In this article, we will take a look at the 10 best stocks for dividends.
With the spread of the Delta variant exacerbating the pandemic-driven recession, investors are looking for safe and dependable income to help combat the rising inflation rate. Annual consumer prices have increased by 5.3%, down from 5.4% in June and July, according to the recent data of the Bureau of Labor Statistics. The 10-year US Treasury bonds are yielding only 1.45%, way below the prevailing inflation rate. We don’t think it is prudent for investors to invest in these bonds and they need to make sure that they aren’t directly or indirectly invested in these subpar government bonds. Smart investors are diversifying their portfolios with high-quality dividend equities to produce dividend income in addition to capital gains while minimizing risk in equity investments to combat financial instability, despite market analysts labeling these low figures “transitory inflation.”
According to the 31st edition of the Janus Henerson Global Dividend Index study, dividends paid to investors are projected to hit $1.39 trillion in 2021. The study also mentioned some of the world’s biggest dividend payers including Exxon Mobil Corporation (NYSE:XOM), AT&T Inc. (NYSE:T), Rio Tinto Group (NYSE:RIO), and Walmart Inc. (NYSE:WMT) to name a few.
Investors are watching mature companies that are less vulnerable to severe market volatility and distribute decent and consistent dividends. In this case, dividend aristocrats are ideal for investors looking to diversify their portfolios with less volatile but sustainable equities. Dividend aristocrats are well-established blue-chip companies that have increased dividend payouts year after year for at least 25 years. Some of the most popular dividend aristocrats that provide a passive income for investors include AT&T Inc. (NYSE:T), Exxon Mobil Corporation (NYSE:XOM), The Coca-Cola Company (NYSE:KO), AbbVie Inc. (NYSE:ABBV), and Realty Income Corporation (NYSE:O).
Investors are also engaged in buying dividend-related exchange-traded funds (ETFs), such as the ProShares S&P 500 Dividend Aristocrats ETF (BATS:NOBL). The low-cost dividend aristocrat-related ETF has returned 25.64% in the past twelve months and has gained 16.12%, year to date. ProShares S&P 500 Dividend Aristocrats ETF (BATS:NOBL) tracks the full list of dividend aristocrats. On the other hand, iShares 7-10 Year Treasury Bond ETF (IEF) lost 4.5% year-to-date. We have been telling our subscribers that investing in a 60-40 portfolio (60% equities and 40% bonds) isn’t prudent anymore. The Federal Reserve has been manipulating the fixed income markets to stimulate the economy but that came at the expense of fixed income investors. Dividend stocks have been good alternatives to bonds. Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by 86 percentage points (see the details here).
That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
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Without further ado, let’s take a look at the 10 best stocks for dividends.
Our Methodology
We listed the best stocks for dividends by filtering the ProShares S&P 500 Dividend Aristocrats ETF (BATS:NOBL) for dividend stocks that offer a yield of 3% or above. You’ll see that the majority of the stocks on our list are from industries with consistent growth, such as energy, healthcare, consumer cyclical, and real estate. Insider Monkey tracks the data of about 873 hedge funds, and we have also used this data to pick dividend stocks that are highly popular among hedge funds today.
For each stock we have mentioned its yield and the number of hedge funds holding a stake in it, ranking them from the lowest to the highest dividend yield. We also included analyst ratings for each company to help readers make more informed investment decisions.
Best Stocks for Dividends
10. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 62
Dividend Yield: 3.02%
We start our list of the 10 best stocks for dividends with The Coca-Cola Company (NYSE:KO). The Coca-Cola Company (NYSE:KO) has increased dividend payments for 59 consecutive years. The company currently pays an annualized dividend of $1.68 per share. The Georgia-based soft drink giant sells non-alcoholic beverages globally. The company also offers healthy teas and drinks under AdeS, Doğadan, and Ayataka brands.
On July 22, Truist analyst Bill Chappell maintained a Buy rating on The Coca-Cola Company (NYSE:KO) and increased his price target for the stock to $65 from $60, citing the company’s continued participation in the reopening of the economy.
The company has a market cap of $242 billion. In the second quarter of 2021, The Coca-Cola Company (NYSE:KO) reported an EPS of $0.68, beating estimates by $0.12. The company’s revenue for the quarter came in at $10.13 billion, an increase of 42% year over year, and beat revenue estimates by $823.1 million. The stock has gained 11.22% in the past twelve months.
At the end of the second quarter of 2021, 62 hedge funds in the database of Insider Monkey held stakes worth $24.96 billion in The Coca-Cola Company (NYSE:KO), up from 61 in the previous quarter worth $24.90 billion.
9. 3M Company (NYSE:MMM)
Number of Hedge Fund Holders: 42
Dividend Yield: 3.21%
Industrial giant 3M Company (NYSE:MMM) ranks ninth on the list of 10 best stocks for dividends. The Minnesota-based industrial firm has increased dividends for the past 63 years and currently pays an annual dividend of $5.92 per share. 3M Company (NYSE:MMM) manufactures and sells personal safety products, medical and surgical supplies, home improvement products, and auto care products.
On July 27, shares of 3M Company (NYSE:MMM) rose 1.4% after the announcement of Q2 2021 results. The company also raised its forecast for 2021 from $9.20 to $9.70 EPS to $9.70 to $10.10 EPS. Total sales growth for 3M Company (NYSE: MMM) is expected to be in the range of 7% to 10%, up from 5% to 8% previously.
On July 28, Argus Research analyst John Eade kept a Buy rating on 3M Company (NYSE:MMM) and increased his price target for the stock to $225 from $220 previously.
The company has a market cap of $107 billion. In the second quarter of 2021, 3M Company (NYSE:MMM) reported an EPS of $2.59, beating estimates by $0.30. The company’s second-quarter revenue was $8.95 billion, an increase of 24.7% year over year, and beat revenue estimates by $371.24 million. The stock has gained 11.5% in the past twelve months and returned 6%, year to date.
At the end of the second quarter of 2021, 42 hedge funds in the database of Insider Monkey held stakes worth $1.58 billion in 3M Company (NYSE:MMM), up from 61 in the previous quarter worth $1.51 billion.
8. Federal Realty Investment Trust (NYSE:FRT)
Number of Hedge Fund Holders: 16
Dividend Yield: 3.55%
Federal Realty Investment Trust (NYSE:FRT) ranks eighth on the list of 10 best stocks for dividends. The REIT based in Maryland has increased its quarterly dividend payment for 54 consecutive years and now pays an annualized dividend of $4.28 per share to its stockholders. Federal Realty Investment Trust (NYSE:FRT) owns and manages 105 real estate properties.
On September 1, Federal Realty Investment Trust (NYSE:FRT) was given an Overweight rating and a $133 price target by Barclays analyst Anthony Powell.
Shares of Federal Realty Investment Trust (NYSE:FRT) jumped 2.67% recently as the company announced the purchase of Twinbrooke Shopping Centre in Virginia, a 110,000-square-foot local grocery area, for $33.8 million on September 13.
The company has a market cap of $9.4 billion. In the second quarter of 2021, Federal Realty Investment Trust (NYSE:FRT) reported funds from operations (FFO) of $1.41 per share, beating estimates by $0.24. The company’s second-quarter revenue was $231 million, up from $176 million in the second quarter of 2020, and beat revenue estimates by $10.2 million. The stock has gained 56.71% in the past twelve months.
At the end of the second quarter of 2021, 16 hedge funds in the database of Insider Monkey held stakes worth $86.7 million in Federal Realty Investment Trust (NYSE:FRT), the same in the previous quarter worth $43.2 million.
7. Leggett & Platt, Incorporated (NYSE:LEG)
Number of Hedge Fund Holders: 14
Dividend Yield: 3.56%
Leggett & Platt, Incorporated (NYSE:LEG) ranks seventh on the list of 10 best stocks for dividends. Leggett & Platt, Inc. (NYSE:LEG) has grown its dividend for the past 50 years and now pays a $1.68 per share of the annual dividend to shareholders. The Missouri-based company manufactures and sells home furnishings and fixture products.
The company has a market cap of $6.4 billion. In the second quarter of 2021, Leggett & Platt, Incorporated (NYSE:LEG) reported an EPS of $0.66, beating estimates by $0.12. The company’s second-quarter revenue was $1.27 billion, up from $845 million in the second quarter of 2020, and beat revenue estimates by $41.9 million. The stock has gained 7.23% in the previous year and returned 7.86%, year to date.
At the end of the second quarter of 2021, 14 hedge funds in the database of Insider Monkey held stakes worth $106 million in Leggett & Platt, Incorporated (NYSE:LEG), down from 24 in the previous quarter worth $83.2 million.
Leggett & Platt, Incorporated (NYSE:LEG) together with AT&T Inc. (NYSE:T), Exxon Mobil Corporation (NYSE:XOM), The Coca-Cola Company (NYSE:KO), AbbVie Inc. (NYSE:ABBV), and Realty Income Corporation (NYSE:O), makes up a good dividend portfolio, according to market analysts.
6. Walgreens Boots Alliance, Inc. (NASDAQ:WBA)
Number of Hedge Fund Holders: 41
Dividend Yield: 3.96%
Drug store chain Walgreens Boots Alliance, Inc. (NASDAQ:WBA) ranks sixth on the list of 10 best stocks for dividends. The Illinois-based drugstore has grown its dividend payment over the last 45 years, and now pays an annual dividend of $1.91 per share to its shareholders. Walgreens Boots Alliance, Inc. (NASDAQ:WBA) owns and operates over 21,000 drugstores in over 25 countries.
On July 6, Barclays analyst Steve Valiquette maintained an Equal-Weight rating on Walgreens Boots Alliance, Inc. (NASDAQ:WBA) with a price target of $53 per share.
The company has a market cap of $42.5 billion. In the third quarter of 2021, Walgreens Boots Alliance, Inc. (NASDAQ:WBA) reported an EPS of $1.38 per share, beating estimates by $0.23. The company’s third-quarter revenue was $34.03 billion, up 12.1% year over year, and beat revenue estimates by $526.6 million. The stock has gained 41.7% in the past twelve months.
At the end of the second quarter of 2021, 41 hedge funds in the database of Insider Monkey held stakes worth $1.11 billion in Walgreens Boots Alliance, Inc. (NASDAQ:WBA), same in the previous quarter worth $1.13 billion.
5. Realty Income Corporation (NYSE:O)
Number of Hedge Fund Holders: 23
Dividend Yield: 4.16%
Realty Income Corporation (NYSE:O) ranks fifth on the list of 10 best stocks for dividends. The company is one of the greatest dividend-paying REITs because it pays its shareholders monthly and has increased its dividend payout for the past 26 years. Realty Income Corporation (NYSE:O) pays an annual dividend of $2.83 per share. As of June 30, 2021, the San Diego-based REIT had a portfolio of 6,761 real estate properties throughout the United States, the United Kingdom, and Puerto Rico.
On August 24, Mizuho analyst Haendel St. Juste maintained a Buy rating on Realty Income Corporation (NYSE:O) and increased his price target for the stock to $81 from $77, noting that the company’s framework is well-positioned for growth.
The company has a market cap of $26.6 billion. In the second quarter of 2021, Realty Income Corporation (NYSE:O) reported funds from operations (FFO) of $0.88 per share, beating estimates by $0.01. The company’s revenue in the second quarter came in at $464.3 million, an increase of 12% year over year, and beat revenue estimates by $31.1 million.
At the end of the second quarter of 2021, 23 hedge funds in the database of Insider Monkey held stakes worth $221 million in Realty Income Corporation (NYSE:O), up from 18 in the previous quarter worth $183 million.
4. AbbVie Inc. (NYSE:ABBV)
Number of Hedge Fund Holders: 82
Dividend Yield: 4.88%
AbbVie Inc. (NYSE:ABBV) is a pharmaceutical company based in Illinois that ranks fourth on the list of 10 best stocks or dividends. AbbVie Inc. (NYSE:ABBV) has increased its dividends for the past 49 years and now pays an annual dividend of $5.20 per share to its shareholders. The research-driven pharmaceutical company sells medicines and therapeutics globally.
On September 8, JPMorgan analyst Chris Schott kept an Overweight rating on AbbVie Inc. (NYSE:ABBV) with a price target of $140 per share.
The company has a market cap of $190 billion. In the second quarter of 2021, AbbVie Inc. (NYSE:ABBV) reported an EPS of $3.11, beating estimates by $0.08. The company’s revenue in the second quarter came in at $13.96 billion, up 33.9% year over year, and beat revenue estimates by $322.64 million.
At the end of the second quarter of 2021, 82 hedge funds in the database of Insider Monkey held stakes worth $5.35 billion in AbbVie Inc. (NYSE:ABBV), up from 72 in the previous quarter worth $5.91 billion.
3. Chevron Corporation (NYSE:CVX)
Number of Hedge Fund Holders: 50
Dividend Yield: 5.58%
Chevron Corporation (NYSE:CVX) ranks third on the list of 10 best stocks for dividends. The California-based energy company has increased dividends in the last 34 years. Chevron Corporation (NYSE:CVX) currently pays an annualized dividend of $5.36 per share.
Chevron Corporation (NYSE:CVX) stock rose 2.12% the previous day after the oil giant announced a $10 billion clean-energy investment on September 14. The company intends to reduce carbon emissions through 2028 by funding carbon capture, greenhouse gas reductions, renewable fuels, and hydrogen energy projects. On September 15, Citi analyst Alastair Syme maintained a Neutral rating on Chevron Corporation (NYSE:CVX) with a price target of $105 per share.
The company has a market cap of $239 billion. In the second quarter of 2021, Chevron Corporation (NYSE:CVX) reported an EPS of $1.71, beating estimates by $0.11. The company’s revenue in the second quarter came in at $37.6 billion, an increase of 179% year over year, and beat revenue estimates by $1.15 billion. The stock has gained 24.5% in the past twelve months and returned 13.9%, year to date.
At the end of the second quarter of 2021, 50 hedge funds in the database of Insider Monkey held stakes worth $4.27 billion in Chevron Corporation (NYSE:CVX), up from 41 in the previous quarter worth $4.86 billion.
2. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 68
Dividend Yield: 6.28%
Exxon Mobil Corporation (NYSE:XOM) ranks second on the list of 10 best stocks for dividends. The oil and gas company based in Texas has increased its dividend payment in the last 37 years. Exxon Mobil Corporation (NYSE:XOM) currently pays its shareholders an annual dividend of $3.48 per share.
On August 3, Exxon Mobil Corporation (NYSE:XOM) was given a Hold rating by DZ Bank analyst Werner Eisenmann with a price target of $62.50 per share.
Exxon Mobil Corporation (NYSE:XOM) shares rose 3.37% on September 15 after the Energy Department reported a bigger decline in domestic crude inventories, as oil prices rose due to the damage caused by hurricanes Nicholas and Ida.
The company has a market cap of $239 billion. In the second quarter of 2021, Exxon Mobil Corporation (NYSE:XOM) reported an EPS of $1.10, beating estimates by $0.11. The company’s revenue in the second quarter grew 108% year over year to $67.74 billion and beat revenue estimates by $3.02 billion. The stock has gained 48.8% in the previous year and 32.4%, year to date.
At the end of the second quarter of 2021, 68 hedge funds in the database of Insider Monkey held stakes worth $3.69 billion in Exxon Mobil Corporation (NYSE:XOM), up from 65 in the previous quarter worth $2.77 billion.
1. AT&T Inc. (NYSE:T)
Number of Hedge Fund Holders: 68
Dividend Yield: 7.61%
Topping the list of 10 best stocks for dividends is AT&T Inc. (NYSE:T). The Texas-based telecom giant has increased its dividend payments in the last 36 years. AT&T Inc. (NYSE:T) currently pays its shareholders an annualized dividend of $2.08 per share. The company was founded in 1983 and is a global provider of telecommunications services.
On September 8, analyst Walter Piecyk of LightShed Partners launched coverage of AT&T Inc. (NYSE:T) with a Buy rating and a $36 price target, highlighting the company’s cellular and fiber growth potential.
The company has a market cap of $197 billion. In the second quarter of 2021, AT&T Inc. (NYSE:T) reported an EPS of $0.89, beating estimates by $0.09. The company’s revenue in the second quarter grew 7.6% year over year to $44 billion and beat revenue estimates by $1.32 billion. AT&T Inc. (NYSE: T) reported 5.5 million new mobility subscribers, resulting in a 31.9% year-over-year increase in equipment revenues to $4.6 billion.
At the end of the second quarter of 2021, 68 hedge funds in the database of Insider Monkey held stakes worth $2.89 billion in AT&T Inc. (NYSE:T), up from 63 in the previous quarter worth $2.70 billion.
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Disclosure. None. 10 Best Stocks for Dividends is originally published on Insider Monkey.
