In this article, we discuss 10 best May dividend stocks to buy. You can skip our detailed analysis of dividend stocks and their performance in the past, and go directly to read 5 Best May Dividend Stocks To Buy.
Dividend stocks have been a popular investment option for decades, providing investors with a steady stream of income from the dividends paid out by companies. Growth investment outweighed dividend stocks historically, however, the onset of the pandemic of 2020 has made investors risk-averse and led to a renewed interest in dividend companies. Over the years, dividends accounted for between 40% to 50% of total return in the US equity market, with an even larger proportion in international markets.
Companies in the S&P 500 paid out a record $561 billion in dividends in 2022, up from $511.2 billion in 2021. Another reason for this tremendous growth was resilient corporate earnings and solid cash flow on corporate balance sheets. The trend is expected to continue this year as well, however, with the recent developments surrounding the Silicon Valley Bank (SVB) fallout and the state of the economy, analysts now expect a modest growth in dividend payments in 2023.
In the first quarter of 2023, cash dividends within the S&P 500 set a record payment, growing by 0.9% from the previous quarter and by 7.9% from the same period last year, as reported by S&P Dow Jones Indices. For the 12-month period that ended March 2023, the S&P 500 dividends were up 10.1% from the prior-year period. Some of the best dividend stocks that are gaining investors’ attention include Merck & Co., Inc. (NYSE:MRK), AbbVie Inc. (NYSE:ABBV), and Chevron Corporation (NYSE:CVX).
Dividend stocks also offer a short-term profit opportunity to investors. For this reason, investors often use a dividend capture strategy, which involves buying a stock just before the company pays its dividend and then selling the stock shortly after the dividend is paid. To learn more about this investment strategy, readers can check out our previous article titled Dividend Capture Strategy Stocks To Buy.
Photo by nick chong on Unsplash
For this list, we selected dividend stocks that will trade ex-dividend in May 2023. Ex-dividend date indicates the cutoff day to buy a stock to receive its upcoming dividend payment. The list is ranked according to their ex-dividend dates.
Best May Dividend Stocks To Buy
10. Energy Transfer LP (NYSE:ET)
Ex-Dividend Date: May 5
Dividend Yield as of April 27: 9.52%
Energy Transfer LP (NYSE:ET) is an American company that is engaged in the transport of natural gas and propane pipelines. The company is based in Texas. On April 26, the company declared a 0.8% hike in its quarterly dividend to $0.3075 per share. This marked the company's sixth consecutive quarter of dividend growth. Moreover, it maintains a 5-year streak of consistent dividend growth, which makes it one of the best dividend stocks on our list. The stock has a dividend yield of 9.52%, as of April 27. It will be trading ex-dividend on May 5.
Energy Transfer LP (NYSE:ET) can be added to dividend portfolios alongside some of the best dividend stocks like Merck & Co., Inc. (NYSE:MRK), AbbVie Inc. (NYSE:ABBV), and Chevron Corporation (NYSE:CVX).
Morgan Stanley maintained an Overweight rating on Energy Transfer LP (NYSE:ET) in April with a $17 price target, highlighting the sector's stability in the current inflationary period.
At the end of December quarter 2022, 38 hedge funds tracked by Insider Monkey owned stakes in Energy Transfer LP (NYSE:ET), up from 33 in the preceding quarter. These stakes have a collective value of over $613.4 million. David Abrams, David Tepper, and Ken Griffin were some of the company's major stakeholders in Q4.
9. California Water Service Group (NYSE:CWT)
Ex-Dividend Date: May 5
Dividend Yield as of April 27: 1.84%
California Water Service Group (NYSE:CWT) is an American publicly-traded utility company, based in California. The company provides drinking water and wastewater services to its consumers. In the first quarter of 2023, the company reported operating revenue of $131 million. At the end of March 2023, the company had $52.3 million available in cash.
California Water Service Group (NYSE:CWT), one of the best dividend stocks, will be trading ex-dividend on May 5. The company currently pays a quarterly dividend of $0.26 per share and has a dividend yield of 1.84%, as recorded on April 27. The company is a Dividend Champion with 51 years of consecutive dividend growth.
In December, Wells Fargo maintained a Neutral rating on California Water Service Group (NYSE:CWT) with a $63 price target, highlighting the company's performance last year.
Insider Monkey's Q4 2022 database shows that 14 hedge funds owned stakes in California Water Service Group (NYSE:CWT), compared with 15 in the previous quarter. These stakes are collectively valued at over $114.5 million. With over 1.5 million shares, Impax Asset Management was the company’s leading stakeholder in Q4.
8. Waste Connections, Inc. (NYSE:WCN)
Ex-Dividend Date: May 9
Dividend Yield as of April 27: 0.75%
Waste Connections, Inc. (NYSE:WCN) is a North America-based water services company that also provides waste management services to its consumers. The company has operations in both the US and Canada. On April 26, the company declared a quarterly dividend of C$0.255 per share, which was in line with its previous dividend. It is one of the best dividend stocks on our list as it maintains a 12-year streak of consistent dividend growth. The stock will be going ex-dividend on May 9.
In the first quarter of 2022, Waste Connections, Inc. (NYSE:WCN) reported a strong cash position. The company's operating cash flow came in at $442.4 million and it generated nearly $274 million in free cash flow. Its revenue for the quarter stood at nearly $2 billion, which showed a 16% growth from the same period last year.
Truist initiated its coverage on Waste Connections, Inc. (NYSE:WCN) with a Buy rating and a $160 price target, calling the company a defensive option for investors amid global uncertainty. The firm also gave a positive outlook on the company's free cash flow generation over the next five years.
The number of hedge funds tracked by Insider Monkey owning stakes in Waste Connections, Inc. (NYSE:WCN) grew to 39 in Q4 2022, from 33 in the previous quarter. These stakes have a consolidated value of over $1.4 billion.
“Waste Connections, Inc. (NYSE:WCN) provides non-hazardous waste collection, transfer, and resource recovery services in the U.S. and Canada. Their shares rose 9% after topping second quarter estimates and raising forward guidance. This was driven by better-than-expected solid waste pricing and robust growth in the E&P waste business for oil exploration companies.”
7. The Charles Schwab Corporation (NYSE:SCHW)
Ex-Dividend Date: May 11
Dividend Yield as of April 27: 1.93%
The Charles Schwab Corporation (NYSE:SCHW) is an American financial services company that provides commercial banking and investing services to its consumers. The stock will be trading ex-dividend on May 11. It currently pays a quarterly dividend of $0.25 per share for a dividend yield of 1.93%, as of April 27. The company is among the best dividend stocks on our list.
In the first quarter of 2023, The Charles Schwab Corporation (NYSE:SCHW) posted revenue of $5.12 billion, which showed a 9.6% growth from the same period last year. The company's net income for the quarter came in at $1.6 billion, up from $1.4 billion in the prior-year quarter.
Following the company's recent quarterly earnings, Piper Sandler maintained an Overweight rating on The Charles Schwab Corporation (NYSE:SCHW) with a $75 price target. The firm also mentioned that the company's organic growth offers a partial offset to the cash sorting impact.
At the end of Q4 2022, 74 hedge funds in Insider Monkey's database reported having stakes in The Charles Schwab Corporation (NYSE:SCHW) with a total value of $8.1 billion. With over 17.3 million shares, GQG Partners was the company's leading stakeholder in Q4.
“Our holding The Charles Schwab Corporation (NYSE:SCHW), which has a bank inside its operations, lost 37% of its value as investors feared it, too, would lose deposits (and earnings power). As Schwab began the year as a 7.0% weight in the portfolio, this hurt as much as the wipeout at First Republic. The declines in First Republic and Schwab together cost us a full five percentage points of our capital. Other financial holdings M&T Bank, Credit Acceptance and JP Morgan also lost value during the quarter.
Moving to Schwab, there are some similarities with First Republic, but I feel pretty strongly that we’re going to be fine holding on to the stock.
I sometimes describe Schwab as the Costco of financial services. Others liken it to the auto insurer Progressive: it has the lowest operating costs in a huge, commoditized industry. Schwab passes on most of the savings from its low cost structure to clients, creating loyalty and trust, which in turn builds its brand. But Schwab has, over many years, reduced fees in so many areas that today it may be overly dependent on the net interest margin it earns on cash swept into its bank…” (Click here to read the full text)
6. Pfizer Inc. (NYSE:PFE)
Ex-Dividend Date: May 11
Dividend Yield as of April 27: 4.24%
Pfizer Inc. (NYSE:PFE) is a New York-based multinational pharmaceutical and biotech company that deals in a wide range of drugs and consumer healthcare products. BofA maintained a Neutral rating on the stock with a $45 price target, presenting a constructive stance on the sector.
Pfizer Inc. (NYSE:PFE), one of the best dividend stocks, currently pays a quarterly dividend of $0.41 per share. The stock will be going ex-dividend on Mat 11. It has been raising its dividends for the past 13 years consistently and has paid dividends for 337 quarters in a row. The stock's dividend yield on April 26 came in at 4.24%. Merck & Co., Inc. (NYSE:MRK), AbbVie Inc. (NYSE:ABBV), and Chevron Corporation (NYSE:CVX) are some other prominent dividend stocks to consider.
At the end of December 2022, 75 hedge funds tracked by Insider Monkey owned investments in Pfizer Inc. (NYSE:PFE), with a collective value of over $2.5 billion.
“Also among our bottom contributors were health care products manufacturer Abbott Labs, global pharmaceutical company Pfizer Inc. (NYSE:PFE), media and technology giant Alphabet, and insurance company American International Group (AIG). Although Pfizer continues to report strong performance of its core drugs, sales of its COVID vaccine and treatment have likely peaked and sales are expected to decline going forward. We remain optimistic about the company long term as we believe management is taking the company in the right direction, focusing R&D, and making strategic acquisitions with profits generated from COVID vaccine sales.”
Click to continue reading and see 5 Best May Dividend Stocks To Buy.
Disclosure. None. 10 Best May Dividend Stocks To Buy is originally published on Insider Monkey.