In this article, we discuss 10 Dow Jones dividend stocks with over 1% yield.
The Dow Jones Industrial Average, or DJIA, is a stock market index of 30 prominent companies listed on US stock exchanges. Some of the major stocks in the index include Microsoft Corporation (NASDAQ:MSFT), The Procter & Gamble Company, and McDonald’s Corporation. The current inflationary environment has jolted major US indexes this year as they suffered their sharpest decline in over 50 years. DJIA is down 15.21% year-to-date and has fallen by 8.69% in the past year, as of the close of September 19.
As inflation reached its 40-year high in 2022, investors are considering dividend stocks to stay afloat in this market condition. Historically, dividend stocks have outperformed their peers in times of financial volatility. In addition to this, dividends have played a significant role in the total return of the broader index in the past. According to a report by CNBC, dividends represented 68% of the S&P 500’s total return since 1988. Another report by Fidelity sheds light on dividend stocks’ performance during inflationary periods. The report mentioned that during the 1940s, 1970s, and 1980s, when the average inflation rate was 5% or above, dividends accounted for 54% of the total return of the S&P 500.
Given the market volatility with the Federal Reserve raising interest rates, stocks could decline if economic data doesn’t meet expectations. Nevertheless, there could be an opportunity for long term investors to buy quality blue chip stocks given the lower valuations.
Further building upon these observations, we will discuss some Dow Jones dividend stocks with over 1% yield.
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Our Methodology:
We took 10 Dow Jones stocks that had dividend yields of over 1% as of September 18 and we sorted them based on the number of hedge funds in our database that owned shares in the stock at the end of Q2 2022.
10 Dow Jones Dividend Stocks With Over 1% Yield
10. The Travelers Companies, Inc. (NYSE:TRV)
Number of Hedge Fund Holders: 31
Dividend Yield as of September 18: 2.29%
The Travelers Companies, Inc. (NYSE:TRV) is a New York-based insurance company that engages in the provision of commercial and personal property and casualty insurance products and services. The company was added to Dow Jones Industrial Average in 2009 and is the only property casualty insurance company in the index.
In July, Raymond James appreciated the company’s outperformance and also highlighted the improvements in its Business Insurance segment. Given this, the firm upgraded The Travelers Companies, Inc. to Strong Buy with a $185 price target.
In Q2 2022, The Travelers Companies, Inc. reported strong earnings, as the company posted revenue of $9.14 billion, which showed a 5% year-over-year growth. The company earned a premium of $8.32 billion, up 9.2% from the same period last year. Its free cash flow for the quarter grew to $1.37 billion, from $1.26 billion in the previous quarter.
The Travelers Companies, Inc. has been making consistent dividend payments for the past 33 years and has a 16-year run of raising its payouts. It currently pays a quarterly dividend of $0.93 per share, with a dividend yield of 2.29%, as of September 18.
At the end of Q2 2022, 31 hedge funds tracked by Insider Monkey owned stakes in The Travelers Companies, Inc., down from 37 in the previous quarter. These stakes hold a collective value of over $433.8 million. With over 3 million shares, First Eagle Investment Management owned the largest position in the company in Q2.
Alongside NIKE, Inc. (NYSE:NKE), UnitedHealth Group Incorporated (NYSE:UNH), and Microsoft Corporation, The Travelers Companies, Inc. is a dividend stock with a dividend yield of over 1% as of September 18 that’s held by many hedge funds in our database as of Q2 2022.
9. Honeywell International Inc. (NASDAQ:HON)
Number of Hedge Fund Holders: 42
Dividend Yield as of September 18: 2.21%
Honeywell International Inc. (NASDAQ:HON) is an American multinational manufacturing company that specializes in products related to different industries, including aerospace, technology, and performance materials. In Q2 2022, the company reported a strong cash position as its operating cash flow stood at nearly $800 million, up from $36 million in the previous quarter. Its free cash flow came in at $631 million and expects it to fall between $4.7 billion to $5.1 billion in FY22. The company ended the quarter with $8.2 billion in cash and cash equivalents, with total assets amounting to over $62.2 billion.
On July 29, Honeywell International Inc. declared a quarterly dividend of $0.98 per share, consistent with its previous dividend. In 2021, the company extended its dividend growth streak to 12 years. The stock’s dividend yield came in at 2.21%, as of September 18.
In July, JPMorgan raised its price target for Honeywell International Inc. to $190 with an Overweight rating on the shares, following the company’s solid Q2 earnings beat. In addition to this, the firm also appreciated the company’s improved organic revenue and better segment margins.
As of the close of Q2 2022, 42 hedge funds in Insider Monkey’s database owned stakes in Honeywell International Inc., compared with 50 in the previous quarter. These stakes hold a collective value of over $1.02 billion.
8. Caterpillar Inc. (NYSE:CAT)
Number of Hedge Fund Holders: 45
Dividend Yield as of September 18: 2.67%
Caterpillar Inc. (NYSE:CAT) is another company on our list of Dow Jones dividend stocks. It specializes in the manufacturing of construction equipment and also sells insurance to customers via a worldwide dealer network. The company is a Dividend Aristocrat as it has been raising its dividends consistently for the past 28 years. It currently pays a quarterly dividend of $1.20 per share, with a dividend yield of 2.67%, as recorded on September 18.
In Q2 2022, Caterpillar Inc. reported revenue of $14.2 billion, which showed an 11% growth from the same period last year. The company returned $1.7 billion to shareholders through dividends and share repurchases during the quarter. In the first half of the year, it generated $2.5 billion in free cash flows and returned $600 million in dividends, which shows that its FCF is stable to cover its dividend payments.
In August, Baird raised its price target on Caterpillar Inc. to $224 with an Outperform rating on the shares, highlighting the company’s competitive advantage in the mining space.
At the end of June 2022, 45 hedge funds tracked by Insider Monkey owned stakes in Caterpillar Inc., compared with 54 in the previous quarter. These stakes are collectively valued at over $3.25 billion. Fisher Asset Management was the company’s leading stakeholder in Q2, owning shares worth over $1.3 billion.
Diamond Hill Capital mentioned Caterpillar Inc. in its Q1 2022 investor letter. Here is what the firm had to say:
“We also initiated a position in Caterpillar (NYSE:CAT), one of the world’s leading manufacturers of construction and mining equipment. It’s a company we know well, as we have owned it in our large cap portfolio for quite some time. Recent share price weakness provided an opportunity for us to add it to our large cap concentrated portfolio at an attractive discount to our estimate of intrinsic value. We believe Caterpillar stands to benefit from increased capital investment supported by a healthier/recovering end market environment, particularly in construction and mining.”
7. McDonald’s Corporation (NYSE:MCD)
Number of Hedge Fund Holders: 50
Dividend Yield as of September 18: 2.17%
McDonald’s Corporation is an American multinational fast food chain and is the leading global food service retailer. In September, Piper Sandler raised its price target on the stock to $270 with an Overweight rating on the shares, appreciating the growth in its comparable sales and its performance in the recent quarter.
In Q2 2022, McDonald’s Corporation reported a 9.7% growth in global comparable sales and a 3.7% growth in its US comparable sales. The company’s digital systemwide sales exceeded $6 billion for the quarter and its systemwide sales grew by 4%. In addition to this, it generated $618 million in operating cash flow and $180.2 million in free cash flow during the quarter.
McDonald’s Corporation currently pays a quarterly dividend of $1.38 per share, with a dividend yield of 2.17%, as of September 18. The company started paying dividends in 1976 and has raised its payouts every year since then.
As of the end of Q2 2022, 50 hedge funds tracked by Insider Monkey owned stakes in McDonald’s Corporation, down from 58 in the previous quarter. These stakes hold a consolidated value of over $2.3 billion.
6. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 67
Dividend Yield as of September 18: 1.68%
Walmart Inc. (NYSE:WMT) is an American multinational retail corporation that operates a chain of grocery stores in the US. The company’s revenue in Q2 2022 saw an 8.2% year-over-year growth at $152.6 billion and its comparable sales in the US also grew by 6.5%. Its global advertising business grew by nearly 30% and its international sales amounted to over $24.4 billion. The company’s operating cash flow for the quarter stood at nearly $13 billion and its free cash flow came in at over $9 billion.
Walmart Inc. holds one of the longest dividend growth track records in the market, raising its payouts consistently for the past 49 years. Currently, it pays a quarterly dividend of $0.56 per share and has a yield of 1.68%, as recorded on September 18. The company is a prominent Dow Jones dividend stock alongside Microsoft Corporation, The Procter & Gamble Company, and McDonald’s Corporation.
In September, KeyBanc initiated its coverage of Walmart Inc. with an Outperform rating and a $155 price target. The firm highlighted the company’s defensive growth, market share gains, and margin recovery to normal levels.
The number of hedge funds tracked by Insider Monkey owning stakes in Walmart Inc. grew to 67 in Q2 2022, from 60 in the previous quarter. The collective value of these stakes came in at over $3.78 billion. Rajiv Jain and Ray Dalio were some of the company’s major stakeholders in Q2.
Like Walmart Inc., NIKE, Inc., UnitedHealth Group Incorporated, and Microsoft Corporation are Dow Jones stocks with dividend yields of over 1% as of September 18 that are also widely held by many hedge funds in our database as of Q2 2022.
5. American Express Company (NYSE:AXP)
Number of Hedge Fund Holders: 67
Dividend Yield as of September 18: 1.36%
American Express Company (NYSE:AXP) is a New York-based company that specializes in payment card services. In July, RBC Capital raised its price target on the stock to $180 with a Sector Perform rating on the shares, as the company’s underlying billings activity remained strong and above pre-pandemic levels.
In Q2 2022, American Express Company reported revenue of $13.4 billion, presenting a 30.9% year-over-year growth. The company also reported record card spending driven by robust travel and entertainment rebound after the pandemic. Its operating cash flow for the quarter came in at $4.2 billion, up from $3.8 billion in the previous quarter. The company’s free cash flow also grew to $3.8 billion, from $3.4 billion in the previous quarter.
American Express Company has been making uninterrupted dividend payments for the past 30 years, coming through as one of the most prominent Dow Jones dividend stocks. It currently pays a quarterly dividend of $0.52 per share, with a dividend yield of 1.36%, as of September 18.
At the end of June 2022, 67 hedge funds in Insider Monkey’s database owned stakes in American Express Company, compared with 69 in the preceding quarter. These stakes hold a total value of over $25.2 billion. With a position worth more than $21 billion, Berkshire Hathaway was the company’s leading stakeholder in Q2.
4. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 71
Dividend Yield as of September 18: 2.64%
Up next on our list of Dow Jones dividend stocks is The Procter & Gamble Company, which is an American multinational consumer goods corporation. The company has been raising its dividends consistently since its incorporation in 1890. It also maintains a 66-year streak of dividend growth. The company pays a quarterly dividend of $0.9133 per share and has a yield of 2.64%, as of September 18.
In fiscal Q4 2022, The Procter & Gamble Company reported revenue of $19.52 billion, which showed a 3% growth from the same period last year. The company’s operating cash flow for the year came in at $16.7 billion and its free cash flow productivity stood at 93%. In addition to this, it returned $19 billion of its capital to shareholders during the year, of which dividend payments represented $8.8 billion.
In August, Barclays reiterated its Overweight rating on The Procter & Gamble Company due to the company’s strong quarterly and annual earnings.
As per Insider Monkey’s Q2 2022 database, 71 hedge funds owned stakes in The Procter & Gamble Company, compared with 72 in the previous quarter. These stakes hold a collective value of over $5.5 billion.
3. NIKE, Inc. (NYSE:NKE)
Number of Hedge Fund Holders: 72
Dividend Yield as of September 18: 1.17%
NIKE, Inc. is an Oregon-based multinational company that specializes in the design and production of footwear, apparel, and related accessories. In Q2 2022, the company remained popular among elite funds, as 72 hedge funds in Insider Monkey’s database owned stakes in it, compared with 67 in the previous quarter. These stakes have a consolidated value of over $3.3 billion.
In fiscal Q4 2022, NIKE, Inc. reported a strong cash position with $13 billion in cash and equivalents and other short-term investments. The company’s operating cash flow stood at over $1.15 billion and its free cash flow came in at $909 million. It returned $481 million in dividends during the quarter, up 11% from the prior year. In addition to this, the company also repurchased its shares worth $1.1 billion.
On August 4, NIKE, Inc. declared a quarterly dividend of $0.305 per share, consistent with its previous dividend. The company has been raising its dividends consistently for the past 20 years. As of September 18, this Dow Jones dividend stock has a yield of 1.17%.
In September, UBS lifted its price target on NIKE, Inc. to $156 and maintained its Buy rating on the shares. The firm appreciated the management’s conviction around its Consumer Direct Acceleration strategy, which is a positive step for the company’s revenue.
ClearBridge Investments mentioned NIKE, Inc. in its Q4 2021 investor letter. Here is what the firm has to say:
“Nike is another play on e-commerce as well as the anticipated growth in consumer spending as we learn to live with COVID-19. After selling out of the stock in 2016 due to competitive concerns, we were motivated to repurchase shares because of optimism around a new management team’s focus on accelerating Nike’s shift toward e-commerce and direct-to-consumer (DTC) distribution. Near-term supply chain issues in Vietnam and retail weakness in China that we see as ephemeral provided a good buying opportunity. We do not believe the market is giving proper credit to Nike’s potential to deliver attractive, high-single-digit revenue growth while delivering operating margin expansion as more merchandise is sold direct. Nike is also still underindexed to the women’s category, which we see as a significant ongoing catalyst.”
2. UnitedHealth Group Incorporated (NYSE:UNH)
Number of Hedge Fund Holders: 91
Dividend Yield as of September 18: 1.27%
UnitedHealth Group Incorporated is an American multinational managed healthcare and insurance company that offers healthcare products and insurance services to consumers. The company reported strong quarterly earnings in Q2, posting revenue of $80.3 billion, up 13% from the same period last year. Its operating cash flow came in at $6.9 billion, compared with $5.3 billion in the previous quarter. Its free cash flow also grew to $6.2 billion, from $4.7 billion in the preceding quarter. The company returned $4 billion to shareholders through dividends and share repurchases.
UnitedHealth Group Incorporated started paying annual dividends in 1990 and shifted to quarterly dividends in 2010. Since then, the company has raised its payouts every year. It currently pays a quarterly dividend of $1.65 per share and has a yield of 1.27%, as recorded on September 18.
In September, Deutsche Bank raised its price target on UnitedHealth Group Incorporated to $569 and maintained its Buy rating on the shares. The firm highlighted the company’s partnership with Walmart, which would help it improve its revenue.
GQG Partners owned $1.6 billion worth of stakes in UnitedHealth Group Incorporated, becoming the company’s leading stakeholder in Q2 2022. Overall, 91 hedge funds owned stakes in the company in Q2, with a total value of roughly $11 billion.
Baron Funds mentioned UnitedHealth Group Incorporated in its Q2 2022 investor letter. Here is what the firm has to say:
“UnitedHealth Group Incorporated is a leading diversified health and wellbeing company whose divisions include insurance arm, United Healthcare and health care services arm, Optum, which offers care delivery and other services. Shares increased 1.1% on strong first quarter results (revenues were up 14% year-over-year), and the company increased its annual guidance.
The performance was driven by Optum as a result of a growing adoption of value-based solutions. We believe UnitedHealth leads the health care industry in innovation and execution as evidenced by its strong value proposition leading to Medicare Advantage share gains, strong cost controls, and its leadership position in the shift to value-based care.”
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 258
Dividend Yield as of September 18: 1.01%
Microsoft Corporation is one of the most stable tech companies that pay dividends to shareholders. On September 20, the company declared a 10% hike in its quarterly dividend to $0.68 per share. This was the company’s 16th consecutive year of dividend growth. As of September 18, the stock has a yield of 1.01%.
Microsoft Corporation generated revenue of $51.8 billion in fiscal Q4 2022, which showed a 12.4% year-over-year growth. The company’s operating cash flow stood at over $24.6 billion while its free cash flow came in at $17.7 billion. During the quarter, it paid $12.4 billion to shareholders and dividend payments amounted to over $4.6 billion.
In July, BMO Capital lifted its price target on Microsoft Corporation to $320 with an Outperform rating on the shares. The firm mentioned that though its results were not up to the mark, the management affirms double-digit constant currency growth and strong booking for the next fiscal year.
At the end of Q2 2022, 258 hedge funds owned positions in Microsoft Corporation, compared with 259 in the previous quarter. The stakes owned by these hedge funds hold a collective value of over $56 billion.
Baron Funds mentioned Microsoft Corporation in its Q2 2022 investor letter. Here is what the firm has to say:
“Shares of Microsoft Corporation, a leading global provider of software solutions, declined 16.6% in the quarter along with the broader software group as well as due to growing concerns of a potential macro-driven slowdown. This is despite the company posting strong quarterly financial results and successfully absorbing headwinds from the war in Ukraine. The company had 21% revenue growth, 23% operating income growth, and 35% growth in Microsoft Cloud (all year-over-year in constant currency), which now represents 47% of total revenues.
As discussed above, we continue to believe Microsoft remains a durable and growing business as companies across all industries look to digitally transform, taking advantage of the continuously expanding solution set Microsoft has to offer.”
You can also take a look at10 Best Blue Chip Dividend Stocks to Invest In and 10 Best Stocks That Pay Monthly Dividends
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This article is originally published at Insider Monkey.
