I’ve always believed that if you’re going to invest your money in a company, there should be more than one logical reason to do so. While some investors focus on making their money from share price increases, others tend to prefer the passive income that high dividend stocks offer. I don’t see any reason why we shouldn’t have the best of both worlds, so today I present my list of the best dividend stocks of 2021. (Note, companies can alter their dividend at any time and I’ll do my best to keep this content fresh and accurate.)
High Dividend Yield Stocks
So when I’m looking for dividend stocks that I feel are worth investing in, I’m normally looking for both a decent dividend rate and the potential to see upswings in a stock’s overall value. With that said, I’ve put together the following list of what I feel are currently the best dividend stocks on the market based on multiple indicators.
Target Corp. (TGT)
As a company that just about every American is familiar with, Target is a dividend stock that offers a certain amount of blue-chip stability. Although Target’s dividend is currently only yielding a modest 1.6%, it’s actually quite impressive when you combine this with its 37% rise in share price value over the last trailing 12 months.
While the general market naturally rebounded from the effects of the 2020 COVID-19 selloff, Target didn’t simply rebound based on investor enthusiasm, it doubled its profits.
Considering that the company has been making strides into online digital markets to compete with some of the internet’s e-commerce giants, TGT is a high-performing dividend stock that’s positioned to do well in 2021 and beyond.
This packaging container company is one that I’ve had my eye on for quite some time. What caught my attention first was its generous dividend yield, which is currently at 3.7%.
As I analyzed the company and looked at its positioning within the market, I found that it’s set to reap the benefits of a recovering world economy, as its focus is on providing industrial shipping supplies to a wide range of different industries.
This is one reason why analysts have estimated total earnings per share (EPS) increases for the stock of 50% within five years. On top of this, Grief’s stock has returned 7.6% for investors since its last earnings update.
If I didn’t include AbbVie’s stock on a list like this, I’d have to be crazy. This pharmaceutical titan, which made headlines last year for acquiring Botox-maker Allergan, is currently offering an exciting 4.85% dividend yield. When you pair this with its 23% share gains over the past year, it’s easy to see why many investors are raving about this stock.
AbbVie is responsible for the drug Humira, which generates billions in revenue for the company each year as the best-selling drug worldwide. Because Humira is capable of treating many different health conditions, its potential to be repurposed for new diseases means unlimited potential for the company going forward.
JPMorgan Chase & Co. (JPM)
Of all the banks that were affected by the COVID-19 selloff last year, JPMorgan Chase is the one that I currently see the most value in. Directly after the crash, this bank stock outperformed analyst estimates by 39%.
Its forward dividend, which is now yielding 2.65%, is attractive enough on its own, but I consider it to be more of a bonus when adding it to the outstanding 46% share price runup that occurred in the last four months of 2020.
Interest rates last year were some of the lowest on record, which is why banks like JPMorgan Chase are likely to see major rebounds once the economy improves and the rates are adjusted closer to their previous levels.
Johnson & Johnson (JNJ)
While Johnson & Johnson’s dividend is a bit timid at a 2.52% yield, I’ve included it on this list for many reasons. The company is considered to be a very safe investment, thanks to its ability to diversify its product lines.
As a pharmaceutical giant, the company’s drug Remicade, which is used in the treatment of Crohn’s disease and ulcerative colitis, typically brings in over $4 billion per year in sales.
The company’s medical device and consumer products segments both separately generate more than twice that amount each year. The company’s share price increase of 9.84% over the past 12 months is quite nice considering that it comes with relative safety and a decent dividend.
Iron Mountain (IRM)
Iron Mountain is a company that has dominated the paper storage industry for over four decades now. Many corporate companies use Iron Mountain’s services to store their documents and paperwork.
The company’s dividend yield currently stands at 8.67%, but this isn’t the only reason I’ve included them on this list. The company is making big moves to transition to digital storage services now, so there’s a lot of upside to this company.
Also, as a REIT (Real Estate Investment Trust), Iron Mountain is exempt from paying corporate taxes in exchange for distributing 90% of their taxable income to investors. This is why the company has a whopping payout ratio of 537.83%.
When most people think of blue-chip stocks, PepsiCo is normally on most investors’ shortlists. It’s a stable company with a market cap of just over 204 billion. Its dividend is presently yielding 2.84%, which might not seem like much after I mention that its share price over the trailing 12 months only increased by 5.6%.
However, it’s important to point out that The Coca-Cola Company (KO), PepsiCo’s most formidable rival, saw a 9% loss in share value over that same period. As large as PepsiCo already is, it still manages to find inroads and expand year after year to outpace its competition.
Discover Financial Services (DFS)
While 2020 was a rough year for many financial companies due to retail business closures, Discover Financial Services still had a stellar year. This international credit card company consistently makes it onto different lists of mine because of its performance, which is normally matched with a decent dividend.
While the S&P 500 averaged about 16% annually for 2020, DFS beat this with a 17% increase for the year. Few companies perform this well and still offer the 2.21% dividend that Discover’s stock is currently offering.
Of the four major credit card companies (Visa, Discover, American Express, and Mastercard), Discover is the smallest out of the group which means more space for the company to expand and steal market share from its competitors.
Cisco Systems, Inc. (CSCO)
Cisco has proven over the years to be a rock-solid tech company. It’s one of only a handful of tech companies to survive the dot-com crash while maintaining its dominance within the industry ever since.
This telecommunication equipment giant yields a dividend of 3.2% and has an overall profit margin of just over 21%. While the company suffered some share losses to the tune of 6.07% this past year, this is mostly because of how the pandemic affected businesses that use the company’s equipment.
As more businesses continue to reopen this year, CSCO’s overall share value has major upside potential, which would make its generous dividend simply icing on a cake.
Mondelez International (MDLZ)
Mondelez is a food giant that owns many popular food brands and has over $4.40 billion in free cash flow. Oreo, Chips Ahoy!, Cadbury, Clorets, Honey Maid, Halls, and Ritz are just some of the brands that call Mondelez home.
In addition to the 2.17% dividend yield that this company is currently shelling out, its diversification across many different stable brands is why I feel that it’s one of the best dividend stocks for this year.
When pandemic lockdowns first went into place in many countries last year, the industry’s presumption that snack brands would suffer turned out to be false. The company’s share price stayed strong and even saw an increase of 6.59% by the end of the year.
Crown Castle International Corp. (CCI)
There’s a lot to like about Crown Castle International Corp., the communications infrastructure company that stands to benefit from the coming 5G revolution. The company provides cell phone towers to various industries and currently has over 40,000 towers to its name.
With its 3.45% forward dividend yield, 3.52% five-year average yield, and 7.52% 12-month trailing share price gain, I felt obligated to add CCI to this list. It has so many positive points going for it. It’s also the second REIT to make this list, as evidenced by its 300% payout ratio.
Normally, I wouldn’t even consider a dividend stock that’s down 23% year-over-year. However, AT&T is known as a solid and reputable company that seems to always rebound back after new lows.
The stock is yielding an eye-opening 7.17% and a payout ratio of 137.75%. With a PE ratio currently pegged at 19.10, AT&T is one of the most undervalued high dividend stocks on this list because it can be picked up at a bargain price and has a very high likelihood of bouncing back, as the company stands at the forefront of the coming 5G telecom market.
Antero Midstream Corp. (AM)
I understand that some simply have a greater appetite for risk, which is why I’ve included Antero Midstream’s stock on this list. The company’s stock boasts a 14.59% dividend yield along with a 12.38% rise in share price over the previous 12 months.
While all of this sounds too good to be true, it’s important to note that before 2020, the stock experienced a 3-year continuous decline where it shed 93% of its overall value. For those who aren’t afraid to take on more risk in exchange for a higher potential return, this company, which owns and operates various energy assets, might be worth a look.
Newmont Corp. (NEM)
As the largest gold mining company in the world, one might assume that Newmont Corp. is a relatively safe investment. However, I don’t consider the company’s stock to be low risk because it’s highly sensitive to gold prices, which often fluctuate drastically. But it would be an understatement to say that NEM has had a fantastic run over the past few years. While
Over the most recent trailing twelve months, the share price skyrocketed past the S&P’s performance with a 47.92% total increase in value, which is more than a 31% edge over the S&P’s average returns. Combine this with 16.8% in revenue growth over the previous year, and I think it’s safe to say that many investors in NEM are happy with their investment.
Of course, Newmont Corp. wouldn’t have made this list without a worthy dividend yield, which now stands at 2.55%.
If you like gold mining, check out Barrick Gold.
Kimberly-Clark Corp. (KMB)
Kimberly-Clark, a household products manufacturer that has diversified into many other industries, had a wild year in 2020. While the stock is currently down more than 6% from where it was a year ago, it had risen to a high of over 13% midway through the year.
I see a good deal in Kimberly-Clark, as it’s a company that has been delivering decent returns for investors for over four decades now. Plus, its current dividend yields an excellent 3.25%. While the stock may have stumbled a bit in the second half of 2020, many long-term investors consider this to be a natural pullback after a high that will almost certainly be reached again.
More Than Just Dividends
As you can see from the entries on my list, I’m always considering multiple factors when rating dividend stocks. Dividend-focused investors tend to sometimes only focus on the dividend rate itself, which can be perilous when other factors come into play. As traders in today’s modern world, we have the ability to quickly access information about companies online. Therefore, there’s no reason why we should make investments based only on a single stock characteristic.