In this article, we discuss the 10 dividend stocks with over 10% yield. If you want to skip our detailed analysis of these stocks, go directly to the 5 Dividend Stocks With Over 10% Yield.
The Federal Reserve Bank of Dallas recently forecast that home prices and rent are likely to rise in the coming months as inventory constraints weigh on the real estate industry. When viewed in the context of increasing prices of everyday goods as supply chain pressures continue to wreak havoc with the post-pandemic economic recovery, it appears increasingly likely that inflation will rise. According to the Dallas bank, rent inflation will rise from 1.9% in June 2021 to 3.0% in June 2022 and 6.9% by June 2023, the highest in three decades.
Although these numbers are not positive for the overall economy, they may be good news to value investors. Growth stocks have enjoyed a record rally in the past few months, with even the pandemic pushing some growth equities to new highs as the digital economy kicked in during lockdowns. As inflation rises, value plays will start outperforming the growth-heavy S&P 500 benchmark. Investors who are eager to shield their portfolios from some of the risks outlined above should consider some solid dividend stocks to weather the coming storm.
Some of the top dividend stocks with high yields include Johnson & Johnson (NYSE:JNJ), The Procter & Gamble Company (NYSE:PG), The Coca-Cola Company (NYSE:KO), Two Harbors Investment Corp. (NYSE:TWO), Vale S.A. (NYSE:VALE), and BHP Group (NYSE:BHP), among others discussed in detail below.
Our Methodology
Here is our list of the 10 dividend stocks with over 10% yield. These were picked based on their business fundamentals and analyst ratings. The forward dividend yield of each stock is mentioned alongside other details below for further clarity.
The hedge fund sentiment around each stock was gauged using the data of 873 hedge funds tracked by Insider Monkey.
Why pay attention to hedge fund holdings? 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 more than 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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Dividend Stocks With Over 10% Yield
10. NuStar Energy L.P. (NYSE:NS)
Number of Hedge Fund Holders: 3
Forward Dividend Yield: 10.09%
NuStar Energy L.P. (NYSE:NS) engages in the storing and marketing of petroleum products. The stock has gained 56% year-to-date as the prices of crude touch new highs. The company recently posted earnings for the third quarter, reporting a revenue of $412 million, up 13% year-on-year and beating estimates by $33 million. The firm also revealed that it planned to spend around $200 million on strategic and reliability capital in 2021.
On August 2, investment advisory JPMorgan assumed coverage of NuStar Energy L.P. (NYSE:NS) stock with a Neutral rating and a price target of $20. Jeremy Tonet, an analyst at the advisory, issued the ratings update.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Zimmer Partners is a leading shareholder in NuStar Energy L.P. (NYSE:NS) with 1.1 million shares worth more than $20 million.
Just like Johnson & Johnson (NYSE:JNJ), The Procter & Gamble Company (NYSE:PG), The Coca-Cola Company (NYSE:KO), Two Harbors Investment Corp. (NYSE:TWO), Vale S.A. (NYSE:VALE), and BHP Group (NYSE:BHP), NuStar Energy L.P. (NYSE:NS) is one of the top dividend stocks to buy right now.
9. Telefónica, S.A. (NYSE:TEF)
Number of Hedge Fund Holders: 4
Forward Dividend Yield: 10.70%
Telefónica, S.A. (NYSE:TEF) provides telecommunication services. It primarily operates in Latin America and parts of Europe. There are reports that the company is exploring the sale of the fiber network business in Spain for around €15 billion. The sale of the asset will likely be directed towards debt reduction of the firm. Telefónica recently announced that it would be partnering with CyberArk to deliver a new set of cybersecurity solutions to consumers.
Telefónica, S.A. (NYSE:TEF) has also recently partnered with Oracle, announcing in late September that it would be moving the bulk of database systems it owns to a cloud network of Oracle under a multi-year deal.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Telefónica, S.A. (NYSE:TEF) with 1.6 million shares worth more than $7 million.
8. Icahn Enterprises L.P. (NASDAQ:IEP)
Number of Hedge Fund Holders: 4
Forward Dividend Yield: 13.94%
Icahn Enterprises L.P. (NASDAQ:IEP) operates as an industrial conglomerate and is based in Florida. The company has interests in businesses as varied as investment, energy, automotive, food packaging, and pharma, among others. It has an impressive dividend history and recently declared a quarterly dividend of $2.00 per share, in line with previous. It also beat market estimates on revenue for the third quarter by $10 million.
In late October, Icahn Enterprises L.P. (NASDAQ:IEP) announced that it would be selling 100% of equity interests in PSC Metals, a scrap metal processor, to SA Recycling for $290 million. The deal is expected to be closed by the end of the year.
Among the hedge funds being tracked by Insider Monkey, Florida-based investment firm Icahn Capital LP is a leading shareholder in Icahn Enterprises L.P. (NASDAQ:IEP) with 237 million shares worth more than $13 billion.
7. Sibanye Stillwater Limited (NYSE:SBSW)
Number of Hedge Fund Holders: 15
Forward Dividend Yield: 11.66%
Sibanye Stillwater Limited (NYSE:SBSW) operates as a precious metals mining company. Deutsche Bank analyst Abhi Agarwal recently initiated coverage of the stock with a Buy rating and a price target of $19, underlining that the firm was poised to generate attractive free cash flows in the coming years as a result of new acquisitions. The company has a market cap of $10 billion and posted over $8 billion in revenue last year.
Sibanye Stillwater Limited (NYSE:SBSW) announced in mid-September that it had agreed to acquire one half of the Nevada lithium project from Ioneer for $495 million. The deal is the largest ever for the metal which is used to power batteries.
Among the hedge funds being tracked by Insider Monkey, Connecticut-based investment firm AQR Capital Management is a leading shareholder in Sibanye Stillwater Limited (NYSE: SBSW) with 6.3 million shares worth more than $106 million.
In its Q1 2021 investor letter, Desert Lion Capital, an asset management firm, highlighted a few stocks and Sibanye Stillwater Limited (NYSE:SBSW) was one of them. Here is what the fund said:
“Sibanye is a South African gold and platinum group metals (“PGM”) producer with mines in South Africa and the U.S. Established in 2012, it has since become one of South Africa’s largest gold producers and the largest PGM producer in the world. Sibanye also operate a PGM recycling facility and own a majority interest in DRDGOLD, a specialist in the recovery of gold and other precious metals from open pit tailings.
The investment thesis incorporates the following logic:
If central banks globally are going to continue printing money unabated, precious metals prices should rise.
The drive for cleaner and greener is accelerating. The market for platinum, palladium and rhodium is structurally attractive.
The company is generally mischaracterized. Ask around, and one will find that most people still refer to Sibanye as “a South African gold miner” with “lots of debt from that Stillwater acquisition.”
It is not quick and easy to ramp up PGM supply in response to higher demand and prices. Favorable supply-demand characteristics will likely remain favorable for longer.
Bad capital allocation decisions, corporate excesses, and resultant tarnished reputations from the previous boom period are still fresh in the minds of most mining executives. Neal Froneman has proven himself a disciplined capital allocator. His approach to capital allocation is straightforward: deploy capital at expected returns that enhances value to shareholders or distribute it via dividends and buybacks.
The company is debt-free and generating heaps of cash.
The valuation is cheap. At current metal prices, Sibanye is trading at about 5 times after-tax cash profits.
Sibanye is effectively a call option on a potential commodity super cycle. In the meantime, the value of our “option” is unlikely to deteriorate as we are rewarded with healthy dividend flows.”
6. Gerdau S.A. (NYSE:GGB)
Number of Hedge Fund Holders: 17
Forward Dividend Yield: 11.90%
Gerdau S.A. (NYSE:GGB) markets steel products and related services. It has benefited from the recent increase in steel prices, although analysts like Morgan Stanley have cautioned that the prices may have peaked. The company posted earnings results for the third quarter in late October, reporting a revenue of R$21 billion, up more than 74% compared to the revenue over the same period last year.
Credit Suisse analyst Caio Ribeiro recently upgraded Gerdau S.A. (NYSE:GGB) stock to Outperform from Neutral and increased the price target to R$39.50 from R$37, predicting that the firm would post a solid free cash flow yield in 2022.
Among the hedge funds being tracked by Insider Monkey, Greenwich-based firm Contrarian Capital is a leading shareholder in Gerdau S.A. (NYSE:GGB) with 20 million shares worth more than $121 million.
In addition to Johnson & Johnson (NYSE:JNJ), The Procter & Gamble Company (NYSE:PG), The Coca-Cola Company (NYSE:KO), Two Harbors Investment Corp. (NYSE:TWO), Vale S.A. (NYSE:VALE), and BHP Group (NYSE:BHP), Gerdau S.A. (NYSE:GGB) is one of the dividend stocks that elite investors are buying.
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Disclosure. None. 10 Dividend Stocks With Over 10% Yield is originally published on Insider Monkey.
