My 3 Favorite Dividend Stocks to Buy in 2022

The U.S. stock market has had an incredible run since the financial crisis. So good, in fact, that if you had invested at the worst time in October 2007, right before the big crash, you still would have more than tripled your money by today. 

What’s more, the S&P 500 doubled between Jan. 1, 2019, and Dec. 31, 2021. It’s more challenging now to find companies for a cheap price, especially well-known industry-leading companies. One solution is to pivot away from capital gains and focus instead on generating passive income. Here’s why Procter & Gamble (NYSE:PG), Kinder Morgan (NYSE:KMI), and Starbucks (NASDAQ:SBUX) are three completely different but equally promising dividend stocks to buy in 2022.

A rock-solid dividend-paying stalwart

Few companies embody stability better than good old Procter & Gamble. This October, P&G will celebrate its 185th birthday. Over the last 65 years, P&G has raised its dividend every year, an accomplishment that earns it a spot on the list of Dividend Kings. 

What makes P&G unique isn’t just its dividend but the way it generates cash to support that dividend. P&G’s business is about as recession-resilient as it gets. Demand for DayQuil, Crest toothpaste, Tide laundry detergent, Dawn dish soap, Olay lotion, Pantene shampoo, Gillette razors, Pampers diapers, and Charmin toilet paper doesn’t ebb and flow with the broader economy like other industries. During an economic slowdown, consumers tend to cut their discretionary spending on things they don’t need. P&G makes products that people need, and therefore, consistently posts organic growth.

For investors that value a dividend they can trust above a riskier higher yield, P&G is as good as it gets in the U.S. stock market.

A stable, high-yield natural gas company

Kinder Morgan may not have the track record for dividend raises that P&G has. But it does generate highly predictable free cash flow (FCF) to support its dividend.

Given how relatable P&G’s products are, it’s easy to understand why its business would thrive during a recession. Kinder Morgan is one of the largest pipeline and energy storage companies in the U.S., something that few of us can relate to. But unlike the volatile nature of oil and gas, over 90% of Kinder Morgan’s business is tied to long-term fixed fee and take-or-pay contracts. Kinder Morgan isn’t making money by drilling for oil, selling it, or turning oil into useful products. Rather, it’s making money on the transportation of natural gas, oil, and carbon dioxide.

Thanks to its contract model, Kinder Morgan is able to forecast its revenue and earnings in advance. It hasn’t even reported its full-year 2021 results but has already issued guidance for full-year 2022. It expects to raise its annualized dividend from $1.08 per share to $1.11 per share and generate $1.09 per share in net income and $2.07 per share in distributable cash flow. Since the oil and gas crash of 2014 and…