4 Top Dividend Stocks for 2022

Dividends are a part of the net income that companies pay to their shareholders and are of great interest to investors. Dividends are paid by companies to send out signals to investors about a company’s future prospects. There are many companies who prefer not to pay dividends and instead reinvest their profits back into the business.

Using the TipRanks Stock Screener, let’s look at the Top Dividend Stocks for 2022. For this article, we have ignored dividend yield as a measure to pick out these stocks. It is because dividend yield, while an important ratio is also a dynamic measure. Dividend yield is a ratio of the annual dividends paid out by the company relative to its current share price.

Instead, we have looked at dividend-paying stocks that also have good growth prospects and which the analysts are bullish about.

Altria Group (NYSE: MO)

Altria has an expansive portfolio of tobacco products for tobacco consumers in the United States over the age of 21. The company also has equity stakes in Anheuser-Busch InBev (BUD), the brewer for famous brands like Budweiser, and Cronos Group, a Canadian cannabinoid company.

In Q3, the cigarette company’s revenues declined 4.7% year-over-year to $6.79 billion.

Billy Gifford, Altria’s CEO commented that its tobacco business still did well against a difficult comparison to last year. The CEO added that the company remained “encouraged by the significant retail share growth from on! [oral nicotine pouches] in the third quarter. We also continued to reward shareholders with a strong and growing dividend and announced today the expansion of our existing $2.0 billion share repurchase program to $3.5 billion.”

In Q3, Altria paid out $1.6 billion in dividends and announced a quarterly dividend of $0.90 per share payable on January 10, 2022 to shareholders of record as of December 23 with an ex-dividend date of December 22.

The company’s current annualized dividend rate is $3.60 per share, indicating a dividend yield of 7.5% as of October 25.

Even analysts are bullish about the stock. Stifel Nicolaus analyst Christopher Growe had reiterated a Buy and a price target of $56 (18.5% upside) on the stock last month.

The analyst stated, “We continue to see strong upside for the Altria shares as the underlying growth potential of the business (MSD [mid-single digits] earnings growth), the consistency of its annual earnings growth, the 8% dividend yield, and the optionality around the ABI stake ($12 billion) provide the support for this outlook.”

Besides Growe, other analysts are also upbeat about the stock with a Strong Buy consensus rating based on six Buys and two Holds. The average Altria Group stock prediction of $52.63 implies upside potential of 11.6% to current levels.

Chevron (NYSE: CVX)

Chevron, the oil giant, is another top pick on this list. The company reported the highest third-quarter earnings this year since Q1 of 2013. According to Mike Wirth, Chevron chairman and CEO, this growth was “largely due to improved market conditions, strong operational performance and a lower cost structure.”

The company also generated the best ever free cash flow of $7.1 billion during Q3, excluding working capital. Free cash flow is the cash generated by the company after accounting for cash outflows that support its operations.

Moreover, the oil giant paid dividends of $2.6 billion in Q3.

Earlier this month, Chevron announced a capital and exploratory budget of $15 billion for 2022, an increase of more than 20% from the expected levels in 2021. According to the press release, this program will support “Chevron’s objective of higher returns and lower carbon, including approximately $800 million in lower carbon spending.”

The company also raised its guidance for stock buybacks from $2 billion to $3 billion every year to between $3 billion and $5 billion.

Morgan Stanley analyst Devin McDermott commented on the share buyback, “We continue to see room for further increases in the buyback size at current commodity prices and assume a return to the pre-covid run-rate of $5 B annually by 2023.”

The analyst reiterated a Buy and a price target of $155 (32% upside) on the stock.

Other Wall Street analysts are also optimistic about Chevron’s growth prospects and have rated the stock a Strong Buy based on 14 Buys and three Holds. The average Chevron stock prediction of $135.06 implies upside potential of 15.2% to current levels.

Chevron also scores a “Perfect 10” when it comes to stock analysis on TipRanks. The TipRanks Smart Score system evaluates a stock based on eight different parameters including media and investor sentiment, analyst recommendations, and hedge fund activity.

Canadian Natural Resources (NYSE: CNQ)

Canadian Natural Resources is another oil and natural gas production company that has made it on this list. The company is engaged in the exploration, development, marketing, and production of crude oil, natural gas, and natural gas liquids (NGLs).

Last month, CNQ announced a quarterly cash dividend of C$0.5875 per share, a 25% rise in quarterly dividend where the dividend will be payable on January 5 next year to shareholders of record at close of business as on December 10.

This was the 22nd consecutive year of dividend rise for the company, indicating a dividend compounded annual growth rate (CAGR) of 20% over the past 22 years.

CNQ stated in its Q3 press release that shareholder returns were “significant” this year as it “has returned approximately $3.1 billion by way of dividends and share repurchases up to and including November 3, 2021,” indicating the durability of its business model.

Analysts are also upbeat about the stock with a Strong Buy consensus rating based on 11 Buys and three Holds. The average Canadian Natural Resources stock prediction of $48.46 implies upside potential of 14.9% to current levels.

Even the news sentiment regarding CNQ is very positive as indicated by the 100% bullish sentiment regarding the stock in the past week as compared to a sector average of 61% bullish.

Tourmaline Oil (OTC: TRMLF)

Tourmaline is a Canadian crude oil and natural gas exploration and production company engaged in the production, exploration, and development of crude oil in the Western Canadian Sedimentary Basin.

Earlier this month, the company declared a quarterly cash dividend of C$0.18 per share that will be payable today to shareholders of record as on December 15.

On October 7, Tourmaline paid a special dividend of $0.75 per share and increased the annual base dividend to $0.72 per share. The company stated that it “plans further special dividends over the next several quarters, contingent upon commodity prices and free cash flow allocation decisions.”

Moreover, Tourmaline added that considering the strong commodity prices and rate of accumulating free cash flows, it expects to pay the next special dividend during the first quarter of next year.

In Q3, the company delivered record free cash flows of $369.5 million. For FY 2022, the company expects to generate FCF of $2.8 billion on an exploration and production capital expenditure of $1.125 billion.

BMO Capital analyst Randy Ollenberger had pointed out in his research report around two months back that the company’s future FCF allocation strategy could see “growing cash returns to shareholders.”

The analyst was positive on the stock, rating it a Buy with a price target of $55. Besides Ollenberger, four other analysts are also bullish with a consensus rating of Strong Buy based on a unanimous five Buys.

The average Tourmaline stock prediction of $51.01 implies upside potential of 59.1% to current levels.

Tourmaline scores a of 9 out of 10 when it comes to stock analysis on TipRanks indicating that the stock could outperform the market.

Disclosure: At the time of publication, Shrilekha Pethe did not have a position in any of the securities mentioned in this article.