3 dividend aristocrats who must be on your radar for 2022

There’s one reason why Aristocratic Dividends are some of the most popular stocks on the market. After all, to be on this exalted list, a company must increase its dividend every year for at least 25 years. Only the most sustainable and cash-generating companies are able to maintain such a streak.

But there are dividend aristocrats who have even more going for them than this high standard. Here are three that should strongly benefit from current and upcoming trends this year: Mcdonalds (NYSE: MCD), AT&T (NYSE: T), and Real estate income (NYSE: O).

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1. McDonald’s

Is there a restaurant stock more resilient than McDonald’s? During its recent history, the classic American burger restaurant has not only survived the global transition to healthier food choices, but has also gone through a pandemic. Proof of what a smart and efficient operator is, the company continued to show excellent growth in both revenue and bottom line.

For such a large and established business, McDonald’s is surprisingly nimble. Not letting health food vendors steal its lunch, the company years ago unveiled a set of healthier menu options; many are still popular choices in its restaurants. And there’s no need to look for a local designer coffee after your meal, as the company’s McCafe has a beer in high demand with customers.

When the pandemic arrived, McDonald’s strong technological backbone enabled it to tackle challenges better than most food companies. Adjustments to its drive-thru facilities have made it a comfortable choice for diners who are unwilling or unable (due to sporadic closures) to eat inside restaurants.

Meanwhile, innovations like the increasingly ubiquitous ordering kiosks inside its restaurants are expected to make the McDonald’s experience even faster and more efficient once dining out becomes the norm again. And drive-thru should continue to be a busy place for drivers looking for a quick dinner, lunch or coffee.

As it has done for so many years, McDonald’s should have a great year 2022 full of growth. Investors should also have a few more coins in their pockets, as the Dividend Aristocrat will almost certainly increase their payout again. Right now, the company’s quarterly dividend is $ 1.13 per share, bringing the yield to just under 2.1%, which is significantly better than the S&P 500is 1.3%.

2. AT&T

An action dog last year, AT&T is poised for a rebound in 2022. It is becoming a leaner, more focused company just as the 5G upgrade cycle accelerates. This technology will certainly allow customers to spend even more time watching videos and browsing the Internet, and it should allow AT&T to sell more premium plans and devices compatible with the technology.

Meanwhile, the company is abandoning the huge entertainment content business entrusted to it for years, which never quite dovetailed with its core telecommunications business.

Wisely, AT&T will use a large chunk of the cash flow from these deals to help pay off its massive debt (over $ 177 billion at the end of September last). As these borrowings are reduced, the interest expense on the income statement will decrease, which will improve profitability. Many investors on the sidelines should then take an interest in the title again.

AT & T’s quarterly dividend is currently $ 0.52. However, the declining company said it would cut its dividend after the spin-off, largely to spend more money on debt service. At this point, he will cease to be a Dividend Aristocrat.

Still, AT&T is well aware that a nice payout is a big part of the appeal of its actions, so we can expect the company to at least keep the amount competitive. Some analysts believe the cut will take the dividend to just under $ 0.29, yielding a return of almost 4.6%. This would add an additional incentive to buy shares in this well-positioned company when they are cheap and have not yet come back to grace.

3. Real estate income

Not only is Realty Income a dividend aristocrat, but this strong Real Estate Investment Trust (REIT) also pays out on a monthly basis rather than the once-per-quarter model that is standard for most dividend-paying stocks. He manages to distribute his profits so frequently because he brings in millions of dollars every month.

This is because Realty Income is a leading retail REIT that operates a large portfolio (7,018 properties at last count) of retail locations in the United States and, increasingly, in the United States. ‘foreigner. As such, it receives a torrent of rent 12 times a year. And this torrent only gets stronger as a typical real estate income lease is long term and imposes modest but constant annual increases. In addition, this well-managed operator is constantly expanding its footprint with new rental spaces.

These are all reasons why the income and cash flow of Realty Income (known in this industry as “operating funds”) have generally continued on their upward trajectory – even through the challenges of the coronavirus pandemic. , which particularly affected the retail sector.

Right now, the monthly payout is just under $ 0.25 per share, delivering a healthy return of almost 4.2%. During 2021, Realty Income declared five dividend increases (albeit marginally in each case). We can certainly expect a lot more in the years to come.

While it can be difficult to conceive at this time, we will overcome the pandemic at some point. When this starts to happen, the retail industry is expected to experience a monster recovery, as is Realty Income.

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* Returns of the portfolio advisor as of December 16, 2021

Eric Volkman does not have a position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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