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3 Supercharged Dividend Stocks to Buy if There's a Stock Market Sell-Off

By Rachel Warren – Dec 31, 2021 at 11:00AM

Key Points

  • Dividend stocks are a great way to boost your portfolio returns and generate more capital to reinvest.
  • Two top healthcare stocks and a stalwart retail stock made the cut.
  • These dividend payers are all smart options to consider as investors embark on a new year.

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You don't have to look far to find top dividend stocks for your portfolio.

The stock market has been on a bumpy ride lately, and there may be more hurdles ahead. Over the past few months, investors have seen plenty of their favorite stocks dip even after a quarter of robust financial performance. While no one can predict the future, it's possible that another big sell-off is in store for investors as we enter another year. 

Here's the thing. As a long-term investor, you don't need to predict the future or try to time the market. Instead, you should focus on investing in high-quality businesses that have long-term staying power in your portfolio. Following are three premium dividend payers to add to your buy list as we head into 2022. With or without a sell-off, these are no-brainer stocks to buy right now. 

Relaxed and smiling investor sits at desk watching stock charts on dual computer screens.

Image source: Getty Images.

1. Johnson & Johnson 

When it comes to dividend payers, few beat Johnson & Johnson's (JNJ 1.02%) record. The company is a Dividend King that has raised its payout every year for nearly 60 years in a row. Currently, J&J's dividend yields about 2.5%. And over the past decade, the stock has delivered a total return of nearly 240%.  

Last month, the 135-year-old healthcare company announced that it will be splitting off its consumer health business (which includes such well-known brands as Tylenol, Neutrogena, and Listerine) from its medical devices and pharmaceutical business. The medical device/pharmaceutical company will still be called Johnson & Johnson while the new consumer health business hasn't been named yet.  

The split, which is expected to conclude within the next two years, will result in two publicly traded, dividend-paying companies. Individuals who remain invested through the split will then own shares of both businesses, which are unequivocal leaders in their respective fields. In 2021 alone, the pharmaceutical and medical device segments are on track to amass combined revenue of $77 billion while the consumer health business is set to reach $15 billion.

Johnson & Johnson has a long history of providing shareholder value with its popular products, faithful dividend payouts, and sales growth. In just the latest quarter, revenue saw a year-over-year jump of 11% while earnings rose 3%. As the company transitions to a new chapter in its history, its competitive advantages and diverse businesses should continue to deliver strong returns and enrich shareholders. 

2. Target 

Amid the rise of e-commerce, I'm not usually one to tout retail stocks. Target (TGT 3.34%) is one of the few exceptions. Not only is the stock a Dividend King with 50 years of consecutive dividend increases to its name, but it also yields a healthy 1.6%. Plus, the shares are up about 30% over the trailing 12 months.  

Investors are pleased because Target is one of a handful of retailers that has done an exceptional job of growing both its brick-and-mortar and e-commerce presence with considerable success, and its "essential retailer" status helped it maintain its strong financials even as other retailers struggled to stay above water early in the pandemic.

Just look at the results. In the third quarter, Target's overall sales rose nearly 13% over the year-ago period. Physical store sales alone were up 10% while digital sales popped a robust 30%. In addition, Target grew its earnings per share an eye-popping 52%.

One of the company's strengths: giving shoppers a variety of delivery options. Management says that same-day services (which includes order pickup, drive up, and its "Shipt" option) grew nearly 60% this year. That's on top of more than 200% last year. Notably, more than 95% of Target's third-quarter sales were fulfilled by its stores.

All of these factors, plus a solid dividend, make this stock an excellent choice to look at in the retail space. 

3. Pfizer 

Another supercharged stock for investors to consider is the unequivocal winner of the COVID-19 vaccine race. Pfizer's (PFE 1.04%) highly successful partnership with BioNTech produced the blockbuster COVID-19 vaccine Comirnaty. The company also just announced on Dec. 22 that it has received Emergency Use Authorization from the U.S. Food and Drug Administration for its COVID-19 antiviral pill Paxlovid, another potential game changer in the fight against the deadly disease.  

Pfizer's successes in the lab are delivering huge results for shareholders. During the first nine months of 2021, revenue grew 91% to $57.7 billion from the year-ago period. While much of this can be attributed to sales of Comirnaty, the company is also seeing significant strength in a range of other top-selling products, including anticoagulant Eliquis and heart failure medications Vyndaqel and Vyndamax.  

Demand for Pfizer's COVID-19 products is unlikely to wane anytime soon, particularly as new variants regularly emerge. Comirnaty is expected to bring in revenue of $36 billion in 2021 alone. The company now maintains market dominance of both the vaccine and therapeutic side of the fight against the disease. It's no wonder the shares are up more than 50% from a year ago.  

Meanwhile, Pfizer also provides a generous quarterly payout. While the company isn't yet a Dividend Aristocrat or Dividend King, it has a robust track record of raising its dividend, which currently yields 2.7% -- more than the other stocks on this list.

If you're interested in investing in a top healthcare stock with a strong history of growth, a massive product pipeline that contains some of the world's most profitable vaccines, and a nice dividend to boot, Pfizer is one to consider as the market enters 2022. 

Rachel Warren owns Johnson & Johnson. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.

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