in form of cash or stocks depending upon the decision of the board. The stock dividends are generally paid to the shareholders when the company wants to preserve its cash reserves.
Investors generally look for high-dividend stocks to improve their passive income as dividends provide investors with immediate rewards. Following is a list of the highest dividend stocks of 2022:
1. Target (NYSE: TGT)
Target Corporation is a department store chain spread all across America, headquartered in Minneapolis, Minnesota. Target is considered the 4th largest retail brand in the United States of America. Target Corporation was formerly known as Dayton Hudson Corporation, now it has three main retail subparts: Target Stores, Marshall Field and Mervyn’s. The corporation has in total of 1556 stores spread across all of America.
The company was founded by George Draper Dayton in 1902 as Goodfellow Dry Goods. The company later changed its name to Dayton Corporation in 1911. After Dayton’s death, his son took over the business and created the world’s first fully enclosed shopping mall. The company introduced its first Target store in 1962 as a discount version of the Dayton Departmental Stores. The company expanded its departmental store operations by merging with the J.L. Hudson Company.
The company offered its first public offering in 1967. The Target departmental stores became the leading revenue producer for the Dayton-Hudson group. The net sales by the Trader stores had reached $1 billion by 1979. The business unveiled its first SuperTarget shop, In addition to a full-service grocery, a photography studio, and eateries were included in the stores.
Dayton-Hudson sold Mervyn’s and Marshall Field and Company in 2004 and changed its name to Target Corporation in 2000 to reflect a new emphasis on its Target locations. The main highlight of Target stores that distinguishes it from the competitors like Walmart, is that it provides upscaled products at affordable prices. The Target clothing line was a massive success because customers particularly liked collaborations with well-known fashion designers including Isaac Mizrahi, Zac Posen, and Jason Wu.
The company has around 4,50,000 employees and it is listed on the New York Pacific stock exchange. The current CEO and Chairman of the company are Brian Cornell. Major subsidiaries of the company include The Associated Merchandising Corporation and Dayton’s Commercial Interiors Inc. The company was able to produce revenue worth $106 Billion and has assets worth $53.8 Billion. The profits of the company during the year 2022 were $6.9 Billion. The dividends per share for Target are 3.78, and the dividend yield is 2.62%.
2. American Express (NYSE: AXP)
American Express is engaged in creating products related to credit cards and travel-related services. American Express was founded by Henry Wells, William G. Fargo and John Warren Butterfield in 1850. American Express is headquartered in New York. This company is involved in the list of most valuable companies in the world. It is also one of the 30 parts of Dow’s Industrial Average.
The company is considered the largest issuer of traveller’s cheques around the world. The company started in 1850 as an express mail dispatcher. American Express has pivoted to become a bank holding after the 2008 financial crisis in America. It also started airport lounges in 2013.
American Express is responsible for processing 22.9% of credit card transactions all across America, globally this transaction is more than $121.7 million. It has been featured in the Forbes list of Top 100 Companies to Work For. The company was able to produce revenue worth $46.3 Billion and has assets worth $196 Billion. The profits of the company during the year 2022 were $7.9 Billion. The P/E ratio of the company is 27.56. The dividends yield for American Express is 1.34%
3. Western Union (WU)
Western Union provides services related to payments and money transfers. Western Union also provides foreign exchange facilities to its customers. This company has around 10,500 employees and it is located in Denver, Colorado. The company was founded in 1851 and it is headquartered in Denver, Colorado. The current president and CEO of the Western Union is Devin McGranahan.
The company has a market cap worth $5.52 Billion. The dividends per share for Target are 0.94, and the dividend yield is 6.58%. The P/E ratio of the company is 6.76.
4. Microsoft (NASDAQ: MSFT)
Microsoft is a multinational corporation headquartered in Washington, America. The company produces computer software, computers and other consumer software. The company was founded by Bill Gates and Paul Allen in 1975 to build the necessary software for Altair 8800. Then, it entered the market of personal computers in the mid-1980s, after which the company introduced its not successful product MS-DOS.
The company went public in 1986 and monopolized the operating system market for a long time. In 2016, Microsoft made its biggest investment by acquiring LinkedIn for $26.2 billion, after Skype technologies for $8.5 billion in 2011.
The Chief Executing Officer of the company is Satya Nadella. The company was able to produce revenue worth $184.9 Billion and has assets worth $340.4 Billion. The profits of the company during the year 2022 were $71.2 Billion. The dividends per share for Microsoft are 2.54, and the dividend yield is 1.14%.
5. Lowe’s (NYSE: LOW)
The Lowe’s corporation is involved in selling home improvement products in retail. The Lowe’s corporation was founded in 1946 and it is currently headquartered in Mooresville, North Carolina, United States. The company is majorly active in the retail and wholesale sectors in the United States.
Lowe’s Corporation sells products for home remodelling in the following categories: windows, doors, lighting & fans, outdoor living, plumbing, flooring, hardware, paint, and appliances.
The company has around 300,000 employees. The Chief Executing Officer of the company is Marvin Ellison. The company was able to produce revenue worth $96.2 Billion and has assets worth $46.3 Billion. The profits of the company during the year 2022 were $8.4 Billion. The dividends per share for Lowe’s is 3.70, and the dividend yield is 1.98%.
6. Johnson & Johnson (NYSE: JNJ)
Johnson & Johnson is a multinational corporation founded in 1886, headquartered in New Jersey, United States of America. Johnson & Johnson researches and sells products related to healthcare and pharmaceuticals. Johnson & Johnson is a parent company with a lot of subsidiaries working in the healthcare industry.
There are 250 subsidiaries of the company and the production processes are spread around 60 countries. James Wood Johnson and Edward Mead Johnson started the company by creating a line of sterile surgical bandages in 1886.
Johnson & Johnson has around 140,000 employees. The Chief Executing Officer of the company is Joaquin Duato. The company was able to produce revenue worth $94.9 Billion and has assets worth $182 Billion. The profits of the company during the year 2022 were $19.8 Billion. The dividends per share for Johnson & Johnson are 4.38, and the dividend yield is 2.61%.
7. Walgreens Boots Alliance (NASDAQ: WBA)
Walgreens Boots Alliance is an American-British-Swiss holding company, The retail drugstore chains Walgreens and Boots, as well as a number of pharmaceutical production and distribution firms, are all owned by the Walgreens Boots Alliance. The company was founded in 1901 and it is headquartered in Deerfield, Illinois, United States of America. The company is majorly active in the retail and pharmaceutical industries.
Walgreens Boots Alliance has around 315,000 employees. The Chief Executing Officer of the company is Stefano Pessina. The company was able to produce revenue worth $135.9 Billion and has assets worth $92.7 Billion. The profits of the company during the year 2022 were $6.3 Billion. Dividends per share for Walgreens Boots Alliance is 1.92, and the dividend yield is 5.22%.
8. Realty Income (NYSE:O)
Realty income deals with real estate properties in America. The company is headquartered in San Diego, United States of America. The shares of the company can be traded on the New York stock exchange as it is a publicly listed company. This investment trust is one of the only companies in the real estate sector that pays dividends monthly and not quarterly. Realty Income owns around 11,288 properties around America.
Realty Income has around 384 employees. The Chief Executing Officer of the company is Sumit Roy. The company was able to produce revenue worth $2.1 Billion and has assets worth $43.1 Billion. The profits of the company during the year 2022 were $350.3 Million. The dividends per share for Realty Income is 2.95, and the dividend yield is 4.51%.
9. Clearway Energy (NYSE: CWEN.A)
Clearway Energy is a renewable energy production company located in America. Clearway Energy produces electrical energy with help of solar and wind electricity generation projects. The New York Stock Exchange trades the Class C and Class A common stocks of Clearway Energy, Inc. under the tickers CWEN and CWEN.A, respectively.
Clearway Energy has around 371 employees. The Chief Executing Officer of the company is Craig Cornelius. The company was able to produce revenue worth $1.24 Billion. The net margin of the company during the year 2022 was 45.32%. Dividends per share for Clearway Energy is 1.40.
10. Dow Inc. (DOW)
Dow Inc is a material science company. The company produces products of majorly four categories: plastics, performance materials, coatings and silicones and industrial intermediates. This company operates majorly in Latin America, Asia, Europe, America, the Middle East and Africa.
Dow Inc. has around 35,700 employees. The Chief Executing Officer of the company is Jim Fitterling. The company was able to produce revenue worth $58.4 Billion and has assets worth $63.3 Billion. The profits of the company during the year 2022 were $6.9 Billion. The dividends per share for Dow Inc. are 2.80, and the dividend yield is 4.77%.
11. Exxon Mobil Corp. (ticker: XOM)
Exxon Mobil Corp. is included in the list of world’s largest producers of gas and oil. Exxon Mobil Corp is also the largest company in the oil and Gas sector
to be traded publicly. The company was formed by the merger of Exxon and Mobile on November 30, 1999. The company is also involved in producing plastic, synthetic materials and chemical substances. The company serves worldwide but it is headquartered in New Jersey, America.
Exxon Mobil Corp. has around 63,000 employees. The Chief Executing Officer of the company is Darren W. Woods. The company was able to produce revenue worth $280.5 Billion and has assets worth $338.9 Billion. The profits of the company during the year 2022 were $23 Billion. The dividends per share for Exxon Mobil Corp is 3.52, and the dividend yield is 3.22%.
12. Canadian Imperial Bank of Commerce (CM)
Canadian Imperial Bank of Commerce is a multinational Bank headquartered in Toronto, Ontario. Canadian Imperial Bank of Commerce was formed as a result of a merger between The Canadian Bank of Commerce and The Imperial Bank of Canada. The company shares can be traded on the Toronto stock exchange and the New York stock exchange.
Canadian Imperial Bank of Commerce. has around 45,282 employees. The Chief Executing Officer of the company is Victor Dodig. The company was able to produce revenue worth $18.7 Billion and has assets worth $677.5 Billion. The profits of the company during the year 2022 were $5.3 Billion. The annual dividend yield given by the company to its shareholders is 5.42%.
13. Unilever PLC (UL)
Unilever PLC is a British multinational company producing products in the nutrition, hygiene and personal care segment. Unilever serves around 190 countries, and it is headquartered in London, England. The company was founded on 2 September 1929. The company shares are traded on New York Stock Exchange, Euronext Amsterdam and London Stock Exchange.
Unilever PLC has around 1,48,000 employees. The Chief Executing Officer of the company is Alan Jope. The company was able to produce revenue worth $62 Billion and has assets worth $85.4 Billion. The profits of the company during the year 2022 were $7.2 Billion. The dividends per share for Unilever PLC are 1.72.
14. Enterprise Products Partners LP (EPD)
Enterprise Products Partners is an American pipeline company headquartered in Houston, Texas. Enterprise Products Partners LP deals with Crude oil, refined products and certain petrochemicals. Enterprise Products Partners ranks 105 on the list of Fortune 500 companies (2018). The company has around 7000 employees. The shares of the company can be treated on the New York stock exchange.
The Chief Executing Officer of the company is W. Randall Fowler and A. James Teague. The market cap of the company during the year 2022 was $56.02 Billion. The dividends per share for Enterprise Products Partners LP is 1.88 and Dividend Yield is 7.38%.
15. Citigroup Inc. ©
Citigroup is an American multinational bank. Citigroup is engaged in the investment banking and financial services sector. The company was formed as a merger between financial giant Travelers Group and banking behemoth Citicorp in 1998.
Citigroup has around 223,400 employees. The Chief Executing Officer of the company is Jane Fraser. The company was able to produce revenue worth $79.9 Billion and has assets worth $2.4 Trillion. The profits of the company during the year 2022 were $18.2 Billion. The dividend yield for Citigroup is 4.09.
16. City Office REIT (CIO)
City Office REIT deals in the real estate sector, it is involved in acquiring and owning real estate properties and offices in metropolitan areas.
City Office REIT is an internally managed real estate corporation dedicated to buying, owning, and managing premium office buildings primarily in Sun Belt cities. The dividend per share for City Office REIT is $0.20.
17. Verizon Communications Inc. (VZ)
Verizon Communications Inc was formed in 1984 as Bell Atlantic as part of the breakup of the Bell System into seven corporations, each a Regional Bell Operating Company (RBOC), generally correlated as “Baby Bells”.
Verizon Communications Inc. has around 118,400 employees. The Chief Executing Officer of the company is Hans Vestberg. The company was able to produce revenue worth $134.3 Billion and has assets worth $366.6 Billion. The profits of the company during the year 2022 were $21.5 Billion. The dividends per share for Verizon Communications Inc. is 2.57, and the dividend yield is 6.24%.
18. Suncor Energy Inc. (SU)
Suncor Energy is a Canadian electrical energy company headquartered in Calgary, Alberta. Suncor energy’s area of expertise is the production of synthetic crude from oil sands.
Suncorr Energy Inc. has around 13,000 employees. The Chief Executing Officer of the company is Kris Smith. The company was able to produce revenue worth $31.2 Billion and has assets worth $66.3 Billion. The profits of the company during the year 2022 were $3.3 Billion. The dividends per share for Suncor Energy Inc. are 2.90, and the dividend yield is 1.95%.
19. Banco de Chile (BCH)
Banco de Chile is a bank and financial services provider in Chile, with headquarters in Santiago. Banco de Chile is a commercial bank that offers its customer base a variety of financial services. Banco de Chile has a nationwide network of 434 branches, 1,915 ATMs, and other electronic means of distribution as of December 31, 2012.
The Chief Executing Officer of the company is Arturo Quiroz. Banco de Chile was founded in 1893. The profits of the company during the year 2022 were $3.575 Billion. The dividend yield of Banco de Chile is 6.64%.
20. Intel Corp. (INTC)
Intel Corp is one of the largest producers of semiconductor chips used in various devices like smartphones, computers and watches etc. Intel Corp is headquartered in Santa Clara, California.
Intel Corp. has around 121,100 employees. The Chief Executing Officer of the company is Patrick Gelsinger. The company was able to produce revenue worth $79 Billion and has assets worth $168.4 Billion. The profits of the company during the year 2022 were $19.9 Billion. The dividends per share for Intel Corp. are 1.44, and the dividend yield is 4.85%.
What is a Dividend?
A dividend is a monetary or non-monetary reward given by publicly listed companies to their shareholders. These benefits are given as per the company’s profit in form of cash or shares. Depending upon the frequency of declaration, the following are four major types of dividends given by the companies:
Special Dividend
Special Dividend is paid on common stocks. A special dividend is frequently provided in a specific situation when a business has accrued large earnings over a number of years. These profits are typically seen as extra money that doesn’t need to be spent either now or anytime soon.
Preferred Dividend
A preferred Dividend is a kind of benefit granted to the holders of preferred stock and is typically paid every quarter in the form of a defined sum. Additionally, shares that behave more like bonds are used to earn this type of income.
Interim Dividend
The interim dividend is announced by companies before the preparation of the final full-year accounts. In the Indian context, the ‘year’ refers to the financial year, which is a time interval between April of one year and March of the following year.
Final Dividend
The final dividend is announced after the final account is disclosed by the company at the end of the year.
The overall intrinsic value of the venture is not affected by issuing dividends to the shareholders. When a company declares issuing dividends the share price increases in the stock market increases, but when the dividend eligibility expires the share prices also decline significantly.
The dividend is determined by using the dividend payout ratio, wherein, the annual dividend per share is divided by earnings per share. The dividend ratio can be expressed by using the below formula –
Dividend Payout Ratio = Dividends paid to the shareholders / Reported net income of the company
How to use Technical Analysis in Dividend Stocks?
Technical analysis is a trading strategy used to assess financial investments and spot trading opportunities in price movements and chart patterns. In order to achieve higher long-term returns, with immediate short-term rewards technical analysis is necessary as it helps in shortlisting high dividend stocks by using essential parameters.
Dividend payments are based on a number of variables, including a company’s debt level, cash flow, earnings, strategic plans, and the capital required to implement them, as well as its dividend history and dividend policy. The dividend payout ratio, dividend coverage ratio, free cash flow to equity, and net debt to EBITDA are the four most common ratios.
How to invest in Dividends?
Investing in dividends is necessary, a great investment plan should include dividend investing. Historically, less volatile dividend equities have beaten the S&P 500. This is due to the fact that dividend stocks offer two types of income: consistent dividend income and stock price growth. Over time, this overall return may increase. The following thing is necessary for Investing in Dividends:
- Demat account: This account stores the assets in the dematerialised form.
- Trading account: This account helps in buying or selling shares through mediums like NSE or BSE.
What are the benefits of Investing in Dividends?
Dividends remain an extraordinary investment incentive, with extra earnings made attainable to shareholders. Following are a few more benefits of dividends:
- The overall share price of the company increases after the announcement of dividends.
- Dividends are generally given by well-established organizations listed on the public stock exchange, this increases the faith of shareholders in the company
- Dividends can be given in various forms, so when the company wants to preserve cash reserves, it can distribute dividends in the form of shares also.
What are the risks of Investing in Dividends?
Following are some of the risks associated with investing in dividends:
- Rising interest rates can harm dividend stocks. Dividends lose appeal as interest rates rise in comparison to the risk-free rate of return provided by government assets.
- A company in trouble could have a high dividend yield. The yield may be high, given that the company’s shares have declined as a result of its financial difficulties and that it hasn’t yet reduced its dividend.
- Bonus shares issued by the company, lessen the share price in the stock market.
Is Dividend Investing a Good Investment Strategy?
Yes, dividend investing is a good Investment Strategy, because it provides an additional source of income to the shareholders of the company. This additional benefit is provided in two forms:
- Immediate Reward: Dividends given by the company act as short-term rewards for the roles of the company, and it is also an indicator that the company is performing well.
- Long-Term Reward: Dividend stocks, like all equities, have the potential to appreciate over the long run.
How do companies pay Dividends?
Companies pay dividends to distribute profits of the company to the shareholders. The board of the company is the central body, which takes decisions regarding dividends like dividend rate and form of a dividend. When the company earns profit, the corporation’s committee of directors approves a strategy to allocate those profits as a dividend.
The corporation discloses the amount, ex-dividend date, and when the dividend will be paid. Investors had to purchase the stock at least two days before the dividend payment’s official date. Investors will not be entitled to the dividend when they buy the stock after the ex-dividend date. Investors who sell their stock after the ex-dividend date are still eligible to collect the dividend.
Can a company pay a Dividend quarterly?
Yes, a company can pay a dividend quarterly. The frequency of dividend payments ranges from monthly to quarterly to semi-annual to annual. There may be no set schedule for payouts in some circumstances, and the business may also distribute extraordinary one-time dividends when it is experiencing exceptional profits. The payment could come in the form of more stock or cash.
Can a company pay a Dividend yearly?
Yes, a company can pay a dividend yearly. The decision regarding the time period of dividend payment is decided by the committee of directors. In some cases, there may be no fixed schedule for distributions, and when the company is making exceptional profits, it may also pay out unusual one-time dividends.
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