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Top 3 Dividend Growth Stocks For 2022

Jan. 03, 2022 7:20 AM ETAMGN, LMT, MRK28 Comments
Dividend Power profile picture
Dividend Power


  • I list my 3 top-quality dividend growth stocks for 2022. The reasons why these stocks may be attractive to investors in 2022 are examined closely.
  • I discuss the dividend safety and valuation of all three dividend growth stocks.
  • My picks for 2021 are reviewed and I reflect on their performance.

Innovation and new ideas lightbulb concept 2022

Olemedia/E+ via Getty Images

As 2022 stars, I like to look ahead and think about my top three dividend growth stock picks for the New Year. This year I am choosing Merck (MRK), Amgen (AMGN), and Lockheed

This article was written by

Dividend Power profile picture
I am a self-taught individual investor and I have been investing in stocks for approximately 20 years. I focus on dividend growth investing with a long-term horizon since I believe in the compounding power of dividend growth investing. I generally look for undervalued large cap stocks with sustainable dividend growth and capital appreciation potential. My second focus is tech and small- or mid-cap stocks with or without dividends for their growth potential. I try to provide a little more in depth analysis weighing the positives and negatives. You can see my performance at my Tip Ranks profile. I am now in the Top 2.5% out of 26,000+ financial bloggers (September 2023).You can follow me at my blog Dividend Power. Read my e-book --> 10 Forever Dividend Growth StocksI also write stock analyses for Sure Dividend as a part-time free lance equity analyst. I provide investment analyses and research for their Sure Analysis Research Database. Additionally, I write stock snapshots and other research for Portfolio Insight.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of AMGN, LMT, IBM, DG either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (28)

Already on board with all 3 with similar investment thesis. thanks for the write-up
Dividend Power profile picture
@OutOfOffice - You're welcome!
SleepyInSeattle profile picture
Have all three AMGN, MRK, and LMT, full position, all undervalued.
Baldy2000 profile picture
@Dividend Power Good picks by me. I have built core positions in AMGN for years and MRK in 2021. I started building a position in LMT in 2021 and will extend only at bargain pricing at $320 or lower. Cheers
Nice picks on all three AMGN, MRK, and LMT, decent valuations.
Dividend Power profile picture
@Money 29 - Thanks they are all good choices for adding to.
This is the key point of the article:

“This performance was decent in absolute terms, but of course, the S&P 500 Index, Dow 30, and NASDAQ Index performed better in 2021.”

So you took on significantly more risk by owning three individual stocks rather than an S&P 500 index fund (which is itself, a dividend growth vehicle), and your reward was underperformance (i.e., you have less money today than you would have had if you invested in the index fund).

The point I got from this article is that dividend growth investing is an expensive hobby…
Investing for Freedom profile picture
@warrenwise03 I think you misunderstood the author. He didn’t say and I do not believe anyone will only own three dividend growth stocks in the DGI community. Most people doing this actually own a lot of names (>20).

And as the author said, this is for long term and in the short term, year over year, these stocks may over- or underperform the index. Judging one year’s performance is not a fair comparison in a year that SP500 had a specially stellar year (beating Dow 30 and Nasdaq).

I have two dividend growth accounts and I designed one with higher average yield and the other with lower average yield. The former beat Dow 30 and Nasdaq but underperformed SP500; the latter beat all three indices by a large margin in 2021. I buy and hold and almost never sell, or at least trying not to sell. What’s most important is that I do not care about short term total return.

The income definitely looks nice for the high yield (average yield 3.5%, YOC > 5%) portfolio.

I guess the key is know what is your investing goal and design the portfolio accordingly and own what you know.
Dividend Power profile picture
@warrenwise03 - The three stocks were part of a larger portfolio, which performed quite well. Dividend growth investing is lower cost than most index investing since there are no commissions at most brokerages these days.
Dividend Ambassador profile picture
This is a great list. This is a list of top three VALUE stocks in my mind. I would be hard pressed not to agree on all three. That said, if I was making a top three list I’d probably find it impossible to leave out BMY (which also has a high yield, just increased yield 10% and has an even lower PE than AMG, LMT and MRK). I’d also have to consider CI, C, UNM, BTI, MO, and VZ.
Dividend Power profile picture
@killiondt - Yes, BMY was one I looked at but I felt Merck was a better buy in the pharma industry. Your other choices are good. I have done a long write up on Verizon on my site.

Dividend Ambassador profile picture
@Dividend Power MRK is a very good buy, that’s for sure, and I have bought MRK opportunistically during 2021 at prices even lower than today. That said, not sure how you could conclude that BMY is a “better” buy???…. Could you elaborate. MRK is cheap but BMY is just massively discounted.

And, thanks for the VZ link. Very helpful.
Dividend Power profile picture
@killiondt - I was basing it off pipeline. I think BMY is a good stock but has more challenges right now. You're welcome on the VZ link.
amegalo profile picture
I agree. LMT great long term prospects with a nice yield while you wait.. very suitable for a long term investor .
Dividend Power profile picture
@amegalo - yes, it is a good stock to own.
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