In this article, we will be looking at 10 high yield dividend stocks to buy in August.
As we enter into a new month this year, it is only natural to be struck by a sense of uncertainty and unease when it comes to economic growth and recovery. While the coronavirus pandemic continues to rage on and vaccination rates continue to rise, the economy continues to remain in a precarious situation. As such, picking and choosing the right companies to invest seems to be becoming harder by the day. This uncertainty surrounding the economy may be steadily becoming a thing of the past, however, as economists have mentioned that within the US, we should be expecting economic growth of about 7% in 2021. This figure would mark the economy’s strongest ever performance since as far back as 1984, according to Reuters. The International Monetary Fund has also upped its growth forecast for the US economy by 0.6% for 2021, bringing the value to 7%. At the same time, the foreseen economic growth in 2022 has also been raised by 1.4%, bringing the value up to 4.9% for the next year.
As new hope dawns for the economy in light of economists’ expectations and governmental support, such as the $1.9 trillion provided by the Biden administration this March as COVID-19 relief, one can begin to breathe a sigh of relief in hopes that the market and economy may be done with the worst of the pandemic. As such, investing in dividend stocks like Bristol-Myers Squibb Company (NYSE: BMY), Altria Group, Inc. (NYSE: MO), Verizon Communications, Inc. (NYSE: VZ), and JPMorgan Chase & Co. (NYSE: JPM) this August may become the next order of the day. The reason for this development is actually pretty simple: as the economy rebounds, so do dividend stocks with a record for outperforming the market. And what better place to put your money than stocks that not only provide income investors with steady incomes in times of financial strife, but also provide others with the opportunity to reinvest their dividends through dividend reinvestment plans, or DRIPs, for long-term financial stability?
Hence, we have compiled a list of the best high yield dividend stocks to buy in August. We have kept in mind the fact that high-yielding stocks have historically outperformed low-yielding stocks by about 1.7% annually from 1928 to 2013, while also remembering that dividend stocks themselves have a huge impact on the market at large, regardless of whether they are higher-yielding stocks or lower-yielding ones. The fact that during bearish markets, in particular, dividend stocks have managed to contribute about 90% of the S&P 500’s total return between 1900 and 2000 is testament enough to the claim that dividends are not to be taken lightly in the market.
Dividend investing is becoming difficult by the day, even for the smart money. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, 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 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 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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With the above context in mind, let’s look at the 10 high yield dividend stocks to buy in August.
By analyzing the data of 866 hedge funds, we have selected stocks by keeping hedge fund sentiment in mind. We have also picked stocks with dividend yields of over 8% while ensuring that the stocks selected have mostly positive analysts’ ratings and strong fundamentals. The stocks added to our list below also have their hedge fund holders and dividend yields mentioned, with the stocks being ranked on the basis of dividend yield, from lowest to highest.
High Yield Dividend Stocks to Buy in August
10. Prospect Capital Corporation (NASDAQ: PSEC)
Number of Hedge Fund Holders: 7
Dividend Yield: 8.9%
Prospect Capital Corporation (NASDAQ: PSEC) is a business development company and ranks 10th on our list of high yield dividend stocks to buy in August. The company’s investments are focused on debt and equity in the US middle-market businesses.
This August, Prospect Capital Corporation (NASDAQ: PSEC) announced that its preferred stock offerings surpassed the $300 million mark since the initial closing in December.
In the fiscal third quarter of 2021, Prospect Capital Corporation (NASDAQ: PSEC) had an NII of $0.19, beating estimates by $0.02. The company’s TII was $159.46 million, up 3.21% year over year and also beating estimates by $8.32 million. Prospect Capital Corporation (NASDAQ: PSEC) has also gained 17.4% in the past 6 months and 45.74% year to date.
By the end of the first quarter of 2021, 7 hedge funds out of the 866 tracked by Insider Monkey held stakes in Prospect Capital Corporation (NASDAQ: PSEC) worth roughly $11.6 million. This is compared to 8 hedge funds in the previous quarter with a total stake value of approximately $18.3 million.
Like Bristol-Myers Squibb Company (NYSE: BMY), Altria Group, Inc. (NYSE: MO), Verizon Communications, Inc. (NYSE: VZ), and JPMorgan Chase & Co. (NYSE: JPM), Prospect Capital Corporation (NASDAQ: PSEC) is a good stock to invest in.
9. American Finance Trust, Inc. (NASDAQ: AFIN)
Number of Hedge Fund Holders: 7
Dividend Yield: 8.9%
American Finance Trust, Inc. (NASDAQ: AFIN) is a real estate investment trust company based in the US. The company specializes in the acquisition of a high-quality single and multi-tenant portfolio, and it ranks 9th on our list of high yield dividend stocks to buy in August.
Barry Oxford, an analyst at Colliers, began covering shares of American Finance Trust, Inc. (NASDAQ: AFIN) this June. Oxford placed a Neutral rating and a $10 price target on the stock.
In the first quarter of 2021, American Finance Trust, Inc. (NASDAQ: AFIN) had an FFO of $0.21, missing estimates by $0.02. The company’s revenue was $79.19 million, up 6.2% year over year and beating the previous quarter’s revenue of $77.24 million. American Finance Trust, Inc. (NASDAQ: AFIN) has also gained 5.12% in the past 6 months and 9.91% year to date.
By the end of the first quarter of 2021, 7 hedge funds out of the 866 tracked by Insider Monkey held stakes in American Finance Trust, Inc. (NASDAQ: AFIN) worth roughly $11.7 million. This is compared to 8 hedge funds in the previous quarter with a total stake value of approximately $9.87 million.
Like Bristol-Myers Squibb Company (NYSE: BMY), Altria Group, Inc. (NYSE: MO), Verizon Communications, Inc. (NYSE: VZ), and JPMorgan Chase & Co. (NYSE: JPM), American Finance Trust, Inc. (NASDAQ: AFIN) is a good stock to invest in.
8. Oxford Square Capital Corp. (NASDAQ: OXSQ)
Number of Hedge Fund Holders: 5
Dividend Yield: 8.9%
Oxford Square Capital Corp. (NASDAQ: OXSQ) is a capital market company ranking 8th on our list of high yield dividend stocks to buy in August. The company aims to maximize its portfolio’s total return by investing in corporate debt securities and collateralized loan obligation structured finance investments primarily.
Ladenburg analyst Mickey Schleien holds a Neutral rating on Oxford Square Capital Corp. (NASDAQ: OXSQ) shares as of this May.
In the second quarter of 2021, Oxford Square Capital Corp. (NASDAQ: OXSQ) had an NII of $0.06, missing estimates by $0.05. The company’s TII was $7.84 million, also missing estimates by $1.96 million. Oxford Square Capital Corp. (NASDAQ: OXSQ) has also gained 20.77% in the past 6 months and 48.11% year to date.
By the end of the first quarter of 2021, 5 hedge funds out of the 866 tracked by Insider Monkey held stakes in Oxford Square Capital Corp. (NASDAQ: OXSQ) worth roughly $4.03 million. This is compared to 7 hedge funds in the previous quarter with a total stake value of approximately $3.33 million.
Like Bristol-Myers Squibb Company (NYSE: BMY), Altria Group, Inc. (NYSE: MO), Verizon Communications, Inc. (NYSE: VZ), and JPMorgan Chase & Co. (NYSE: JPM), Oxford Square Capital Corp. (NASDAQ: OXSQ) is a good stock to invest in.
7. Dynex Capital, Inc. (NYSE: DX)
Number of Hedge Fund Holders: 10
Dividend Yield: 9%
Dynex Capital, Inc. (NYSE: DX), another real estate investment trust company, ranks 7th on our list of high yield dividend stocks to buy in August. The company is based in Virginia, US, and manages a diversified and leveraged fixed-income portfolio.
BTIG has a Buy rating on shares of Dynex Capital, Inc. (NYSE: DX), set by analyst Eric Hagen who has also placed a $19 price target on the stock and commented that Dynex Capital, Inc. (NYSE: DX) may be able to deliver an economic return of 9-11%.
In the second quarter of 2021, Dynex Capital, Inc. (NYSE: DX) had an FFO of $0.51, beating estimates by $0.04. The company’s revenue was $12.12 million, missing estimates by $2.96 million. Dynex Capital, Inc. (NYSE: DX) has gained 13.39% in the past year.
By the end of the first quarter of 2021, 10 hedge funds out of the 866 tracked by Insider Monkey held stakes in Dynex Capital, Inc. (NYSE: DX) worth roughly $23.7 million. This is compared to 10 hedge funds in the previous quarter with a total stake value of approximately $15.1 million.
Like Bristol-Myers Squibb Company (NYSE: BMY), Altria Group, Inc. (NYSE: MO), Verizon Communications, Inc. (NYSE: VZ), and JPMorgan Chase & Co. (NYSE: JPM), Dynex Capital, Inc. (NYSE: DX) is a good stock to invest in.
6. AGNC Investment Corp. (NASDAQ: AGNC)
Number of Hedge Fund Holders: 18
Dividend Yield: 9.1%
AGNC Investment Corp. (NASDAQ: AGNC) is another REIT dividend stock that has made it to our list of high yield dividend stocks to buy in August. The company invests in residential mortgage pass-through securities and collateralized mortgage obligations and ranks 6th on our list.
Piper Sandler holds an Overweight rating and $18.50 price target on AGNC Investment Corp. (NASDAQ: AGNC) shares while Keefe Bruyette holds a Market Perform rating and an $18.25 price target as of this June. Additionally, Barclays also holds an Overweight rating on shares of AGNC Investment Corp. (NASDAQ: AGNC) as of this July.
In the second quarter of 2021, AGNC Investment Corp. (NASDAQ: AGNC) had an FFO of $0.76, beating estimates by $0.11. The company’s revenue was $232 million, but missing estimates by $90.23 million. AGNC Investment Corp. (NASDAQ: AGNC) has also gained 2.27% year to date and 14.56% in the past year.
By the end of the first quarter of 2021, 18 hedge funds out of the 866 tracked by Insider Monkey held stakes in AGNC Investment Corp. (NASDAQ: AGNC) worth roughly $167 million. This is compared to 25 hedge funds in the previous quarter with a total stake value of approximately $353 million.
Like Bristol-Myers Squibb Company (NYSE: BMY), Altria Group, Inc. (NYSE: MO), Verizon Communications, Inc. (NYSE: VZ), and JPMorgan Chase & Co. (NYSE: JPM), AGNC Investment Corp. (NASDAQ: AGNC) is a good stock to invest in.
5. Ellington Financial Inc. (NYSE: EFC)
Number of Hedge Fund Holders: 6
Dividend Yield: 9.1%
Ellington Financial Inc. (NYSE: EFC) is a company that focuses on investing in financial assets like residential and commercial mortgage-backed securities, residential and commercial mortgage loans, consumer loans, and other related assets. It ranks 5th on our list of high yield dividend stocks to buy in August.
BTIG’s Eric Hagen raised his price target on Ellington Financial Inc. (NYSE: EFC) shares this May from $18.50 to $19, reiterating a Buy rating at the same time. Additionally, UBS has a Neutral rating on shares of Ellington Financial Inc. (NYSE: EFC) as well.
In the first quarter of 2021, Ellington Financial Inc. (NYSE: EFC) had an FFO of $0.43, beating the previous quarter’s FFO of $0.37. The company’s revenue was $40.08 million, also beating the previous quarter’s $39.07 million revenue. Ellington Financial Inc. (NYSE: EFC) has also gained 15.12% in the past 6 months and 24.11% year to date.
By the end of the first quarter of 2021, 6 hedge funds out of the 866 tracked by Insider Monkey held stakes in Ellington Financial Inc. (NYSE: EFC) worth roughly $38.6 million. This is compared to 9 hedge funds in the previous quarter with a total stake value of approximately $40.5 million.
4. Antero Midstream Corporation (NYSE: AM)
Number of Hedge Fund Holders: 17
Dividend Yield: 9.7%
Antero Midstream Corporation (NYSE: AM), an energy company, works to service increasing natural gas and natural gas liquid production in the Appalachian Basin. The company ranks 4th on our list of high yield dividend stocks to buy in August and is based in Denver, Colorado.
Morgan Stanley’s Mark Carlucci upgraded shares of Antero Midstream Corporation (NYSE: AM) this March from Underweight to Equal Weight, with a raised price target of $11 versus the previous $6 price target.
In the second quarter of 2021, Antero Midstream Corporation (NYSE: AM) had an EPS of $0.23, beating estimates by $0.01. The company’s revenue was $232.79 million, up 5,94% year over year and also beating estimates by $11.9 million. Antero Midstream Corporation (NYSE: AM) has also gained 14.43% in the past 6 months and 20.58% year to date.
By the end of the first quarter of 2021, 17 hedge funds out of the 866 tracked by Insider Monkey held stakes in Antero Midstream Corporation (NYSE: AM) worth roughly $123 million. This is compared to 19 hedge funds in the previous quarter with a total stake value of approximately $141 million.
Bonhoeffer Capital Management, a value-oriented investment management firm, mentioned Antero Midstream Corporation (NYSE: AM) in its fourth-quarter 2020 investor letter. Here’s what they said:
“Public LBOs (32% of Portfolio; Quarterly Average Performance +25%)
This includes our broadcast TV franchises, leasing and roll-on/roll-off (RORO) shipping, and our natural gas pipeline firm. One trend in these levered firms is the increasing spread between bond yields and the firms’ free cash flow yield.
An example is Antero Midstream, whose FCF yield was 15% as of December 31, 2020, with a debt yield of 6% with the bond/equity FCF spread of 9%. This is a large spread given that Antero Midstream has completed its backbone infrastructure and gathering investment and capital expenditures should be small going forward. With natural gas prices rebounding, Antero Midstream cash flows become more secured as Antero Resources has more cash flow cushion in making payments to Antero Midstream. The recovery in natural gas prices is expected to continue as the economy opens up and low oil prices have shut down Permian oil wells that were generating almost-free associated natural gas. Antero Midstream’s FCF yield of 15% is also higher than similarly secured Antero subordinated debt with a yield of 7.8%.”
3. Natural Health Trends Corp. (NASDAQ: NHTC)
Number of Hedge Fund Holders: N/A
Dividend Yield: 10.9%
Natural Health Trends Corp. (NASDAQ: NHTC) is a company operating internationally in the direct-selling and e-commerce businesses. The company’s subsidiaries deal in personal care, wellness, and quality of life products and it ranks 3rd on our list of high yield dividend stocks to buy in August.
In light of the announcement of its Q2 results, Natural Health Trends Corp. (NASDAQ: NHTC) commented that its performance for the quarter showed “sequential growth,” mentioning that it had seen its fifth quarter of positive operating income and net income in a row, alongside its third consecutive quarter of positive cash flow generation.
In the second quarter of 2021, Natural Health Trends Corp. (NASDAQ: NHTC) had an EPS of $0.02, surpassing the $0.01 EPS of the previous quarter. The company’s revenue was $3.93 million, also beating the $3.25 million revenue from the previous quarter. Natural Health Trends Corp. (NASDAQ: NHTC) has also gained 8.33% in the past 6 months and 44.74% year to date.
2. ARMOUR Residential REIT, Inc. (NYSE: ARR)
Number of Hedge Fund Holders: 9
Dividend Yield: 11.6%
ARMOUR Residential REIT, Inc. (NYSE: ARR), a residential REIT founded in 2008, ranks 2nd on our list of high yield dividend stocks to buy in August. The company invests only in residential mortgage-backed securities issues by the US government’s sponsored entities.
This July, B. Riley’s analyst Matt Howlett began covering shares of ARMOUR Residential REIT, Inc. (NYSE: ARR) with a Neutral rating. The analyst also placed an $11.50 price target on the stock.
In the second quarter of 2021, ARMOUR Residential REIT, Inc. (NYSE: ARR) had an FFO of $0.21, missing estimates by $0.07. The company’s revenue was $16.7 million, beating the previous quarter’s revenue of $16.06 million. ARMOUR Residential REIT, Inc. (NYSE: ARR) has also gained 8.44% in the past year.
By the end of the first quarter of 2021, 9 hedge funds out of the 866 tracked by Insider Monkey held stakes in ARMOUR Residential REIT, Inc. (NYSE: ARR) worth roughly $22.2 million. This is compared to 13 hedge funds in the previous quarter with a total stake value of approximately $23.5 million.
1. Orchid Island Capital, Inc. (NYSE: ORC)
Number of Hedge Fund Holders: 8
Dividend Yield: 16.1%
Orchid Island Capital, Inc. (NYSE: ORC) is next and last on our list of high yield dividend stocks to buy in August and ranks 1st. It is a speciality finance company investing primarily in residential mortgage-backed securities on a leveraged basis.
Ladenburg holds a Buy rating on shares of Orchid Island Capital, Inc. (NYSE: ORC), an upgrade from the stock’s previous rating of Neutral.
In the second quarter of 2021, Orchid Island Capital, Inc. (NYSE: ORC) had an FFO of $0.24, missing estimates by $0.03. The company’s revenue was $27.70 million, up 21.59% year over year and beating estimates by $1.41 million.
By the end of the first quarter of 2021, 8 hedge funds out of the 866 tracked by Insider Monkey held stakes in Orchid Island Capital, Inc. (NYSE: ORC) worth roughly $19.9 million. This is compared to 10 hedge funds in the previous quarter with a total stake value of approximately $14.8 million.
You can also take a look at 10 Best Dividend Paying Stocks to Buy Under $50 and 10 Best Dividend Stocks Under $20.
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Disclosure: None. 10 High Yield Dividend Stocks to Buy in August is originally published on Insider Monkey.
