In this post, we will review seven stocks that offer both safe and growing dividend yields. We used several criteria. First, we examined the historical track record of paying and increasing dividends. Second, we assess the capacity for these companies to sustain their dividends. As you will see below, stocks in the banking industry dominate the list.
Methodology
See below the criteria’s used to select the best dividend stocks to buy now:
- At least 10 years of consecutive dividend increases;
- Low payout ratio;
- Minimum dividend yield of 2.5%;
- 1 Billion dollar minimum – Market capitalization;
- Great historical performance.
Best dividend stocks to buy – Dividend aristocrats 2022
Investing in dividend-paying stocks
Investing in dividend paying stocks is a strategy that appeals to young and old investors. Here is a quick reminder of the main concepts to keep in mind before applying this strategy:
Investment horizon: 5 years or more minimum. The strategy of investing in dividend paying stocks is not suitable for an investor with a short term horizon (less than 5 years).
Objective: The strategy can help you build passive income or further grow your capital by reinvesting the dividends received.
Risk Tolerance: Medium (provided you restrict yourself to selecting quality securities and having a diversified portfolio across several sectors).
Best dividend stocks to buy now for safety and growth
| Ticker / Name | Div Yield | Years of Dividend Increases |
| PRU -Prudential Financial | 3.95 | 13 |
| WASH -Washington Trust Bancorp, Inc. | 3.64 | 11 |
| PFG -Principal Financial Group Inc | 3.34 | 15 |
| BEN -Franklin Resources, Inc. | 3.32 | 42 |
| UGI -UGI Corp. | 3.01 | 34 |
| WEC -WEC Energy Group | 2.79 | 18 |
| KEY -Keycorp | 2.92 | 11 |
US Stocks that pay monthly dividends (Full list by sector)
PRU – Prudential Financial Inc.
Prudential Financial, Inc. is one of the world’s leading providers of financial services. The company offers a wide range of financial products and services. They are known for life insurance, retirement-related services, annuities, mutual funds, investment management and real estate services.
Prudential offers an attractive dividend yield of 3.95%. The payout ratio is low at 24.58%, which means it’s sustainable in the future. Some companies offer higher dividend yields but their payout ratio often exceeds 100%. This means that they are paying in dividends more than their reported income. Obviously, a high payout ratio means that sooner or later the company will have to make a cut. Furthermore, a company that distributes most of its reported income as dividends does not invest in its future.
The company increased its dividend every year in the past 13 years.
Prudential is a large cap with over 44 Billion dollars in assets. The stock is as volatile as the market with a Beta of 1.06. In addition to paying generous dividends, the stock performance was also attractive.
| Ticker | PRU |
| Name | Prudential Financial Inc. |
| Sector | Financial Services |
| Dividend Yield | 3.95 |
| Years of Dividend Increases | 13 |
| 1-Year Dividend Growth | 4.55% |
| 5-Year Dividend Growth (Annualized) | 8.92% |
| Market Cap ($M) | 44,006 |
| Payout Ratio | 24.58% |
| Beta | 1.06 |
| One Year Price Return | 48.37% |
| Two Year Price Return | 36.55% |
| Five Year Price Return | 32.64% |
WASH – Washington Trust Bancorp, Inc.
Washington Trust Bancorp, Inc. engages in the provision of financial services. It operates through the following segments:
- Commercial Banking ;
- Wealth Management Services.
The company was founded in 1984 and is headquartered in Westerly, RI.
Washington Trust offers an attractive dividend yield of 3.64%. The company increased its dividend every year in the past 11 years.
The payout ratio is low at 48.14%, which means it’s sustainable in the future. Some companies offer higher dividend yields but their payout ratio often exceeds 100%. This means that they are paying in dividends more than their reported income. Obviously, a high payout ratio means that sooner or later the company will have to make a cut. Furthermore, a company that distributes most of its reported income as dividends does not invest in its future.
WASH is a mid cap with over 1 Billion dollars in assets. The stock is less volatile than the market with a Beta of 0.80. In addition to paying generous dividends, the stock performance was also attractive.
| Ticker | WASH |
| Name | Washington Trust Bancorp, Inc. |
| Sector | Financial Services |
| Dividend Yield | 3.64% |
| Years of Dividend Increases | 11 |
| 1-Year Dividend Growth | 3.85% |
| 5-Year Dividend Growth Annualized | 7.28% |
| Market Cap ($M) | 1,032 |
| Payout Ratio | 48.14% |
| Beta | 0.80 |
| One Year Price Return | 31.30% |
| Two Year Price Return | 25.14% |
| Five Year Price Return | 36.24% |
PFG – Principal Financial Group Inc
Principal Financial Group, Inc. is a financial company. It specializes in retirement solutions, insurance, and investment products through its diverse family of financial services companies and national network of financial professionals.
Principal Financial offers a interesting dividend yield of 3.34%. The company increased its dividend every year in the past fifteen years!
The payout ratio is low at 38.65%, which means it’s sustainable in the future. Some companies offer higher dividend yields but their payout ratio often exceeds 100%. This means that they are paying in dividends more than their reported income. Obviously, a high payout ratio means that sooner or later the company will have to make a cut. Furthermore, a company that distributes most of its reported income as dividends does not invest in its future.
PFG is a large cap with over 20 Billion dollars in assets. The stock is more volatile than the market with a Beta of 1.26. In addition to paying generous dividends, the stock performance was very attractive. PFG had a price return of over 50% just in the past year.
| Ticker | PFG |
| Name | Principal Financial Group Inc |
| Sector | Financial Services |
| Dividend Yield | 3.34% |
| Years of Dividend Increases | 15 |
| 1-Year Dividend Growth | 14.29% |
| 5-Year Dividend Growth Annualized | 6.83% |
| Market Cap ($M) | 20,299 |
| Payout Ratio | 38.65% |
| Beta | 1.26 |
| One Year Price Return | 50.85% |
| Two Year Price Return | 49.09% |
| Five Year Price Return | 57.70% |
BEN – Franklin Resources, Inc.
Franklin Resources, Inc. is a publicly owned asset management holding company. Through its subsidiaries, the firm provides its services to individuals, institutions, pension plans, trusts, and partnerships.
Franklin Resources offers a interesting dividend yield of 3.32%. The company is a dividend aristocrat with a solid record of increasing its dividends (42 years in a row).
The payout ratio is low at 15%, which means it’s sustainable in the future. Some companies offer higher dividend yields but their payout ratio often exceeds 100%. This means that they are paying in dividends more than their reported income. Obviously, a high payout ratio means that sooner or later the company will have to make a cut. Furthermore, a company that distributes most of its reported income as dividends does not invest in its future.
BEN is a large cap with over 17 Billion dollars in assets. The stock is more volatile than the market with a Beta of 1.51. In addition to paying generous dividends, the stock performance was very attractive. BEN had a price return of over 36.86% just in the past year.
| Ticker | BEN |
| Name | Franklin Resources, Inc. |
| Sector | Financial Services |
| Dividend Yield | 3.32% |
| Years of Dividend Increases | 42 |
| 1-Year Dividend Growth | 3.57% |
| 5-Year Dividend Growth Annualized | 7.71% |
| Market Cap ($M) | 17,553 |
| Payout Ratio | 15.60% |
| Beta | 1.51 |
| One Year Price Return | 36.86% |
| Two Year Price Return | 49.68% |
| Five Year Price Return | 10.71% |
UGI – UGI Corp.
UGI Corp. operates as a holding company that engages in the distribution, storage, transport, and marketing of energy products and services. It operates through the following segments: AmeriGas Propane; UGI International; Midstream and Marketing; and UGI Utilities.
UGI offers a interesting dividend yield of 3.06%. The company is a dividend aristocrat with a solid record of increasing its dividends (34 years in a row).
The payout ratio is low at 9.7%, which means it’s sustainable in the future. Some companies offer higher dividend yields but their payout ratio often exceeds 100%. This means that they are paying in dividends more than their reported income. Obviously, a high payout ratio means that sooner or later the company will have to make a cut. Furthermore, a company that distributes most of its reported income as dividends does not invest in its future.
UGI is a large cap with over 9 Billion dollars in assets. The stock is less volatile than the market with a Beta of 0.60. In addition to paying generous dividends, the stock performance was very attractive. UGI had a price return of over 28.69% just in the past year.
| Ticker | UGI |
| Name | UGI Corp. |
| Sector | Utilities |
| Dividend Yield | 3.06% |
| Years of Dividend Increases | 34 |
| 1-Year Dividend Growth | 4.55% |
| 5-Year Dividend Growth Annualized | 7.75% |
| Market Cap ($M) | 9,584 |
| Payout Ratio | 9.76% |
| Beta | 0.60 |
| One Year Price Return | 28.69% |
| Two Year Price Return | 10.94% |
| Five Year Price Return | 13.17% |
WEC – WEC Energy Group Inc
WEC Energy Group, Inc. is a holding company, which engages in the generation and distribution of electricity and natural gas.
WEC offers a interesting dividend yield of 2.99%. The company has a solid record of increasing its dividends (18 years in a row).
The payout ratio is low at 64%, which means it’s sustainable in the future. Some companies offer higher dividend yields but their payout ratio often exceeds 100%. This means that they are paying in dividends more than their reported income. Obviously, a high payout ratio means that sooner or later the company will have to make a cut. Furthermore, a company that distributes most of its reported income as dividends does not invest in its future.
WEC is a large cap with over 9 Billion dollars in assets. The stock is less volatile than the market with a Beta of 0.14. In addition to paying generous dividends, the stock performance was very attractive. WEC had a price return of over 14% just in the past year.
| Ticker | WEC |
| Name | WEC Energy Group Inc |
| Sector | Utilities |
| Dividend Yield | 2.99% |
| Years of Dividend Increases | 18 |
| 1-Year Dividend Growth | 7.11% |
| 5-Year Dividend Growth Annualized | 5.43% |
| Market Cap ($M) | 30,685 |
| Payout Ratio | 64.43% |
| Beta | 0.14 |
| One Year Price Return | 14.06% |
| Two Year Price Return | 9.91% |
| Five Year Price Return | 92.91% |
KEY – Keycorp
KeyCorp operates as bank holding company, which engages in the provision of financial services. it provides a range of retail and commercial banking, commercial leasing, investment management, consumer finance, student loan refinancing, commercial mortgage servicing and special servicing, and investment banking products and services to individual, corporate, and institutional clients.
KEY offers a interesting dividend yield of 2.92%. The company has a solid record of increasing its dividends (11 years in a row).
The payout ratio is low at 29%, which means it’s sustainable in the future. Some companies offer higher dividend yields but their payout ratio often exceeds 100%. This means that they are paying in dividends more than their reported income. Obviously, a high payout ratio means that sooner or later the company will have to make a cut. Furthermore, a company that distributes most of its reported income as dividends does not invest in its future.
KEY is a large cap with over 24 Billion dollars in assets. The stock is more volatile than the market with a Beta of 1.15. In addition to paying generous dividends, the stock performance was very attractive. WEC had a price return of over 47% just in the past year.
| Ticker | KEY |
| Name | Keycorp |
| Sector | Financial Services |
| Dividend Yield | 2.92% |
| Years of Dividend Increases | 11 |
| 1-Year Dividend Growth | 5.41% |
| 5-Year Dividend Growth Annualized | 18.07% |
| Market Cap ($M) | 24,859 |
| Payout Ratio | 29.04% |
| Beta | 1.15 |
| One Year Price Return | 47.11% |
| Two Year Price Return | 49.64% |
| Five Year Price Return | 71.78% |
Reasons behind the strength of banking stocks
News of faster economic growth than anticipated seem to favor the banking sector. Here we need to distinguish between two trends: large Banks and small-mid regional banks.
Large banks benefited from:
- Trading: revenues are soaring from an exceptional year. Retail investors were abnormally active and trading much more than usual which increased commissions’ revenues for Banks;
- Releasing large sums of money that were held in reserves to hedge against expected loan losses due to pandemic. These losses never materialized.
Small and regional Banks
Regional banks did not benefit from the increase witnessed in trading activities or investment banking. See below some factors that are pushing some investors to be bullish:
- Loan growth should improve because most if not all covid-related support will cease in the second half of the year;
- Rising interest rates is usually favorable for both attracting new deposits and providing high yielding loans;
- Consumer spending is picking up and is expected to reach pre-pandemic levels before year end. This will benefit traditional baking segments;
- Mergers and acquisitions rumors’ surrounding some attractively valued US regional banks.