In this article, we discuss 10 best halal dividend stocks to buy. You can skip our detailed analysis of dividend stocks and their performance, and go directly to read 5 Best Halal Dividend Stocks To Buy.
Halal companies are those that employ halal (permissible according to religion) practices in their operations and comply with Shariah principles in investments. These companies manufacture products that are ethical and halal. The S&P High Yield Dividend Aristocrats Shariah Index tracks the performance of Shariah-compliant companies within the S&P 1500 Composite that have raised their dividends for at least 20 years or more. The index has reported strong performance against the broader market, gaining 0.46% year-to-date through November 30.
This year’s economic landscape has shifted investors’ attention from high-growth tech securities to dividend stocks. During the previous inflationary years, dividend-paying securities came out as clear winners, outperforming the broader market. According to a report by T. Rowe Price, dividend stocks in the Russell 1000 outplayed the benchmark during down and flat markets from 1985 to December 2020. The report also mentioned that Russell 1000 fell by 18%, whereas dividend growers recorded a 12.1% decline during down markets in the same period.
When investing in dividend stocks, investors consider companies with strong dividend growth track records. These companies have solid cash flow generation and can maintain dividend growth over the long haul. The S&P 500 Dividend Aristocrats Index returned 29.45% during the rising interest rates periods from 2008 to 2010, according to a report by ProShares. In comparison, the Dow Jones US Select Dividend Index returned 15.8% during the same period. Dividend stocks like AbbVie Inc. (NYSE:ABBV), PepsiCo, Inc. (NASDAQ:PEP), and Merck & Co., Inc. (NYSE:MRK) are popular among investors as they have raised their dividends for several years, which shows their stable earnings and strong fundamentals. In this article, we will further discuss the best halal dividend stocks to buy.
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Our Methodology:
For this list, we selected stocks from the S&P High Yield Dividend Aristocrats Shariah Index. These companies have paid generous dividends to shareholders over the years and have strong financial health. The stocks are ranked according to their dividend yields, as of December 7.
10 Best Halal Dividend Stocks To Buy
10. Air Products and Chemicals, Inc. (NYSE:APD)
Dividend Yield as of December 7: 2.05%
Air Products and Chemicals, Inc. (NYSE:APD) is an American international chemical industry company that sells gases and chemicals for industrial uses. On November 22, the company declared a quarterly dividend of $1.62 per share, which fell in line with its previous dividend. The company has raised its dividends for 40 years in a row, becoming one of the best dividend stocks on our list.
In addition to AbbVie Inc. (NYSE:ABBV), PepsiCo, Inc. (NASDAQ:PEP), and Merck & Co., Inc. (NYSE:MRK), Air Products and Chemicals, Inc. (NYSE:APD) can be added to dividend portfolios due to the company’s solid dividend growth track record.
In fiscal Q4 2022, Air Products and Chemicals, Inc. (NYSE:APD) reported an operating cash flow of $3.1 billion. The company’s cash generation remained strong as it paid $1.3 billion in dividends to shareholders during the quarter. It generated $3.57 billion in revenues, up 25.7% from the same period last year.
In December, Deutsche Bank raised its price target on Air Products and Chemicals, Inc. (NYSE:APD) to $340 with a Buy rating on the shares, appreciating the company’s overall performance this year.
Air Products and Chemicals, Inc. (NYSE:APD) was a popular stock among hedge funds in Q3 2022, as 43 funds in Insider Monkey’s database owned stakes in the company, up from 33 in the previous quarter. These stakes are worth $394.2 million collectively. Adage Capital Management was one of the company’s leading stakeholders in Q3.
Madison Funds mentioned Air Products and Chemicals, Inc. (NYSE:APD) in its Q2 2022 investor letter. Here is what the firm has to say:
“This quarter we are highlighting Air Products and Chemicals, Inc. (NYSE:APD) as a relative yield example in the Materials sector. APD is a leading global industrial gas supply company and is the largest supplier of hydrogen and helium in the world. It has a sustainable competitive advantage due to long-term customer relationships and contracts, high customer switching costs, and the missioncritical nature of its products. Industrial gases are a relatively small fraction of customers’ overall costs but are crucial to ensure uninterrupted production. (Click here to read full text)
9. The Procter & Gamble Company (NYSE:PG)
Dividend Yield as of December 7: 2.44%
The Procter & Gamble Company (NYSE:PG) is an Ohio-based multinational consumer goods company that specializes in a wide range of personal care and hygiene products. In December, Deutsche Bank raised its price target on the stock to $162 with a Buy rating on the shares, appreciating the company’s defensive qualities and positive developments over the years.
The Procter & Gamble Company (NYSE:PG) is one of the strongest dividend players in the US, paying regular dividends to shareholders for the past 132 years. Moreover, the company maintains a 66-year streak of consistent dividend growth. It currently pays a quarterly dividend of $0.9133 per share for a dividend yield of 2.44%, as of December 7.
The Procter & Gamble Company (NYSE:PG) has shown strong cash flow productivity of 86% in the third quarter of 2022. The company’s revenue for the quarter came in at $20.6 billion, which showed a 1.3% growth from the same period last year. Its organic sales also went up 7% year-over-year.
As of the close of Q3 2022, 69 hedge funds tracked by Insider Monkey reported owning stakes in The Procter & Gamble Company (NYSE:PG), down from 71 in the previous quarter. The collective value of these stakes is over $4.08 billion.
8. The Coca-Cola Company (NYSE:KO)
Dividend Yield as of December 7: 2.77%
The Coca-Cola Company (NYSE:KO) is one of America’s leading beverage companies. It specializes in a wide range of beverages, syrups, and non-alcoholic drinks. The company reported earnings beat in Q3 2022. Its revenue for the quarter came in at $11.1 billion, which showed an 11% growth from the prior-year period. The company’s operating cash flow for the first nine months stood at $8.1 billion and its free cash flow amounted to $7.3 billion.
The Coca-Cola Company (NYSE:KO) qualifies as one of the best dividend stocks on our list as the company has been making uninterrupted dividend payments to shareholders since 1920. The company also holds a 60-year track of consistent dividend growth. It currently offers a per-share dividend of $0.44 per share for a dividend yield of 2.77%, as of December 7.
As of the end of Q3 2022, 59 hedge funds in Insider Monkey’s database owned stakes in The Coca-Cola Company (NYSE:KO), with a collective value of $25 billion. Berkshire Hathaway was the company’s largest stakeholder with 400 million shares.
Carillon Tower Advisers mentioned The Coca-Cola Company (NYSE:KO) in its Q3 2022 investor letter. Here is what the firm has to say:
“Shares of The Coca-Cola Company (NYSE:KO) sold off with consumer staples even as the company reported strong pricing for the second quarter. On average, product prices rose with management hinting at further momentum.”
7. The Clorox Company (NYSE:CLX)
Dividend Yield as of December 7: 3.18%
The Clorox Company (NYSE:CLX) is an American multinational manufacturer and marketer of consumer and professional goods, based in California. The company mainly specializes in cleaning and bleach products. Deutsche Bank raised its price target on the stock to $151 in December and maintained a Hold rating on the shares, acknowledging the company’s performance in the current economic period.
In the first nine months of the year, The Clorox Company (NYSE:CLX) reported an operating cash flow of $178 million, jumping from $41 million during the same period last year. The company had $278 million in cash and cash equivalents at the end of fiscal Q1 2023, compared with $183 million in the previous quarter.
The Clorox Company (NYSE:CLX) has paid dividends to shareholders for 50 years in a row and has raised its dividends consistently for the past 20 years. The company currently pays a quarterly dividend of $1.18 per share and has a dividend yield of 3.18%, as of December 7.
At the end of September 2022, 27 hedge funds tracked by Insider Monkey owned stakes in The Clorox Company (NYSE:CLX), compared with 31 in the previous quarter. These stakes hold a consolidated value of over $493.8 million. Ken Griffin and Jim Simons were some of the company’s major stakeholders in Q3.
6. Chevron Corporation (NYSE:CVX)
Dividend Yield as of December 7: 3.31%
Chevron Corporation (NYSE:CVX) manufactures a wide range of high-quality refined products, including gasoline, diesel, and fuel oil additives. The company is one of the best dividend stocks on our list as it has raised its dividends consistently for the past 25 years. It currently pays a quarterly dividend of $1.42 per share and has a dividend yield of 3.31%, as recorded on December 7.
Chevron Corporation (NYSE:CVX) reported a strong cash generation in Q3 2022. The company’s operating cash flow for the quarter came in at $15.3 billion and its free cash flow stood at $12.3 billion. It paid $2.7 billion to shareholders in dividends, up 6% from the same period last year.
The number of hedge funds tracked by Insider Monkey owning stakes in Chevron Corporation (NYSE:CVX) jumped to 66 in Q3 2022, from 59 in the previous quarter. These stakes have a total value of over $27 billion.
Diamond Hill Capital mentioned Chevron Corporation (NYSE:CVX) in its Q1 2022 investor letter. Here is what the firm had to say:
“Other top contributors in Q1 included multinational energy company Chevron Corp. (NYSE:CVX). The company benefited from increased energy demand as COVID-related economic restrictions eased in tandem with concerns regarding supply interruptions related to Russia’s invasion of Ukraine.”
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Disclosure. None. 10 Best Halal Dividend Stocks To Buy is originally published on Insider Monkey.