14 Best American Dividend Stocks to Buy Now
In this article, we take a look at 14 best American dividend stocks to buy now. If you want to see more best American dividend stocks to buy now, go directly to 5 Best American Dividend Stocks to Buy Now.
Dividend stocks pay a dividend. Although not always the case, most dividend stocks listed in the United States pay a quarterly dividend.
In addition to buybacks, dividends are a way for management to return excess capital back to shareholders. For those of you interested, check out 10 Stocks with the Biggest Buybacks.
When times are good, the profits of profitable companies could expand and management may decide to increase the dividend. When times are difficult, company profits could shrink or turn to losses and company management could decrease or even suspend the dividend.
The best dividend stocks are arguably stocks with competitive advantages and a fairly long history of profitability and annual dividend increases through multiple market cycles including challenging recessions. Those dividend stocks would ideally also have dividend growth potential given future earnings potential. Those stocks ideally would have decent balance sheets with enough free cash flow to cover the dividend across the market cycle.
For those of you interested, check out 10 High Growth Dividend Paying Stocks to Buy.
In this article, we define American dividend stocks as stocks of companies that pay dividends with headquarters in the United States and are listed on either the NYSE or the NASDAQ.
Given many American companies have operations overseas, many of the American companies with headquarters in the United States also have fairly substantial international revenues as well.
In terms of the American economy, the unemployment rate in the United States is low and the economy is still expanding. Inflation, however, has been higher than expected as the core personal consumption expenditures price index increased 0.6% in January and 4.7% from the previous year.
As a result of the higher inflation, there is potential for the Federal Reserve to raise interest rates further. Federal Reserve Bank of San Francisco President Mary Daly said Saturday, "It’s clear there is more work to do. In order to put this episode of high inflation behind us, further policy tightening, maintained for a longer time, will likely be necessary."
If the U.S. central bank raises interest rates too much further, the economy could slow or even enter into a recession. As a result, it could be a good idea for long term investors to own a well diversified portfolio of leading stocks across many different sectors.
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Methodology
For our list of 14 Best American Dividend Stocks to Buy Now, we chose 14 American stocks with competitive advantages that have dividend growth potential in the future.
We ranked each stock based on the number of hedge funds in our database of 943 funds that held shares in the same stock at the end of Q4.
14 Best American Dividend Stocks to Buy Now
14. T. Rowe Price Group, Inc. (NASDAQ:TROW)
Number of Hedge Fund Holders: 29
Dividend Yield as of 3/4: 4.30%
T. Rowe Price Group, Inc. (NASDAQ:TROW) is a leading investment manager that provides services to individuals, institutional investors, retirement plans and more. At the end of full year 2022, the company had assets under management of $1.27 trillion, giving it fairly substantial scale. In terms of capital returned, T. Rowe Price Group, Inc. (NASDAQ:TROW) returned $1.964 billion in capital to shareholders in 2022, with $855.3 million in share repurchases. As of 3/4, T. Rowe Price Group, Inc. (NASDAQ:TROW) has a dividend yield of 4.3% and the company has increased its annual dividend for 38 consecutive years.
13. Air Products & Chemicals, Inc. (NYSE:APD)
Number of Hedge Fund Holders: 41
Dividend Yield as of 3/4: 2.37%
Air Products & Chemicals, Inc. (NYSE:APD) is a leading provider of essential industrial gases and related equipment. In 2022, Air Products & Chemicals, Inc. (NYSE:APD) had sales of $12.699 billion, up 23% year over year, and adjusted diluted EPS was $10.41, up 15% year over year.
Given the strong results, Air Products & Chemicals, Inc. (NYSE:APD) declared an annual dividend of $6.36 per share, up from $5.84 per share in dividends declared in 2021. As a result of its dividend increases, Air Products & Chemicals, Inc. (NYSE:APD) has raised its annual dividend for 42 straight years. As of 3/4, the company has a dividend yield of 2.37%.
12. Automatic Data Processing (NASDAQ:ADP)
Number of Hedge Fund Holders: 49
Dividend Yield as of 3/4: 2.22%
Automatic Data Processing (NASDAQ:ADP) is a leading payroll company that has raised its annual dividend for 48 straight years given its past history of earnings growth. As a result, Automatic Data Processing (NASDAQ:ADP) has an annual dividend of $5 per share and a dividend yield of 2.22% as of 3/4. Despite the high inflation, the company's sales rose 9% year over year to $4.4 billion and its adjusted net earnings rose 17% year over year to $815 million.
Of the 943 hedge funds in our database, 49 owned shares of Automatic Data Processing (NASDAQ:ADP) at the end of Q4, ranking the stock #12 on our list of 14 Best American Dividend Stocks to Buy Now.
11. McDonald's Corporation (NYSE:MCD)
Number of Hedge Fund Holders: 57
Dividend Yield as of 3/4: 2.26%
McDonald's Corporation (NYSE:MCD) is a leading restaurant chain that has fairly strong free cash flow generation. McDonald's Corporation (NYSE:MCD) said in January 2023 during its Q4 2022 earnings call, "And finally, we expect to generate strong cash flow in 2023, enabling us once again to convert more than 90% of our net income to free cash flow. Going forward, our capital allocation priorities remain unchanged: first, to invest in new units and opportunities to grow the business along with reinvesting in existing restaurants; second, to continue growing our dividend; and third, to repurchase shares." Given its strong business, McDonald's Corporation (NYSE:MCD) has raised its annual dividend for 46 straight years.
10. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 66
Dividend Yield as of 3/4: 1.62%
Walmart Inc. (NYSE:WMT) is a leading retailer that generated $29.1 billion in operating cash flow and returned $16 billion to shareholders through dividends and share repurchases in its fiscal 2023 year. In the fourth quarter of fiscal 2023, Walmart Inc. (NYSE:WMT)'s total revenue rose 7.3% year over year to $164 billion and the company's adjusted EPS was $1.71. Currently, Walmart Inc. (NYSE:WMT) has a quarterly dividend of $0.57 per share and a 51 year history of consecutive annual dividend increases.
9. Lowe's Companies, Inc. (NYSE:LOW)
Number of Hedge Fund Holders: 68
Dividend Yield as of 3/4: 2.10%
Lowe's Companies, Inc. (NYSE:LOW) is a leading home improvement retailer that ranks #9 on our list of 14 Best American Dividend Stocks to Buy Now given 68 hedge funds in our database owned the stock at the end of Q4. In terms of its dividend, Lowe's Companies, Inc. (NYSE:LOW) has been a pretty consistent annual dividend raiser in the past half century given the company has increased its annual dividend for 49 straight years. In May 2022, Lowe's Companies, Inc. (NYSE:LOW)'s board of directors declared a quarterly cash dividend of $1.05 per share, a 31% increase over the previous quarterly dividend of $0.80 per share.
8. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 74
Dividend Yield as of 3/4: 2.59%
The Procter & Gamble Company (NYSE:PG) is a leading consumer staple whose overall demand has softened given the high inflation has caused some consumers to purchase lower cost alternatives. Nevertheless, The Procter & Gamble Company (NYSE:PG) remains a strong dividend stock given its balance sheet, earnings power, and dividend yield of 2.59% as of 3/4. For the second quarter of fiscal year 2023, The Procter & Gamble Company (NYSE:PG)'s net sales decreased 1% to $20.8 billion, and its core EPS decreased 4% to $1.59. Net earnings were $4 billion and the company returned $4.2 billion in cash to shareholders via around $2.2 billion in dividend payments and $2 billion in stock repurchases.
7. Goldman Sachs Group, Inc. (NYSE:GS)
Number of Hedge Fund Holders: 74
Dividend Yield as of 3/4: 2.80%
Goldman Sachs Group, Inc. (NYSE:GS) is a leading Wall Street bank that has lost a considerable amount of money trying to grow its consumer business in recent years. Given the losses, Goldman Sachs Group, Inc. (NYSE:GS) CEO David Solomon has said the firm is looking for potential 'strategic alternatives' for specialty lending and credit card partnerships. With less losses in that business, Goldman Sachs Group, Inc. (NYSE:GS) could potentially be more profitable in the long term, which would be good for its quarterly dividend of $2.50 per share. In 2022, the company returned $6.7 billion of capital back to shareholders, including $3.2 billion in common stock dividends and $3.5 billion in share repurchases.
6. Wells Fargo & Company (NYSE:WFC)
Number of Hedge Fund Holders: 87
Dividend Yield as of 3/4: 2.56%
Wells Fargo & Company (NYSE:WFC) is one of the big four American banks with considerable scale and a fairly attractive dividend given its quarterly dividend of $0.30 per share, which as of 3/4 is a dividend yield of 2.56%. By comparison, the company had diluted earnings per common share of $0.67 per share for the quarter ended December 31, 2022, giving management substantial flexibility in terms of how it plans to use its excess capital. If the bank's business grows in the long term, Wells Fargo & Company (NYSE:WFC)'s quarterly dividend will likely keep growing.
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Disclosure: None. 14 Best American Dividend Stocks to Buy Now is originally published on Insider Monkey.
