Rock-solid dividend stocks have the potential to:

  • Offer a plump income stream in good times and bad.
  • Provide diversification to growth-oriented portfolios.
  • Outperform the S&P 500 over the long haul.

Here’s a look at three dividend stocks that could be an opportunity for income investors in 2022.

Walmart (WMT)

People shopping at a Walmart store in south San Francisco bay area
Sundry Photography/Shutterstock

At a time when many brick-and-mortar retailers remain in the doldrums, powerhouse Walmart stands out.

The company runs a massive retail business with approximately 10,500 stores under 48 banners in 24 countries. Thanks to its “Everyday Low Prices,” Walmart attracts around 220 million customers to its stores and websites every week.

Walmart has thrived during the COVID-19 pandemic.

In the three months ended Oct. 31, 2021, revenue grew 4.3% year over year to $140.5 billion. Notably, comparable-store sales — a key measure of a retailer’s health — at Walmart U.S. rose 9.2%.

The company has also capitalized on the e-commerce boom, which is often considered a threat to physical retailers. Compared to two years ago, Walmart U.S. e-commerce sales grew 87%.

The retail giant started paying dividends in 1974 and has increased its payout every year since.

With a quarterly dividend rate of 55 cents per share, Walmart offers an annual yield of 1.5%.

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Verizon (VZ)

Verizon Wireless sign and rademark logo. Verizon Wireless is a wholly owned subsidiary of Verizon
Ken Wolter/Shutterstock

When you make payments to a company every month, wouldn’t it be nice to get some cash back from it?

Well, investors can do that with Verizon — one of the largest telecommunication companies in the U.S. that also happens to be paying generous and reliable dividends.

Millions and millions of people pay Verizon every month to use the company’s service. Its 4G LTE network covers 99% of the American population, and more than 230 million people are already covered by its 5G network.

Verizon has been raising its payout annually and currently offers an annual dividend yield of 4.8% — a very generous amount in today’s market.

Business is growing, too. The company’s wireless segment had 699,000 retail postpaid net additions in Q3 of 2021. Total revenue rose 4.3% year over year to $32.9 billion for the quarter.

Despite Verizon’s solid business and rising dividend payouts, its shares have slipped 7% over the past 12 months. With so many stocks trading at new highs, Verizon could give contrarian investors something to think about.

Ellington Financial (EFC)

Financial building facade closeup
fotomak/Shutterstock

If Verizon’s 4.8% yield still isn’t juicy enough for you, check out Ellington Financial.

Headquartered in Old Greenwich, Conn., Ellington Financial has a portfolio of financial assets that provide it with a predictable income stream. It then passes those profits to shareholders through monthly dividends.

The company’s investments include residential and commercial mortgage loans, mortgage-backed securities and consumers loans among others.

While Ellington isn’t a widely followed financial play, it stands out in today’s market due to the sheer size of its payout. With a monthly dividend rate of 15 cents per share and a current stock price of $17.55, the company offers a staggering annual yield of 10.2%.

In Q3 of 2021, Ellington Financial generated core earnings of $23.0 million, or 46 cents per share. Its book value per share at the end of September was $18.35.

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Fine art as an investment

Stocks can be volatile, cryptos make big swings to either side, and even gold is not immune to the market’s ups and downs.

That’s why if you are looking for the ultimate hedge, it could be worthwhile to check out a real, but overlooked asset: fine art.

Contemporary artwork has outperformed the S&P 500 by a commanding 174% over the past 25 years, according to the Citi Global Art Market chart.

And it’s becoming a popular way to diversify because it’s a real physical asset with little correlation to the stock market.

On a scale of -1 to +1, with 0 representing no link at all, Citi found the correlation between contemporary art and the S&P 500 was just 0.12 during the past 25 years.

Earlier this year, Bank of America investment chief Michael Harnett singled out artwork as a sharp way to outperform over the next decade — due largely to the asset’s track record as an inflation hedge.

Investing in art by the likes of Banksy and Andy Warhol used to be an option only for the ultrarich. But with a new investing platform, you can invest in iconic artworks just like Jeff Bezos and Bill Gates do.

About the Author

Jing Pan

Jing Pan

Investment Reporter

Jing is an investment reporter for MoneyWise. Prior to joining the team, he was a research analyst and editor at one of the leading financial publishing companies in North America. An avid advocate of investing for passive income, he wrote a monthly dividend stock newsletter for the better half of the past decade. Jing holds a Master’s Degree in Economics and an Honours Bachelor of Science Degree, both from the University of Toronto.

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