The stock market's decline this year may be bad news for investors holding shares of growth stocks, but if you're looking for a great dividend, now may be an optimal time to buy. Falling share prices mean rising yields, allowing you to invest less money while still earning the same dividend the stock offered months earlier.
Three of the best dividend stocks to buy this month are Innovative Industrial Properties (IIPR 0.28%), Coca-Cola (KO 0.68%), and Stanley Black & Decker (SWK -0.01%). They all yield more than the S&P 500 average of less than 1.4% and are safe places to invest in for the long haul.
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1. Innovative Industrial Properties
Innovative Industrial Properties (IIP) has been falling like a stone in 2022, down 45% since the start of the year. The big reason for its decline is likely just that it is grouped in with other cannabis stocks. And, unfortunately, the cannabis sector isn't a hot place to invest of late with the AdvisorShares Pure US Cannabis ETF falling 40% over the same time frame.
IIP has also faced some negative press with short seller Blue Orca Capital releasing a report last month that alleges IIP operates as a "high-risk cannabis bank" and that one of its key tenants, Parallel, is in default. Like other short-seller reports, it can be difficult to prove or disprove many of the claims. IIP stated the report was flawed and that it contained misleading information, although it didn't go into detail, saying that it didn't warrant more of a response from the company.
For investors not spooked by the short-seller report, IIP's decline should make it an even more attractive buy today. The real estate investment trust (REIT) has no problems with profitability, and in 2021 it reported diluted funds from operations (FFO) per share of $6.17, more than $5.72 per share it declared in dividends during the year. And the REIT's FFO is likely to climb this year as more states move to legalize marijuana, including New Jersey, which commenced adult-use sales just last month.
That makes the stock's 4.8% yield incredibly attractive right now. And as high as that payout is already, investors will likely be collecting more on their initial investment over time -- IIP has nearly quadrupled its dividend payments over a span of just three years.
2. Coca-Cola
Shares of soft drink giant Coca-Cola have been a bright spot for the markets as they are up 7% year to date (the S&P 500 is down more than 12%). One reason for that bullishness is that the company is proving to be a solid investment to hold amid inflation.
Coca-Cola reported its quarterly earnings last month, and for the period ended April 1. Sales rose 16% to $10.5 billion year over year and beat analyst expectations of $9.83 billion. The company's brand is strong enough that it can make price increases without hurting the top line. Price hikes played a positive role in boosting sales this past quarter, and management indicated on its latest earnings call that there will be more increases to come this year as it battles rising costs.
That could have already been enough to make Coca-Cola a promising stock to own this year. Another reason to sweeten the deal is its 2.7% yield, which is relatively high. It's also a Dividend King, having raised its payouts for more than 50 years, meaning that like IIP, there's plenty of incentive for income investors to buy and hold the stock. The $0.64 quarterly profit that Coca-Cola reported this past quarter leaves plenty of room for the company to cover its quarterly dividend payment of $0.44.
3. Stanley Black & Decker
Tool and storage company Stanley Black & Decker has seen its stock price crash 30% in 2022. Rising raw material costs that squeeze its margins have left investors bearish on the stock right now, especially with supply chain issues remaining a problem for the foreseeable future. Plus, inflation could hurt demand as consumers look to trim their expenses this year, which potentially means putting off large repairs or projects.
However, even amid these challenges, the company has proven to be resilient. Although last month it reduced its full-year forecast, it still anticipates per-share profit to be at least $7.20 (the previous projection called for earnings per share of at least $10.10) -- that's more than double the $3.16 it pays annually in dividends right now. Stanley Black & Decker is a stock that can withstand troubled times, and so investors shouldn't be surprised to know that it is also a Dividend King with an impressive track record for growing its payouts over the years.
Its yield of 2.6% is above average, and with the stock trading around its 52-week low, now could be a prime time for investors to add this dividend stock to their portfolio.
