Well-chosen dividend stocks can add a potent combination of growth and income to your investment portfolio. The key is to choose companies that can successfully navigate the market environment they're likely to face in the coming years.
To help you identify such stocks, here are five businesses poised to lead their respective industries -- and generate bountiful returns for their investors -- in the year ahead. These are some of the best dividend stocks to consider in 2022.
These are the dividend stocks you've been searching for. Image source: Getty Images.
1. Ford Motor Company
Ford Motor Company (F 0.66%) is 118 years old, but it's far from a stodgy automaker. CEO Jim Farley took on his leadership role in October 2020 and has placed electric vehicles (EVs) at the heart of the company's growth strategy.
Demand is booming for battery-powered versions of Ford's popular F-150 pickup truck and Mustang sports car. The automaker is ramping up its production of EVs to meet this surging demand, and sales of these higher-margin vehicles should help to boost profits.
Ford's future is bright enough and strong enough that management was comfortable recently reinstating its dividend after a short hiatus during the early stages of the pandemic. Its shares currently yield a solid 1.9%, and investors can expect the auto leader's cash payout to rise over time along with its earnings.
2. Bank of America
To combat inflation, the Federal Reserve has signaled its intent to raise interest rates in 2022. That's led to a strong sell-off in many high-priced growth stocks, yet it could be a boon for banks.
Banks tend to generate higher profits as interest rates rise since the spread between the cost of the interest they pay to depositors and the interest they earn on the loans they issue widens. Bank of America (BAC 3.35%) is particularly well-positioned to benefit from rising rates. The financial services giant stands to earn an additional $6.5 billion just in net interest income over the next year if interest rates increase by a single percentage point.
Higher profits should lead to larger dividends, and Bank of America's shares already yield a respectable 1.9%.
3. Walmart
As inflation rears its ugly head, consumers are likely to shift their spending habits. A broadscale increase in the prices of goods and services will drive shoppers to search for ways to cut costs. That plays right into Walmart's (WMT 0.46%) wheelhouse.
The retail colossus is known for its everyday low prices. As shoppers look for ways to cut costs, Walmart expects to see an influx of traffic, both in-store and online, from consumers.
Additionally, Walmart's massive distribution network allows it to navigate the recent pandemic-induced challenges to retail supply chains better than its smaller competitors. As more customers shop at its well-stocked stores, its profits -- and, by extension, its dividends -- should march steadily higher. Meanwhile, investors can collect the company's 1.6% yield.
4. Waste Management
If you're looking for a stock that will allow you to sleep well at night, look no further than Waste Management (WM 0.97%). The aptly named provider of trash collection and recycling services has increased its per-share dividend annually for 19 straight years, a streak that's likely to continue for many years to come.
Waste Management's nearly nationwide network of landfills and collection sites forms a wide moat around its business, at least in a figurative sense. Strict regulation and stiff homeowner opposition make it hard for would-be rivals to wrestle away market share. That allows Waste Management to raise prices without hurting sales. This leads to a growing stream of profits that it passes on to shareowners, via its steadily rising cash payout.
As long as there are people, there's going to be garbage. Investors can thus count on Waste Management to deliver reliable dividend income, year in and year out. Its stock currently yields 1.5%.
5. Apple
If you're looking to add a powerful growth component to your portfolio, consider Apple (AAPL -1.22%). The tech titan is currently valued at a staggering $2.7 trillion, and yet investors are still likely undervaluing its incredible earnings potential.
Rising demand for 5G connectivity should help to fuel a sustained upgrade cycle for Apple's most important product, the iPhone. Meanwhile, the strong performance of Apple's new M1 chips is boosting sales of its Macs and iPads. These strong device sales, in turn, are driving the growth of Apple's high-margin services.
Together, these trends will help Apple double its earnings per share over the next half-decade, according to Wall Street's estimates. That should allow the company to ramp up its cash payout to investors during this time. Shares currently yield a relatively meager 0.5%, but a combination of share price appreciation and rising dividend income could deliver hefty total returns.
