Dividend stocks aren't always known for generating sizzling gains. However, investors have flocked to some dividend payers this year as the overall market has tumbled.
Some of the biggest winners are among the elite group of S&P 500 members that have increased their dividends for at least 25 consecutive years. Here are the three best Dividend Aristocrat stocks in the first half of 2022.
1. ExxonMobil
ExxonMobil (XOM -0.09%) ranked as the hands-down biggest winner among Dividend Aristocrats in the first six months of the year. The energy giant has increased its dividend for 39 consecutive years. Its shares skyrocketed more than 40% in the first half of 2022.
That impressive gain is actually a lot lower than it might have been. At its peak in early June, ExxonMobil stock was up more than 70%. There's one key reason for this strong performance: high oil prices.
However, predictions that oil prices could fall have caused many energy stocks, including ExxonMobil, to pull back in recent weeks. Several factors have contributed to expectations of lower prices, including OPEC's decision to boost oil production and the Federal Reserve's interest rate hikes, which could cool down the economy.
2. Chevron
It will probably come as no surprise that another Dividend Aristocrat from the energy sector has delivered big gains so far this year as well. Chevron (CVX 0.75%) has increased its dividend for 35 years in a row. The stock is up close to 25% year to date.
The same tailwinds that have driven ExxonMobil's tremendous performance have also worked to Chevron's benefit. In particular, the Russian invasion of Ukraine and the lead-up to the military conflict spurred an influx of investments in Chevron and other energy stocks.
Like ExxonMobil's, though, Chevron's share price is now well below its high mark set a few weeks ago. At one point, Chevron stock had soared 54% year to date. The same concerns about falling oil prices that caused ExxonMobil's pullback also resulted in Chevron's shares declining.
3. AbbVie
Two sectors have performed the best so far this year: energy and healthcare. We already have a couple of energy stocks as the top Dividend Aristocrats of 2022. The third-place spot belongs to a healthcare stock: AbbVie (ABBV 0.25%). This big drugmaker has increased its dividend for 50 consecutive years. And its shares have jumped around 12% year to date.
AbbVie's strong dividend yield of nearly 3.7% has no doubt attracted some investors. The stock's low valuation (shares currently trade at less than 11 times expected earnings) could also be a draw.
Probably the biggest reason for AbbVie's market-beating performance this year, though, is that the company has chalked up several regulatory wins for its drugs in recent months. Rinvoq picked up U.S. approvals for treating active ankylosing spondylitis and ulcerative colitis, and Skyrizi won U.S. approval for treating Crohn's disease.
Are they buys now?
I think that all three of these high-flying Dividend Aristocrat stocks are still good picks to buy now. My view is that the energy and healthcare sectors are the two best sectors to invest in under the current market dynamics. ExxonMobil, Chevron, and AbbVie stand out as solid choices in those areas.
ExxonMobil and Chevron are the top leaders in the oil and gas industry. While fuel prices might moderate somewhat, I expect that they will remain high. In particular, my expectation is that the European Union's move to ban more than two-thirds of Russian oil by the end of the year will help both of these stocks.
AbbVie faces the loss of U.S. exclusivity for its top-selling drug, Humira, in 2023. However, the company's success in winning new approved indications for Rinvoq and Skyrizi bodes well for its future prospects. I think that Humira's upcoming loss of exclusivity is already largely baked into AbbVie's share price. This is still a good stock to buy, in my view, especially for income-seeking investors.
