Investing

5 of the Highest Dividend-Paying S&P 500 Companies Are Also Outstanding 2022 Stock Picks

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Investors love dividend stocks. Not only do they provide dependable income, but they also provide a great opportunity for solid total return. Total return includes interest, capital gains, dividends and distributions realized over a given period. In other words, the total return on a stock investment includes both income and stock appreciation.
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We screened our 24/7 Wall St. research database looking for companies in the S&P 500 that were rated Buy at major Wall Street firms and also paid among the highest dividends in the venerable index. We found five that look like great ideas for income-oriented investors looking for some upside appreciation as well. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Altria

This maker of tobacco products offers value investors a great entry point now and was hit as cigarette sales have slowed. Altria Group Inc. (NYSE: MO) is the parent company of Philip Morris USA (cigarettes), UST (smokeless), John Middleton (cigars), Ste. Michelle Wine Estates and Philip Morris Capital. PMUSA enjoys a 51% share of the U.S. cigarette market, led by its top cigarette brand Marlboro.

Altria also owns over 10% of Anheuser-Busch InBev, the world’s largest brewer. In March 2008, it spun off its international cigarette business to shareholders. In December 2018, the company acquired 35% of Juul Labs, and it has purchased a 45% stake in cannabis company Cronus for $1.8 billion.

Shareholders receive a 7.15% dividend. Deutsche Bank has a $54 target price on Altria stock. The consensus target is $53.33, and the stock closed on Thursday at $50.33 a share.

Kinder Morgan

This top energy stock remains a favorite across Wall Street. Kinder Morgan Inc. (NYSE: KMI) operates as an energy infrastructure company in North America. The company operates through the following segments.
The Natural Gas Pipelines segment owns and operates interstate and intrastate natural gas pipelines and underground storage systems; natural gas gathering systems and natural gas processing and treating facilities; natural gas liquids (NGLs) fractionation facilities and transportation systems; and liquefied natural gas (LNG) liquefaction and storage facilities.

The Products Pipelines segment owns and operates refined petroleum products and crude oil and condensate pipelines, as well as associated product terminals and petroleum pipeline transmix facilities.
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The Terminals segment owns or operates liquids and bulk terminals that store and handle various commodities, including gasoline, diesel fuel, chemicals, ethanol, metals and petroleum coke. It also owns tankers.

The CO2 segment produces, transports and markets CO2 to recover and produce crude oil from mature oil fields, and it owns interests in or operates oil fields and gasoline processing plants, as well as operates a crude oil pipeline system in West Texas. It owns and operates approximately 83,000 miles of pipelines and 144 terminals.

Shareholders receive a 6.20% dividend. Mizuho’s price objective of $21 compares with the $18.93 consensus target. Thursday’s closing print for Kinder Morgan stock was $17.43 per share.

Lumen Technologies

This under-the-radar stock has big total return potential. Lumen Technologies Inc. (NYSE: LUMN) is a facilities-based technology and communications company that provides various integrated services and solutions under CenturyLink name to business and residential customers in the United States and internationally.

The company operates offers IP and data services, including VPN data network, Ethernet, internet protocol (IP), and content delivery services. It also offers transport and infrastructure services comprising high bandwidth optical networks; unlit optical fiber networks, and related professional and management services; private line services, a direct circuit or channel specifically dedicated for connecting two or more organizational sites; colocation and data center services; and consulting services, which include network management, installation and maintenance of data equipment, and building of proprietary fiber-optic broadband networks for government and business customers.

Lumen Technologies stock investors receive an 8.12% dividend. The Wells Fargo price target is a surprisingly low $12. The $11.30 consensus target is also less than Thursday’s close at $12.05 a share.

ONEOK

The rising price of natural gas over the past year has helped to lift this top energy company. ONEOK Inc. (NYSE: OKE) primarily engages in natural gas transportation, storage and natural gas and natural gas liquids (NGLs) gathering, processing and fractionation in the Bakken, Mid-Continent and Permian. The company recently closed the roll-up of its underlying master limited partnership, ONEOK Partners.
The company has a strong presence in the Oklahoma SCOOP/STACK (NGL gathering/takeaway system, G&P), the Williston Basin (G&P, NGL takeaway) and the Permian Basin (NGL gathering, NGL takeaway, natural gas takeaway), which analysts feel provides high-return growth opportunities.

Many on Wall Street remain very positive on the company’s primarily fee-based earnings, which account for 90% of total earnings.
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Investors receive a 6.30% dividend. The $65 Barclays price target is less than the $65.95 consensus target for ONEOK stock. The shares closed on Thursday at $59.39.

Williams Companies

This is another top energy company and a solid pick for investors who are more conservative and looking for exposure to LNG. Williams Companies Inc. (NYSE: WMB) operates as an energy infrastructure company primarily in the United States.

Its Transmission & Gulf of Mexico segment comprises Transco and Northwest natural gas pipelines, as well as natural gas gathering and processing, and crude oil production handling and transportation assets in the Gulf Coast region. The Northeast G&P segment engages in the midstream gathering, processing and fractionation activities in the Marcellus Shale region, primarily in Pennsylvania and New York, and the Utica Shale region of eastern Ohio.

The West segment comprises gas gathering, processing and treating operations in the Rocky Mountain region of Colorado and Wyoming, the Barnett Shale region of north-central Texas, the Eagle Ford Shale region of South Texas, the Haynesville Shale region of northwest Louisiana and the Mid-Continent region, which includes the Anadarko, Arkom, and Permian basins. It also includes NGL and natural gas marketing operations, as well as storage facilities.

The company owns and operates 30,000 miles of pipelines, 34 processing facilities, nine fractionation facilities and approximately 23 million barrels of NGL storage capacity.

Shareholders receive a 5.70% dividend. BofA Securities recently nudged up the $34 price target to $35. The consensus target is $31.45, and Williams Companies stock closed at $28.77 on Thursday.


Five of the highest yielding S&P 500 stocks all have Buy ratings from top Wall Street firms. These stocks give investors great total return potential. For investors looking to take positions or increase exposure in the red-hot energy sector, the three picks here could be some of the best sector ideas now.

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