This article will give you seven of the most popular dividend stocks ranked from the largest market cap to the smallest. Dividend stocks have a place in every investor’s portfolio. Income investors obviously benefit from a reliable, and repeatable, stream of income that can supplement their regular income. Meanwhile, growth investors, who don’t need the income right now, can reinvest the dividends to boost the total return for their investments.
Some of the criteria I used to define these popular dividend stocks were (1) The company is in a defensive sector, which tends to make these stocks low beta stocks which means they’ll be less volatile than the broader market; (2) They have a reliable history of increasing dividends; (3) They have a dividend yield that is equal to or greater than other stocks in their sector.
No matter what your investment style is, the regular payments you get from dividend stocks can have a significant benefit to your standard of living and/or the growth of your portfolio. Consider these seven popular dividend stocks as you review your watchlist.
|EPD||Enterprise Products Partners||$24.69|
AbbVie (NYSE:ABBV) leads off this list of popular dividend stocks. With a market cap of $258 billion, the company operates in the pharmaceutical space. with some analysts believing AbbVie could be the largest company in the sector by 2028.
To be one of the leaders in this sector requires a stable of commercially available drugs that are capturing market share. You also need a pipeline that can ensure that revenue is not threatened. AbbVie has both. In recent quarters, the company has shown investors that its recent launch of Skyrizi and RINVOQ will help offset the loss of patent protection on its blockbuster drug Humira.
ABBV stock has rewarded investors with 66% stock price growth in the last five years. In addition, the company recently joined the ranks of dividend kings when it increased its dividend for the 50th consecutive year. That dividend has a yield of 3.67% which is slightly below the sector average of 4.25%.
With a $261 billion market cap, Coca-Cola (NYSE:KO) counts Warren Buffett among its loyal shareholders. One reason that Buffett likes the company is that he looks for companies that have strong brand names that create brand loyalty and pricing power. The KO stock fits that plan very nicely. If you’re looking for stock price growth, Coca-Cola has delivered a 29% gain in the last five years. That’s not bad for a stock that has a beta of 0.57. And the gains are even better when you count the company’s dividend.
Coca-Cola is a dividend king, a group of stocks reserved for companies that have increased their dividends for at least 50 consecutive years. Coke has managed the feat for 60 years. It currently has a dividend yield of 2.96% which is above its sector average. Plus, it’s been growing the dividend at a rate of 2.50% for the last three years.
With a $200.8 billion market cap, McDonald’s (NYSE:MCD) is a solid addition to this list of popular dividend stocks ranked from biggest to smallest. Not that it needed to, but McDonald’s proved its role as an “essential” company during the Covid-19 pandemic. But the seeds of that performance were sown in the prior years when the company made a significant investment in its digital presence. That investment continues to pay off today. The low beta 0.59 stock is up 60% in the last five years. The company’s 2.50% dividend yield comes in slightly above the sector average of 2.37%.
And the company is a Dividend Aristocrat. This group of stocks is just below the dividend kings and includes companies that have increased their dividends for at least 25 consecutive years. McDonald’s has increased its dividend for the last 45 years and has increased its dividend at a 7.8% clip over the last three years.
Lockheed Martin (LMT)
Lockheed Martin (NYSE:LMT) is one of the most well-known stocks in the defense and aerospace sector. With a $127 billion market cap, it comes in at number three on this list of popular dividend stocks ranked from largest to smallest.
The current argument for LMT stock is that defense stocks are likely to benefit from what is looking more likely to be a Republican congress. Whether the Republicans grab one or both chambers doesn’t really matter. Either option is likely to be good for defense stocks.
The stock is up 53% in the past five years and carries a P/E ratio of 22x, which is slightly below the sector average of 27x. That growth also comes with a dividend that the company has increased 8.9% over the last three years. The current yield of 2.59% is well above the sector average of 1.33%. Better, the company has increased its dividend in each of the last 19 years.
Another Warren Buffett stock that makes this list is Citigroup (NYSE:C). The bank is one of Berkshire Hathaway’s recent additions. But it’s fair to say that Buffett has jumped in with both feet.
As Ian Bezek wrote for InvestorPlace, a key reason for that may be the company’s cheap valuation. Shares of C stock are trading for just 6x earnings. When you combine that with a 4.5% dividend yield, investors can’t be blamed for thinking the bank that was “too big to fail” is now “too cheap to ignore.”
The bank also stands to benefit from rising interest rates in one key defensive way. That is, the bank has less exposure to consumer loans. Therefore, it’s less exposed to the default risk that comes when interest rates are on the rise. In the second quarter of 2022, Citigroup’s net interest margin (the spread between the interest a bank earns on loans and investments) and the average rate it pays to depositors increased by 19 basis points from 2.05% to 2.24%.
Enterprise Products Partners (EPD)
You may have expected to find an energy stock on this list well before now. But never fear, Enterprise Products Partners (NYSE:EPD) is here to represent that sector. Enterprise Products Partners isn’t a driller, it’s a pipeline operator. And as Josh Enomoto wrote, that gives the company many sources of revenue.
Of all the dividend stocks ranked on this list, EPD is the one that shows the lowest stock price growth. In fact, shareholders have basically nothing to show for owning the stock in terms of stock price appreciation. That’s due largely due to the fact that Enterprise Products Partners is a master limited partnership (MLP).
But the company more than makes up for it with a dividend that has a yield of close to 8%. There are times when dividend yield can be misleading. But that’s not the case here. Because it’s an MLP, the company is incentivized to pass along a healthy portion of its profits as a dividend. And that doesn’t change regardless of what’s happening in the economy.
General Mills (GIS)
Last on this list and checking in with a market cap of $48.3 billion is another popular dividend stock, General Mills (NYSE:GIS). The company makes some of the most iconic names in the packaged goods space. The company’s pricing power is evident in its 15% margins that are better than 95% of related companies.
GIS stock is up 54% in the last five years. And investors who are buying and holding the stock get that return with significantly less volatility that you would expect from a stock that has a beta of just 0.32. The company has a dividend yield of 2.76%. That’s slightly below the 2.88% average of the consumer staples sector. While the company does not have a long history of increasing its dividend in consecutive years, it has consistently paid a dividend and has rewarded shareholders with regular dividend increases.
The company has a P/E ratio of around 16.8x that puts it slightly below the sector average.
On the date of publication, Chris Markoch had a LONG position in MCD stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.