Passive Income: Why I’m Furiously Buying Dividends in 2022

This year, I’m furiously buying dividend stocks like Occidental Petroleum (NYSE:OXY).

| More on:

In 2022, I’m furiously buying dividend stocks, because they are among the best opportunities on the stock market today.

Tech stocks, especially smaller tech stocks, have been selling off all year, as they’re struggling to make ends meet amid central bank rate hiking. The higher interest rates go, the less valuable growth becomes. That fact is taking a bite out of non-dividend paying tech stocks this year. However, dividend stocks are doing reasonably well. Oil stocks are up for the year, utility stocks are about flat, and other dividend stocks are down less than tech stocks are. In fact, tech stocks that pay dividends are down less than tech stocks that don’t! So, whether you’re a traditional value investor or a holder of dividend tech stocks, you’re doing better than the average growth investor this year.

In January, I started re-positioning my portfolio to include a higher percentage of dividend stocks than it had previously. I’m glad I did. In this article, I’ll explain why I’m buying dividend stocks furiously in 2022.

Dividend stocks are well positioned

One reason I’m buying dividend stocks this year is because the sectors that usually pay dividends are well positioned. Take oil, for example. Oil stocks like Occidental Petroleum (NYSE:OXY) have been delivering stunning growth, paying off debt, and raising their dividends all year long. Oil prices are down from their June peak but still up for the whole year. This means that oil stocks, to this day, are likely to report much higher income than they did this time last year.

That’s one reason why I started buying up Occidental Petroleum when I heard about it this year. I saw that its stock was extremely cheap, despite growing its earnings by triple digits! I knew that growth would slow down eventually, but the sheer cheapness of the stock priced in several years of growth slowing down. It also didn’t hurt that Warren Buffett was buying up the stock in massive quantities.

Dividend income is nice in any market

Another reason why I’m buying dividend stocks this year is because dividends are nice in any market condition. With dividends, you get cash paid to your brokerage account without having to sell stock. It takes a lot of the guesswork out of investing and reduces stress.

If you look at dividend stocks that haven’t been doing so well in the stock market, you’ll see that they’re still cranking out the cash every single quarter. Take Toronto-Dominion Bank (TSX:TD) for example. Unlike Occidental Petroleum, this stock is not rising this year. It’s down by about the same amount as the broader stock market. However, it had a 3.5% dividend yield at the start of the year. If you subtract the 3.5% from the capital loss, you end up with a total return that’s much better than the stock market’s overall return this year.

Foolish takeaway

2022 has not been a great year for the stock market, but it’s a mistake to say that stock investors are doing poorly. Investors who prioritized value and dividends at the start of the year were rewarded. As for me, I’m still a buyer. In fact, I’m more enthusiastic about buying now than I was at the start of the year.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Andrew Button has positions in The Toronto-Dominion Bank and Occidental Petroleum. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Middle aged man drinks coffee
Dividend Stocks

Here’s the Average TFSA Balance at Age 35 in Canada

At age 35, it might not seem like you need to be thinking about your future cash flow. But ideally,…

Read more »

ETF stands for Exchange Traded Fund
Dividend Stocks

How to Invest Your $7,000 TFSA Contribution in 2024

Here's how I would prioritize a $7,000 TFSA contribution for growth and income.

Read more »

a man relaxes with his feet on a pile of books
Dividend Stocks

CPP Pensioners: Watch for These Important Updates

The CPP is an excellent tool for retirees, but be sure to stay on top of important updates like these.

Read more »

Technology
Dividend Stocks

TFSA Investors: 3 Dividend Stocks I’d Buy and Hold Forever

These TSX dividend stocks are likely to help TFSA investors earn steady and growing passive income for decades.

Read more »

four people hold happy emoji masks
Dividend Stocks

Love Dividend Growth? Check Out These 2 Income-Boosting Stocks

National Bank of Canada (TSX:NA) and another Canadian dividend-growth stock are looking like a bargain going into December 2024.

Read more »

An investor uses a tablet
Dividend Stocks

A Dividend Giant I’d Buy Over Enbridge Stock Right Now

Enbridge stock may seem like the best of the best in terms of dividends, but honestly this one is far…

Read more »

how to save money
Dividend Stocks

Got $1,000? The 3 Best Canadian Stocks to Buy Right Now

If you're looking for some cash flow from your $1,000 investment, these are the ideal investments to make.

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

A Dividend Giant I’d Buy Over BCE Stock Right Now

Don't get sucked in by BCE's 10% dividend -- the stock is a total yield trap. Buy this instead.

Read more »