In this article, we will discuss the best dividend stocks according to hedge funds with over 5% yield.
The current stock market situation has investors and hedge funds gravitating toward dividend stocks to increase their portfolios’ returns. Dividend payments also hit record levels this year as many companies reinstated or raised their payouts after being suffered by the pandemic of 2020. The net dividend gain for the 12 months ending September 2022 was $71.5 billion, compared with $61.4 billion during the same period last year, as reported by S&P Dow Jones Indices. The report also mentioned that cash dividends within the S&P 500 grew by 8.5% in Q3 2022 from the prior-year period.
Analysts are also recommending income strategies in the current economic landscape. David Kostin, an equity strategist chief at Goldman Sachs, spoke about dividend stocks in the firm’s late October note. He highlighted the significance of dividend companies during times of weak economic growth. He mentioned that companies that returned cash to shareholders significantly outperformed the market during previous inflationary periods. The firm estimates a 6% growth in dividend per share over the next 10 years, compared with a 0.5% per share growth in dividends according to market pricing. Moreover, dividend growth has never been below 2% on a 10-year annualized basis since 1950.
According to Morgan Stanley, investors should focus on dividend companies offering consistent growth in their payouts. These reliable securities are safe in times of economic clampdown as they have strong cash flows and solid balance sheets. The report also mentioned that banks, utility, beverages and household products, packaged food, and energy are some of the sectors that currently offer attractive yields and have strong dividend growth track records. Some of the popular dividend stocks that are gaining investors’ attention include The Coca-Cola Company (NYSE:KO), Johnson & Johnson (NYSE:JNJ), and The Procter & Gamble Company (NYSE:PG).
Our Methodology:
For this list, we scanned Insider Monkey’s database of 920 hedge funds’ holdings and picked the top 10 dividend stocks with over 5% yield.
10. Enterprise Products Partners L.P. (NYSE:EPD)
Number of Hedge Fund Holders: 21
Dividend Yield as of November 28: 7.68%
Enterprise Products Partners L.P. (NYSE:EPD) is a Texas-based midstream natural gas and crude oil pipeline company. In October, Tudor Pickering maintained a Hold rating on the stock with a $29 price target, expressing concerns regarding the company’s performance in the current environment.
In the third quarter of 2022, Enterprise Products Partners L.P. posted revenue of $15.4 billion, which showed a 42.8% growth from the same period last year. The company’s distributable cash flow for the quarter came in at $1.9 billion, compared with $1.6 billion in the prior-year quarter. Moreover, its adjusted operating cash flow amounted to $2 billion, up from $1.7 billion in Q3 2021.
Enterprise Products Partners L.P. announced a quarterly dividend of $0.475 per share, which fell in line with its previous dividend. The company has been raising its dividends consistently for the past 22 years. As of November 28, the stock has a dividend yield of 7.68%. EPD can be added to dividend portfolios alongside some of the best dividend stocks like The Coca-Cola Company, Johnson & Johnson, and The Procter & Gamble Company.
At the end of Q3 2022, 21 hedge funds tracked by Insider Monkey owned stakes in Enterprise Products Partners L.P., compared with 23 in the previous quarter. The collective worth of these stakes is over $221.6 million. With nearly 4 million shares, Fairholme (FAIRX) was the company’s leading stakeholder in Q3.
Fairholme Capital Management mentioned Enterprise Products Partners L.P. in its Q2 2022 investor letter. Here is what the firm has to say:
“Enterprise Products Partners L.P. (NYSE:EPD) is the largest position in the Fund. Enterprise provides processing and transportation services to producers and consumers of natural gas, natural gas liquids, and oil. These hydrocarbons are critical for modern life and have few if any, ready substitutes. Commodity prices do not greatly affect the company’s toll road fees. Enterprise is priced at less than nine times distributable cash flows and pays a 7.5% cash distribution.”
9. ONEOK, Inc. (NYSE:OKE)
Number of Hedge Fund Holders: 29
Dividend Yield as of November 28: 5.72%
ONEOK, Inc. (NYSE:OKE) is an Oklahoma-based diversified company that specializes in the transmission of natural gas. In October, Morgan Stanley maintained an Equal Weight rating on the stock with a $70 price target, appreciating the company’s accelerated buyback programs.
ONEOK, Inc. is one of the best dividend stocks on our list as the company has been making consecutive dividend payments for the past 25 years. It currently offers a quarterly dividend of $0.935 per share for a dividend yield of 5.72%, as of November 28.
In the third quarter of 2022, ONEOK, Inc. posted revenue of roughly $6 billion, which showed a 30.3% growth from the same period last year. The company’s net income for the quarter amounted to over $431.8 million, up 10% from the prior-year quarter.
At the end of September 2022, 29 hedge funds in Insider Monkey’s database reported owning stakes in ONEOK, Inc., compared with 30 a quarter earlier. The collective value of these stakes is over $225 million.
8. Altria Group, Inc. (NYSE:MO)
Number of Hedge Fund Holders: 47
Dividend Yield as of November 28: 8.40%
Altria Group, Inc. (NYSE:MO) is a Virginia-based company that manufactures and markets tobacco products, including cigarettes. The company has always remained committed to its shareholder obligation. In Q3 2022, it repurchased roughly 9 million shares of its common stock for a total cost of $368 million. Moreover, the company paid $1.6 billion in dividends to shareholders during the quarter, which places it as one of the best dividend stocks on our list.
Altria Group, Inc. currently offers a quarterly dividend of $0.94 per share for a dividend yield of 8.40%, as of November 28. The company has been raising its dividends consistently for the past 53 years.
Stifel lifted its price target on Altria Group, Inc. to $50 this October with a Buy rating on the shares, appreciating the company’s joint venture with Japan Tobacco and its overall fundamentals.
At the end of Q3 2022, 47 hedge funds tracked by Insider Monkey reported owning stakes in Altria Group, Inc., down from 48 in the previous quarter. The consolidated value of these stakes is over $1.5 billion. Among these hedge funds, Arrowstreet Capital was the company’s leading stakeholder in Q3.
7. Devon Energy Corporation (NYSE:DVN)
Number of Hedge Fund Holders: 51
Dividend Yield as of November 28: 7.56%
Devon Energy Corporation (NYSE:DVN) is an American energy company that is engaged in the exploration of hydrocarbons. In November, Argus raised its price target on the stock to $90 with a Buy rating on the shares, highlighting the company’s strong quarterly earnings. The firm also appreciated the company’s higher production during the quarter.
Devon Energy Corporation reported strong results in the third quarter of 2022. Its operating cash flow for the quarter came in at $2.1 billion, showing a 32% growth from the same period last year. It also generated $1.5 billion in free cash flow. The company’s revenue came in at $5.43 billion, up 56.5% from the prior-year period.
Devon Energy Corporation currently pays a quarterly dividend of $1.35 per share, with a dividend yield of 7.56%. The company has been making consistent dividend payments for the past 29 years, which makes it one of the best dividend stocks on our list.
At the end of Q3 2022, 51 hedge funds tracked by Insider Monkey owned stakes in Devon Energy Corporation, compared with 57 in the previous quarter. These stakes are collectively valued at over $1.5 billion. Rajiv Jain’s GQG Partners was the company’s leading stakeholder in Q3.
GoodHaven Capital Management mentioned Devon Energy Corporation in its Q2 2022 investor letter. Here is what the firm has to say:
“Our biggest dollar gainer within this period was Devon Energy Corporation (NYSE:DVN), a position which emanated from a takeover in early 2021 of our long time holding WPX Energy. We are sitting on a material (unrealized) gain from our cost and are now receiving material dividends thanks to Devon’s thoughtful fixed/variable dividend policy. Energy is now a hot sector for investors but we have had a material exposure for a long time. We remember a bit too well $40 oil, NEGATIVELY PRICED front-month oil contract, and what it’s like to own a company with leverage and negative free cash flow during such periods. Our desire to have our biggest portfolio exposures be high return, growing, reasonably predictable and moderately levered companies lead us to reduce our Devon exposure in the past. When the recent facts and circumstances for the industry changed and appeared supportive of healthy oil prices, we decided to maintain a sizable holding and more recently added to the position. At Devon’s Q1 dividend rate, which is mostly variable in nature, the shares now yield approximately 10% and our yield on our average cost is materially higher. In addition, we maintain additional energy exposure through our long-term (and successful) holding in Hess Midstream and less directly through TerraVest and Berkshire Hathaway’s energy investments.”
6. Blackstone Inc. (NYSE:BX)
Number of Hedge Fund Holders: 61
Dividend Yield as of November 28: 5.49%
Blackstone Inc. (NYSE:BX) is an American alternative investment management company that aims to create long-term value for its investors. The company currently pays a quarterly dividend of $0.90 per share and has a dividend yield of 5.49%, as recorded on November 28.
BMO Capital maintained a Market Perform rating on the stock with a $109 price target, highlighting the company’s overall performance.
In addition to The Coca-Cola Company, Johnson & Johnson, and The Procter & Gamble Company, Blackstone Inc. can be added to dividend portfolios due to the company’s strong balance sheet.
At the end of Q3 2022, 61 hedge funds tracked by Insider Monkey owned stakes in Blackstone Inc., the same as in the previous quarter. These stakes are valued at over $1.3 billion collectively. Farallon Capital was the company’s leading stakeholder in Q3.
Baron Funds mentioned Blackstone Inc. in its Q3 2022 investor letter. Here is what the firm has to say:
“Share We also took advantage of a pullback in stocks to acquire shares of Blackstone Inc. (NYSE:BX), though as mentioned above, our timing could have been better. Blackstone is the largest alternative asset manager in the world with nearly $1 trillion of assets under management (AUM) and $700 billion of fee-earning capital. More importantly, 40% of Blackstone’s AUM is perpetual in nature and 90% of revenue is tied to capital that is perpetual or long term in nature. We have long admired Blackstone due to its strong brand, premier global franchise, loyal investor base, nearly 40-year superior investment track record, and talented executive team anchored by CEO Steve Schwarzman and President Jon Gray.
The company has been at the forefront of new product innovation, and we believe that Blackstone will continue to be the winner against an appealing industry backdrop with durable growth characteristics, underpinned by: i) a large and growing addressable market in alternative investments of $10 trillion today vs. $250 trillion for stocks and bonds; ii) institutions continuing to allocate increasing amounts of capital to alternatives (due to historical lower volatility and higher returns); and iii) the opportunity in the retail/high net worth channel that is less than 5% penetrated (versus approximately 30% for institutions)…” (Click here to read the full text)
5. AT&T Inc. (NYSE:T)
Number of Hedge Fund Holders: 61
Dividend Yield as of November 28: 5.81%
AT&T Inc. is a Texas-based multinational telecommunications company that mainly provides mobile telephone services to its consumers. Raymond James upgraded the stock to Strong Buy in October with a $24 price target, appreciating the company’s current operating performance.
In the third quarter of 2022, AT&T Inc. reported growth in nearly its all segments. The company’s wireless service revenues and broadband revenues were up by 5.6% and 6.1% from the same period last year, respectively. Its operating cash flow for the quarter came in at $10.1 billion and its free cash flow stood at $3.8 billion. The company’s dividend payout ratio came in at a healthy 52.3%, which makes it one of the best dividend stocks on our list.
AT&T Inc. currently pays a quarterly dividend of $0.2775 per share and has a dividend yield of 5.81%, as of November 28. The company has been raising its dividends consistently for the past 23 years.
At the end of Q3 2022, 61 hedge funds tracked by Insider Monkey owned stakes in AT&T Inc., up from 55 a quarter earlier. The collective value of these stakes is over $1.53 billion.
Chartwell Investment Partners mentioned AT&T Inc. in its Q2 2022 investor letter. Here is what the firm has to say:
“In the Dividend Equity accounts, the three best performers in Q2 includes AT&T (NYSE:T, 2.5%), up 17.1%. AT&T completed the spin of the WarnerMedia business (HBO, CNN, etc.), and the market seemed to like the “back-to-basics” approach. Also, the telco business is expected to do relatively well in an inflationary environment.”
4. Verizon Communications Inc. (NYSE:VZ)
Number of Hedge Fund Holders: 62
Dividend Yield as of November 28: 6.69%
Verizon Communications Inc. (NYSE:VZ) offers voice, data, and video streaming services to its consumers through its wide range of networks and platforms. The company is one of the best dividend stocks on our list as it has raised its payouts consistently for the past 16 years. It currently pays a quarterly dividend of $0.6525 per share for a dividend yield of 6.69%, as of November 28.
Verizon Communications Inc. has shown a strong cash position this year so far. In the first nine months, the company’s operating cash flow came in at $28.2 billion while its free cash flow for the period stood at $12.4 billion. It generated $34.2 billion in revenue in Q3 2022, which showed a 4% growth from the same period last year.
In October, Morgan Stanley appreciated the growth in Verizon Communications Inc.’s wireless and postpaid segments. In view of this, the firm maintained an Equal Weight rating on the stock with a $41 price target.
Verizon Communications Inc. saw growth in hedge fund positions in Q3 2022, as 62 funds in Insider Monkey’s database owned stakes in the company, up from 58 in the previous quarter. The collective value of these stakes is over $1.42 billion. Citadel Investment Group is the company’s leading stakeholder in Q3.
Mawer Investment Management mentioned Verizon Communications Inc. in its Q3 2022 investor letter. Here is what the firm has to say:
“There are a few other segments of our portfolios that displayed weakness in the quarter. Cable and telecommunication companies have been an area that has lagged the broader market as their worlds are increasingly colliding. Companies such as Verizon (NYSE:VZ) has been impacted as wireless operator is spending heavily to attract internet subscribers with fixed wired access and the cable companies are trying to build wireless businesses.”
3. Philip Morris International Inc. (NYSE:PM)
Number of Hedge Fund Holders: 63
Dividend Yield as of November 28: 5.17%
Philip Morris International Inc. (NYSE:PM) is a New York-based multinational tobacco company that sells its products in over 180 countries. In the third quarter of 2022, the company reported revenue of $8.03 billion, which beat Street estimates by $730 million. At the end of September, it had $5.3 billion available in cash and cash equivalents, compared with $4.4 billion nine months ago. For FY22, the company expects to generate $10.5 billion in operating cash flow.
Philip Morris International Inc. is one of the best dividend stocks on our list as the company has been raising its dividends since its IPO in 2008. The company currently pays a quarterly dividend of $1.27 per share for a dividend yield of 5.17%, as recorded on November 28.
Argus upgraded Philip Morris International Inc. to Buy in November with a $110 price target, as the company is exploring smoke-free business ideas and considering alternative means to produce risk-free products.
The number of hedge funds tracked by Insider Monkey owning positions in Philip Morris International Inc. jumped to 63 in Q3 2022, from 56 in the previous quarter. These funds hold a collective stake value of over $4.68 billion.
Artisan Partners mentioned Philip Morris International Inc. in its Q2 2022 investor letter. Here is what the firm has to say:
“On the positive side of the ledger, our top contributor was Swedish Match, a Swedish tobacco and nicotine products maker. The company received an all-cash takeover offer from rival Philip Morris International Inc. (NYSE:PM), which we also held in the portfolio, for SEK 106 per share—a 35% premium to Swedish Match’s prior closing share price. The deal is a good fit for PM as it reduces PM’s dependence on cigarettes—a category in steady decline—and accelerates the company’s transition to smokeless “reduced-risk” products (RRPs)—a category that has experienced rapid growth over the past five years. PM can also leverage its global scale to generate significant revenue synergies from these complementary product sets, as well as quickly gain access to the US market—the world’s largest market for RRPs and one where regulators have embraced RRPs and other less harmful nicotine products. We exited our position in Swedish Match as shares approached the takeout price.”
2. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 69
Dividend Yield as of November 28: 5.00%
Intel Corporation (NASDAQ:INTC) is a multinational semiconductor company, based in California. Mizuho resumed its coverage of the stock with a Neutral rating and a $32 price target in November. The firm highlighted that the company is gaining market share in personal computers this year.
In the third quarter of 2022, Intel Corporation reported an EPS of $0.59, which beat estimates by $0.26. The company’s revenue for the quarter came in at $15.3 billion, which fell in line with the analysts’ consensus. For the next quarter, it expects its revenue to be between $14 billion to $15 billion.
Intel Corporation currently pays a quarterly dividend of $0.365 per share. The company has been raising its dividends consistently for the past seven years while maintaining a 28-year track record of dividend payments. The stock’s dividend yield on November 28 came in at 5.00%.
As of the end of the September quarter, 69 hedge funds owned stakes in Intel Corporation, up from 65 in the previous quarter. These stakes have a total value of roughly $2 billion. With over 15 million shares, Two Sigma Advisors was one of the company’s leading stakeholders in Q3.
ClearBridge Investments mentioned Intel Corporation in its Q3 2022 investor letter. Here is what the firm has to say:
“Also on the detractor side, Intel Corporation (NASDAQ:INTC) delivered a disappointing revenue miss and lowered full-year revenue and earnings guidance as COVID-19-driven demand for PCs abated (where Intel enjoys half its sales) and a delay in its flagship Sapphire Rapids CPU hurt its data center business. Despite these issues, we still believe Intel is an economically sensitive turnaround story with substantial upside.”
1. Chesapeake Energy Corporation (NASDAQ:CHK)
Number of Hedge Fund Holders: 70
Dividend Yield as of November 28: 9.74%
Chesapeake Energy Corporation (NASDAQ:CHK) is an American exploration and production company with headquarters in Oklahoma. On November 11, the company declared a 36.2% growth in its quarterly dividend to $3.16 per share. As of November 28, the stock has a dividend yield of 9.74%.
In October, Jefferies initiated its coverage on Chesapeake Energy Corporation with a Buy rating and a $150 price target. The firm gave a positive view of the energy transition companies.
In Q3 2022, Chesapeake Energy Corporation reported an EPS of $5.06, which surpassed estimates by $0.58. The company’s operating cash flow came in at $1.3 billion and generated $773 million in adjusted free cash flow. It also returned $1.9 billion to shareholders in dividends and share repurchases during the quarter, which makes it one of the best dividend stocks on our list.
Of the 920 hedge funds tracked by Insider Monkey, 70 funds owned stakes in Chesapeake Energy Corporation in Q3 2022, up from 67 in the previous quarter. These stakes are worth over $4.1 billion collectively.
Miller Value Partners mentioned Chesapeake Energy Corporation in its Q3 2022 investor letter. Here is what the firm has to say:
“Chesapeake Energy Corporation (NASDAQ:CHK) gained 19.1%2 in the period. The company reported 2Q22 Adjusted Earnings Before Interest, Taxes, Depreciation, Amortization, and Exploration Expense (EBITDAX) of $1,269MM, +195.8% Y/Y, ahead of consensus of $1,226MM, and Adjusted Earnings per Share (EPS) of $4.87, compared to 2Q21 EPS of $1.64, ahead of analyst expectations for EPS of $3.82. Chesapeake generated adjusted free cash flow (FCF) of $494MM, bringing TTM FCF to $1,663MM, or a FCF yield of 14.4%. Management also raised the company’s base dividend by 10% to $2.20/share, bringing the total quarterly dividend to $2.32/share, or an annualized yield of ~9.7%. Additionally, the company doubled its existing share repurchase authorization from $1B to $2B and has executed $670MM in repurchases so far through 7/31/22. Collectively, management is guiding for $1.2B in total FY22 dividends, at the midpoint, and $1B in share buybacks, implying total FY22 shareholder returns of $2.2B, or ~19.1% of the company’s market cap.”
You can also take a look at 15 Best Dividend Stocks of All Time and 12 Best High-Yield Dividend Stocks To Buy Now
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This article is originally published at Insider Monkey.
