In this article, we discuss the 15 best income stocks to invest in. You can skip our detailed analysis of these stocks and the current market situation, and go directly to 5 Best Income Stocks To Invest In.
Stocks can be incredibly volatile, and 2022 has provided yet another reminder of that fact. With stocks and investors alike struggling, one can’t help but wonder what the best course of action would be to mitigate risks to their portfolios. Enter income stocks. One of the many investment strategies that investors can utilize, income investing is a strategy that focuses on building a portfolio that is carefully structured to generate a passive stream of regular income. According to research conducted by Hartford Funds, 84% of the total return of the S&P 500 Index can be attributed to reinvested dividends and compounding since 1960, till 2021. Additionally, stocks of companies that offered dividends returned 10.68% on average from 1978 to 2021. Incidentally, unlike others, income stocks not only weathered the pandemic risks but even soared afterward. Based on a report by the Janus Henderson Global Dividend Index, global dividend payments jumped by 14.7%, reaching a record $1.47 trillion in 2021. Furthermore, such payments are expected to reach $1.52 trillion in 2022, heralding an underlying growth of 5.7%.
Given the changing market environment, investors would do well to pick their income stocks carefully. It would also be wise to select stocks that have been known to constantly grow their dividend yield over the years, despite a bad economy. Some of these stocks include Chevron Corporation (NYSE:CVX), International Business Machines Corporation (NYSE:IBM), and Altria Group, Inc. (NYSE:MO), among others listed below.
For this list, we picked income stocks that look set to deliver shareholders stable returns for the year 2022. We focused on companies with solid business fundamentals and growth incentives. We also took into account company financials, most recent quarterly results, and the analyst and sentiment around these stocks.
The hedge fund sentiment around each stock was derived from Insider Monkey’s database which tracks 924 hedge funds as of the fourth quarter of 2021.
Best Income Stocks To Invest In
15. Chevron Corporation (NYSE:CVX)
Number of Hedge Fund Holders: 53
Dividend Yield (as of May 7): 3.33%
One of the successor companies of Standard Oil, Chevron Corporation (NYSE:CVX) is a California-based multinational energy corporation that is active in over 180 countries across the globe. Involved in the refining and marketing of crude oil products, the company also operates exploration and production facilities for oil and natural gas.
On February 15, Chevron Corporation (NYSE:CVX) declared a quarterly dividend of $1.42 per share. The dividend was distributed to shareholders of the company on March 10. Chevron Corporation (NYSE:CVX) delivers a dividend of 3.33% as of May 7.
On May 2, Credit Suisse analyst Manav Gupta raised the price target on Chevron Corporation (NYSE:CVX) to $190 from $180 following quarterly results. The analyst maintained an Outperform rating on the shares of the company.
Hedge fund sentiment around Chevron Corporation (NYSE:CVX) was extremely bullish at the end of the fourth quarter of 2021, as 53 hedge funds in the database of Insider Monkey held stakes worth $6.5 billion in the company, up from 51 in the preceding quarter worth $4.4 billion.
Much like Exxon Mobil Corporation (NYSE:XOM), International Business Machines Corporation (NYSE:IBM), and Altria Group, Inc. (NYSE:MO), Chevron Corporation (NYSE:CVX) is a decent income stock that investors should consider for their portfolios.
“The energy sector, which led a strong market in 2021, generated even more dramatic relative performance in the quarter, advancing 39% and leading the benchmark Russell 1000 Value Index. Years of restrained investment in the energy sector, combined with a strong post-pandemic recovery, contributed to the higher commodity prices. The upward pressure escalated with the Russian invasion of Ukraine. Our energy holding Chevron (NYSE:CVX) benefited from higher commodity prices and was among the top contributors to first-quarter performance.”
14. Suncor Energy Inc. (NYSE:SU)
Number of Hedge Fund Holders: 33
Dividend Yield (as of May 7): 3.52%
Suncor Energy Inc. (NYSE:SU) is a Canadian integrated energy company based in Calgary, Alberta, that specializes in the production of synthetic crude from oil sands. The company delivers a dividend yield of 3.52% as of May 7.
On February 2, Suncor Energy Inc. (NYSE:SU) declared a C$0.42 per share quarterly dividend, in line with the previous. The dividend was distributed to shareholders on March 25. Back in 2021, Suncor Energy Inc. (NYSE:SU) reported a full-year revenue of approximately $31 billion, compared to $19.3 billion in the previous year, while the company’s net income for the year stood at $3.25 billion.
On April 18, Scotiabank analyst Jason Bouvier raised the price target on Suncor Energy Inc. (NYSE:SU) to C$46 from C$45 and kept an Outperform rating on the shares of the company.
According to the fourth quarter database of Insider Monkey, 33 hedge funds held long positions in Suncor Energy Inc. (NYSE:SU), compared to 32 funds in the earlier quarter. The total stakes owned in Q4 amounted to $1.30 billion, up from $1.08 billion in the previous quarter. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital is the biggest shareholder in the company, with 9.3 million shares worth approximately $235 million.
“Also within the structural bucket, we added to our commodity exposure with the purchase of Suncor Energy (NYSE:SU). Suncor, a past holding, is a Canadian integrated oil company where we capitalized on attractive valuation due to a COVID-19-induced slowdown. We expect recovery in oil demand and strong pricing will result in faster than expected free cash flow growth and financial deleveraging.
The structural bucket has the shortest investment horizon across the spectrum of growth companies we target in the Strategy. We closely monitor the macro impacts and turnaround progress of these companies and will be disciplined sellers when the thesis for a holding plays out.”
13. AbbVie Inc. (NYSE:ABBV)
Number of Hedge Fund Holders: 82
Dividend Yield (as of May 7): 3.69%
AbbVie Inc. (NYSE:ABBV) is an American publicly-traded biopharmaceutical company that originated as a spin-off of Abbott Laboratories. A member of the S&P Dividend Aristocrats Index, the company is involved in the development, manufacture, and sales of pharmaceuticals worldwide.
On February 17, 2022, AbbVie Inc. (NYSE:ABBV) declared a quarterly cash dividend of $1.41 per share of its common stock, which is payable on May 16 to investors of record on April 15.
Earlier on April 29, AbbVie Inc. (NYSE:ABBV) released a report which detailed the company’s earnings for the fiscal first quarter of 2022. The company registered an EPS of $3.16, beating expert estimates by $0.02. Moreover, the company’s revenues grew 4.66% on a year-over-year basis, reaching $13.54 billion.
Morgan Stanley analyst Terence Flynn lowered the price target on AbbVie to $188 from $192 but maintained an Overweight rating on the shares on May 2. Although he made a few adjustments to his model, the analyst states that there is no change to his view on the company’s key growth drivers following the earnings report and he views recent weakness as a buying opportunity.
Out of the 924 elite hedge funds tracked by Insider Monkey in the fourth quarter of 2021, 82 were long AbbVie Inc. (NYSE:ABBV) with stakes worth $374.43 million, an increase from 81 funds in the preceding quarter. Of these, Warren Buffett’s Berkshire Hathaway was the top stakeholder, owning over 3 million shares worth roughly $410.7 million.
“While optimistic about a recovery, we continue to balance our cyclical holdings with dividend-payers in stable, less economically-sensitive industries. We hold three pharmaceutical companies, (which includes) AbbVie (ABBV). All three have strong cash flows and balance sheets, making their high dividends reasonably safe. The investment controversy surrounding these pharma companies is whether they can develop or acquire new products to replace their current blockbuster drugs. The low valuations on these stocks reflects what we believe to be undue pessimism by investors on the prospects for new drugs.”
12. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 71
Dividend Yield (as of May 7): 3.84%
Exxon Mobil Corporation (NYSE:XOM), stylized as ExxonMobil, is an American multinational oil and gas corporation headquartered in Irving, Texas. The company has consistently increased its dividend payouts for 39 years and delivers a dividend yield of 3.84% as of May 7.
On April 29, Exxon Mobil Corporation (NYSE:XOM) reported that its earnings per share for the fiscal first quarter of 2022 came to $2.07, falling short of EPS estimates by $0.16. On the other hand, the company’s quarterly revenues came in at $90.5 billion, an increase of 53.01% on a year-over-year basis, surpassing revenue estimates by $6.93 billion.
On May 2, Cowen analyst Jason Gabelman raised his price target on Exxon Mobil Corporation (NYSE:XOM) to $90 from $77 and kept a Market Perform rating on the shares following the company’s quarterly results.
Exxon Mobil Corporation (NYSE:XOM) is a popular stock pick among elite hedge funds, and by the end of Q4 2021, 71 hedge funds held long positions in the company worth roughly $5.38 billion, compared to 64 hedge funds in the previous quarter with stakes worth $4.64 billion. Rajiv Jain’s GQG Partners is the most prominent investor in Exxon Mobil Corporation (NYSE:XOM) with stakes worth approximately $2 billion in the company.
“Few companies maintain their position at the top for more than a decade or two. One that did was Exxon, which appeared decennially from 1980 through 2010. In 2019 it was ranked 10th, but as of writing has dropped to 39th place.”
11. Blackstone Inc. (NYSE:BX)
Number of Hedge Fund Holders: 62
Dividend Yield (as of May 7): 4.00%
Blackstone Inc. (NYSE:BX) is a financial services firm that invests in early-stage companies, real estate, corporate private equity, and other areas. The company delivers a dividend yield of 4.00% as of May 7. Additionally, Blackstone Inc. (NYSE:BX) declared on April 29 a $1.32 per share quarterly dividend, which was payable on May 9.
Earlier this April, Blackstone Inc. (NYSE:BX) reported that its earnings per share for the fiscal first quarter of 2022 were valued at $1.55, beating expert estimates by $0.50. Additionally, the company generated revenues of $3.50 billion, up 71.06% year over year, and outperformed market consensus by $988.17 million.
BMO Capital analyst James Fotheringham raised the price target on Blackstone Inc. (NYSE:BX) to $142 from $124 but maintained a Market Perform rating on the shares on April 22. According to the analyst, the company’s Q1 investment performance was “notably strong” and its Real Estate, Infrastructure, and Credit businesses appear well-positioned for a higher inflation/rate environment.
According to Insider Monkey’s database, 62 hedge funds held long positions in Blackstone Inc. (NYSE:BX) by the end of the fourth quarter of 2021. Of these, the majority stakes were held by Unio Capital, making it the most prominent investor in Blackstone Inc. (NYSE:BX), with stakes worth approximately $613 million in the company.
Similar to Chevron Corporation (NYSE:CVX), International Business Machines Corporation (NYSE:IBM), and Altria Group, Inc. (NYSE:MO), Blackstone Inc. (NYSE:BX) is an income stock with strong business fundamentals.
“Along these lines, funds affiliated with the Blackstone Group launched a takeover offer for one of the Fund’s holdings for the second time in the previous three quarters. In this case, the bid related to Preferred Apartment Communities, Inc. (NYSE:APTS)- a US-based Real Estate Investment Trust (“REIT”) that predominantly owns a portfolio of modern and well-located multi-family properties in the Sunbelt region as well as grocery-anchored retail properties across the same geographic footprint. While the Fund’s investment was only established in 2021, Blackstone’s (NYSE:BX) offer price represented a substantial premium to the Fund’s cost basis. The process undertaken by the Board to eliminate the disconnect between the company’s public and private market values also seemed robust.”
10. Realty Income Corporation (NYSE:O)
Number of Hedge Fund Holders: 30
Dividend Yield (as of April 7): 4.48%
Realty Income Corporation (NYSE:O) is a real estate investment trust that invests in free-standing, single-tenant commercial properties in the United States, Spain and the United Kingdom. One of the most prominent monthly dividend-paying stocks, it has grown its dividend payment to shareholders for 25 years in a row, with the company’s compound average annual dividend growth rate standing at approximately 4.4%. On April 12, Realty Income Corporation (NYSE:O) declared a $0.247 per share monthly dividend, which was in-line with the previous, and the firm’s dividend yield stood at 4.48% as of May 7.
The company posted strong financials for the first quarter of 2022. The EPS was reported to be at $1.01, beating estimates by $0.04. Additionally, the revenue came in at $807.34 million, an increase of 93.29% on a year-over-year basis, surpassing market predictions by $58.66 million. Wolfe Research analyst Andrew Rosivach upgraded Realty Income Corporation (NYSE:O) to Outperform from Peer Perform on March 15.
Based on Insider Monkey’s Q4 database, 30 hedge funds were bullish on Realty Income Corporation (NYSE:O), up from 22 funds in the preceding quarter. The total stakes held in Q4 2021 amounted to approximately $399 million. Matthew Barrett’s Glendon Capital Management is the largest shareholder of the company, with a position worth roughly $133 million.
9. Gilead Sciences, Inc. (NASDAQ:GILD)
Number of Hedge Fund Holders: 54
Dividend Yield (as of May 7): 4.73%
Gilead Sciences, Inc. (NASDAQ:GILD) is an American biopharmaceutical company headquartered in Foster City, California, that focuses on researching and developing antiviral drugs used in the treatment of HIV/AIDS, hepatitis B, hepatitis C, and influenza. The company’s dividend yield on May 7 came in at 4.73%.
On April 27, Gilead Sciences, Inc. (NASDAQ:GILD) declared a $0.73 per share quarterly dividend, the same as the previous amount. The dividend will be distributed to shareholders of the company on June 29.
Piper Sandler analyst Do Kim raised the price target on Gilead Sciences, Inc. (NASDAQ:GILD) to $73 from $72 and maintained a Neutral rating on its shares on April 29. According to the analyst, the company reported Q1 revenue and earnings that beat consensus estimates, driven by higher Veklury sales and lower costs. He also expects pipeline updates to primarily drive the shares going forward.
Based on Insider Monkey’s Q4 data, Gilead Sciences, Inc. (NASDAQ:GILD) was found in the public stock portfolios of 54 hedge funds, with collectively held stakes worth $2.36 billion. Jim Simons’ Renaissance Technologies is one of the most notable position holders in the company, with more than 9 million shares valued at $659.4 million.
“Other pharma companies are providing solutions as well. Biopharmaceutical company Gilead Sciences’ remdesivir, sold under the brand name Veklury, is a broad-spectrum antiviral medication administered by intravenous infusion; it can shorten the time to recovery in hospitalized patients and reduce the risk of hospitalization and death in non-hospitalized patients.”
8. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 44
Dividend Yield (as of May 7): 4.79%
International Business Machines Corporation (NYSE:IBM) is an American multinational technology corporation that provides technology integrated solutions and services worldwide. One of the highest yielding technology dividend stocks from the S&P 500 list, the company has four core business segments – Software, Consulting, Infrastructure, and Financing.
International Business Machines Corporation (NYSE:IBM) recently declared a $1.65 per share quarterly dividend, a 0.6% increase from its prior dividend of $1.64. The dividend is payable on June 10, to shareholders of the company as of May 10. The company’s dividend yield as of May 7 stood at 4.79%.
On April 19, International Business Machines Corporation (NYSE:IBM) reported earnings for the first quarter of 2022, posting an EPS of $1.40, beating market consensus by $0.01. The Q1 revenue came in at $14.20 billion, outperforming analysts’ estimates by approximately $353 million.
Earlier this April, BofA analyst Wamsi Mohan raised the price target on International Business Machines Corporation (NYSE:IBM) to $165 from $162 and kept a Buy rating on the shares after the company reported a “solid” set of quarterly results and gave a “strong” outlook for 2022. The analyst believes that the company has made significant progress, with its portfolio being defensive and able to outperform in a difficult macro environment. Furthermore, he expects sustained revenue growth beyond 2022.
Among the hedge funds tracked by Insider Monkey, 44 funds reported owning stakes in International Business Machines Corporation (NYSE:IBM) at the end of December 2021, compared to 41 funds in the preceding quarter. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital held one of the leading positions in the company, with 3.2 million shares worth $440.5 million.
Here is what St. James Investment Company has to say about International Business Machines Corporation in its Q4 2021 investor letter:
“IBM was not the first company to build computers. The distinction belongs to Sperry-Rand’s subsidiary UNIVAC, which introduced the first commercially successful computers in the early 1950s. In this era, IBM did possess the largest research and development department of the business machines industry and quickly caught up, introducing cost-competitive computers a few years after UNIVAC. By the late 1950s, IBM held the dominant market share in computers. IBM also touted a vastly superior sales organization, which used a sales tactic called “paper machines” (the equivalent of today’s “vaporware”). If a competitor’s product was selling well in a market segment that IBM had yet to penetrate, the company would announce a competing product and start taking orders for the “paper machine” long before it was available.
One cannot overstate how powerful IBM was in the computer industry in the 1950s and 1960s. Every competitor rightly worried that if their product worked too well for too long, it was only a matter of time before an army of IBM salesforce representatives mobilized. In their easily recognizable uniforms of starched white shirts, red ties, and blue suits, IBM marketers marched on their customers and offered a more expensive, but much more defensible, choice. “Nobody gets fired for buying IBM” was a common phrase. Even competitors acknowledged that the company excelled at sales. As a UNIVAC executive once complained, ‘It doesn’t do much good to build a better mousetrap if the other guy selling mousetraps has five times as many salesmen.’” (Click here to see the full text)
7. Philip Morris International Inc. (NYSE:PM)
Number of Hedge Fund Holders: 47
Dividend Yield (as of May 7): 5.01%
Philip Morris International Inc. (NYSE:PM) is a Swiss-American multinational cigarette and tobacco manufacturing company, with products sold in over 180 countries. As of May 7, Philip Morris International Inc. (NYSE:PM)’s dividend yield stood at 5.01%.
Philip Morris International Inc. (NYSE:PM) posted above expected earnings for the first quarter of 2022 on April 21 with an EPS of $1.56, crossing market estimates by $0.07. The $7.75 billion revenue grew 2.12% on a year-over-year basis, exceeding analysts’ predictions by $315.53 million.
On April 24, BofA analyst Lisa Lewandowski raised her price target on Philip Morris International Inc. (NYSE:PM) to $117 from $107 and maintained a Buy rating on the shares of the company. Despite challenges in 2022, the analyst expects Philip Morris International Inc. (NYSE:PM) to pivot its focus to other high potential markets and work through the temporary cost pressures of shifting production away from Russia. Additionally, the analyst likes its attractive yield, strategy to shift smokers to higher margin, and less harmful smoking alternatives.
Among the hedge funds tracked by Insider Monkey in Q4 2021, 47 funds reported owning stakes in Philip Morris International Inc. (NYSE:PM) worth $6.1 billion, compared to 48 funds in the prior quarter, holding stakes in the company valued at $5.9 billion. Terry Smith’s Fundsmith LLP is the biggest position holder in Philip Morris International Inc. (NYSE:PM), with 20.4 million shares worth $1.94 billion.
Broyhill Asset Management mentioned Philip Morris International Inc. (NYSE:PM) in its Q2 2021 investor letter. Here is what the firm had to say:
“Philip Morris (PM) shook off the prospects of a ban on menthol and a potential cap on nicotine and gained 23%. We shared our thoughts on these regulations during the quarter, which are available here.
‘PM Valuation. PM is up ~ 15% YTD and would have the most to gain under a nicotine cap. A cap would likely accelerate conversion to iQOS, which is 100% incremental for PM (PM also has zero exposure to combustible cigarettes in the U.S. and licenses its IQOS product for MO to distribute domestically). As such, the decline in PM was much more muted, with the stock hitting new 52 week highs a day after the Biden headline, driven by yesterday’s earnings release. It didn’t take long for investors to shift their attention back to fundamentals and the fundamentals here are best in class. In short, results beat estimates across the board (a recurring theme here), and management raised guidance for the full year (another recurring theme). IQOS continued to deliver impressive growth, recording continued market share gains on the heels of continued user acquisition growth, up 1.5M to 19.1M total users. Importantly, IQOS now represents nearly 30% of PM net revenues (management expects “smoke-free” products to represent more than half of their business by 2025, which should make the ESG folks happy), which is driving top-line growth and margin expansion. Hard to believe that they have created a product with higher margins than combustible cigarettes!! We expect PM operating margins to increase by 100bps – 200bps annually as IQOS continues to gain share. The stock trades at ~ 15x today or 2/3 of the market’s multiple for a business likely to generate $35B in cash flow – or 25% of the market cap – in just the next three years. Over the last decade, shares have traded at an average multiple of 18x and within a range of ~ 14x – 22x (+/-1 standard deviation). The stock yields 5.1% at the current price, and we expect management to resume share purchases in the back half of this year.’”
6. AT&T Inc. (NYSE:T)
Number of Hedge Fund Holders: 70
Dividend Yield (as of May 7): 5.68%
The world’s largest telecommunications company and the largest provider of mobile telephone services in the United States, AT&T Inc. (NYSE:T) is an American multinational telecommunications holding company based in Dallas, Texas, that offers wireless voice and data plans, cloud solutions, different kinds of telephony services, and cloud solutions.
Goldman Sachs analyst Brett Feldman reinstated coverage of AT&T Inc. (NYSE:T) with a Buy rating and a $23 price target, which represents a 23.5% potential total return on April 25. According to the analyst’s notes, the company’s communications-focused business model and adjusted capital allocation priorities following its recently completed asset sales and spin-off of WarnerMedia better positions it to invest in the core growth opportunities of fiber and 5G, and “sustain more durable trends” in revenues and adjusted earnings.
AT&T Inc. (NYSE:T) reported earnings for Q1 2022 on April 21, posting an EPS of $0.77, above market estimates by $0.08. The $38.11 billion revenue also outperformed Street consensus estimates by $8.68 billion. Shares of the company rose after these results surpassed expectations, with the latest performance being partly attributed to the aggressive expansion of its 5G services.
According to Insider Monkey’s database, AT&T Inc. (NYSE:T) was spotted on 70 investment portfolios by the end of the fourth quarter of 2021. The total stakes of these funds in the company amounted to approximately $4.9 billion, up from $3.2 billion in the previous quarter with 66 positions. As of December 31, Ken Griffin’s Citadel Investment Group is the largest stakeholder in AT&T Inc. (NYSE:T), with stakes valued at $1 billion.
In addition to Chevron Corporation (NYSE:CVX), International Business Machines Corporation (NYSE:IBM), and Altria Group, Inc. (NYSE:MO), AT&T Inc. (NYSE:T) is one of the best income stocks to buy right now.
Here is what Weitz Investment Management Hickory Fund has to say about AT&T Inc. (NYSE:T) in its Q4 2021 investor letter:
“After several quarters of pandemic-induced outsized growth, new broadband connection growth has slowed for U.S. cable operators. This slower growth has coincided with a renewed push by competitors like Verizon and AT&T to offer high-speed data (either via wireless connects or by building new fiber-optic networks).”
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Disclosure. None. 15 Best Income Stocks To Invest In is originally published on Insider Monkey.