In this article, we will be looking at the 10 most popular dividend stocks on Robinhood.
High Volatility and Surging Inflation
As we entered 2022, the market situation has been relatively volatile. U.S. employers had added 467,000 jobs in January, topping the forecast of 300,000 job openings in total. According to the former U.S. Treasury Secretary, Lawrence H. Summers, the economy is moving towards an entrenched inflation rate of over the estimated 2%. Mr. Summers also points out that the Fed is behind the curve and has to catch up.
“An economy with 4% in declining unemployment rate, with a record level of job vacancies, and with wage inflation now on more and more measures above 6%, I think that the greater risk is that we under-tighten and that we end up with an economy with underlying inflation of above 4%,” Summer said.
The Power of Dividends
In times like these, dividend investing is one strategy that will pay and can help you get through periods of surging inflation. Apart from being a proven method of developing a passive income stream, dividend stocks have been seen to outperform market indices since the 1930s. Dividend stocks aid investors in reaping the benefits of compounding, since they can reinvest any capital gains made over a certain period of time. According to research conducted by Denise Chisholm, director of the quantitative market strategy for Fidelity, during periods of rising inflation rates company stocks that raised their dividend payouts have been seen to outperform the broad market indices significantly.
Going back to the 1940s, and then the 1970s, when inflation rates were on their respective record highs, dividend stocks accounted for 65% and 71% of the S&P 500’s return, respectively.
Robinhood Markets
As of January 2022, Robinhood Markets claims to have over 22 million users. Among the most widely held stocks by Robinhood users, we see names like Exxon Mobil Corporation (NYSE:XOM), Verizon Communications Inc. (NYSE:VZ), Microsoft Corporation (NASDAQ:MSFT), and Apple Inc. (NASDAQ:AAPL).
Photo by Artem Beliaikin on Unsplash
Our methodology
To come up with the 10 most popular dividend stocks on Robinhood, we scoured internet forums and determined which stocks are the most frequently traded among Robinhood users. We checked the yields of these stocks and then narrowed down our selection to stocks with dividend yields of at least 2% and above. We also took into account the hedge fund sentiment and analyst ratings to populate our list of the most popular dividend stocks and prioritized dividend yields in our rankings.
Most Popular Dividend Stocks on Robinhood
10. Johnson & Johnson (NYSE:JNJ)
Dividend Yield : 2.55%
Johnson & Johnson (NYSE:JNJ) has consistently increased its dividend payouts for about 59 years now. The company announced a quarterly cash dividend of $1.06 per share on January 4, 2022. The dividend is payable on March 8, 2022, to shareholders of record at the close of business on February 22, 2022.
This January, Raymond James analyst Jayson Bedford raised his price target on Johnson & Johnson (NYSE:JNJ) to $185 from $178 and kept an Outperform rating on the shares.
Here’s Distillate Capital’s stance on whether or not Johnson & Johnson (NYSE:JNJ) is a stock worth pouring money into:
“The largest additions in the rebalance, Johnson & Johnson (NYSE:JNJ) was around 50 and 40 basis points incrementally. J&J underperformed in the quarter while its normalized free cash flows held steady and so its position size was topped off to match the stable cash flows.”
9. The Coca-Cola Company (NYSE:KO)
Dividend Yield: 2.82%
The Coca-Cola Company (NYSE:KO) has regularly increased its dividend payouts for 59 years now and is dubbed as one of the highest yielding dividend kings. The company has a 5-year dividend CAGR of 3.71% and paid its last dividend of $0.42 per share on December 15, 2021.
This January, Guggenheim analyst Laurent Grandet upgraded The Coca-Cola Company (NYSE:KO) to Buy from Neutral and gave the stock a price target of $66, up from $61.
Like Exxon Mobil Corporation (NYSE:XOM), Verizon Communications Inc. (NYSE:VZ), Microsoft Corporation (NASDAQ:MSFT), and Apple Inc. (NASDAQ:AAPL), The Coca-Cola Company (NYSE:KO) is among the most popular stocks on Robinhood.
8. Pfizer Inc. (NYSE:PFE)
Dividend Yield: 3.35%
Pfizer Inc. (NYSE:PFE) has been consistent with increasing its dividend payouts for over a decade now. Pfizer Inc. (NYSE:PFE) has a 5-year growth rate of 6.32% and a dividend yield of 3.02% as of February 7, 2022. Pfizer Inc. (NYSE:PFE) announced an increase in the quarterly cash dividend on the company’s common stock to $0.40 for the first-quarter 2022 dividend, which will be payable on March 4, 2022, to holders of the Common Stock of record on January 28, 2022.
On January 28, 2022, JPMorgan analyst Chris Schott raised his price target on Pfizer Inc. (NYSE:PFE) to $57 from $53 and reiterated a Neutral rating on the stock.
Here’s what Saturna Capital said about Pfizer Inc. (NYSE:PFE) in its third-quarter 2021 commentary:
“The Fund’s strongest performer during the quarter was pharmaceutical manufacturer Pfizer Inc. (NYSE:PFE). The company submitted trial data to the FDA for use of its COVID-19 vaccine for younger children, and it is widely expected that the FDA will approve it. Health authorities also began recommending booster shots of the Pfizer vaccine for select populations, further increasing demand for vaccinations.”
7. National Fuel Gas Company (NYSE:NFG)
Dividend Yield: 2.83%
National Fuel Gas Company (NYSE:NFG) released earnings for the fiscal first quarter of 2022 this February. The company beat both EPS and revenue estimates. In January, National Fuel Gas Company (NYSE:NFG) was reinstated at BofA, by analyst John Abbott, who gave the stock a $66 price target and an Underperform rating.
National Fuel Gas Company (NYSE:NFG) has exhibited consistent growth in dividends over the past 8 years. GAMCO Investors was the leading shareholder in the company as of the third quarter of 2021. The fund’s stake in the company amounted to $66.62 million.
National Fuel Gas Company (NYSE:NFG) is a stock that has gained the attention of Robinhood investors. Some other stocks that Robinhood investors are pouring into include Exxon Mobil Corporation (NYSE:XOM), Verizon Communications Inc. (NYSE:VZ), Microsoft Corporation (NASDAQ:MSFT), and Apple Inc. (NASDAQ:AAPL).
6. Chevron Corporation (NYSE:CVX)
Dividend Yield: 3.68%
Chevron Corporation (NYSE:CVX) is yet another oil and gas company that has made it to the 10 most popular dividend stocks on Robinhood. The company’s track record shows 34 years of consistent dividend hikes, and it boasts a 5-year dividend growth rate of 4.36% and a payout ratio of 65.31%.
Chevron Corporation (NYSE:CVX) declared its quarterly cash dividend for the first quarter of 2022 on January 26, 2022, amid surging oil prices.
As of this February, Fisher Asset Management is the leading stakeholder in the company, owning over 6.59 million shares of the stock which amount to $774.21 million. The investment covers 0.43% of Fisher Asset Management’s 13F portfolio.
On January 31, 2022, Cowen analyst Jason Gabelman raised his price target on Chevron Corporation (NYSE:CVX) to $133 from $122 and reiterated an Outperform rating on the stock.
Goehring & Rozencwajg Associates mentioned Chevron Corporation (NYSE:CVX) in their third-quarter 2021 commentary. Here’s what the firm had to say about the stock:
“After successfully replacing 25% of Exxon’s board of directors despite owning just 0.02% of the outstanding equity, Engine No. 1, the climate-focused activist hedge fund, met with Chevron’s management late last summer. In discussions that were later described as “cordial,” Chevron Corporation (NYSE:CVX) executives shared their plan to reduce carbon emissions. Subsequently, Chevron announced new plans to further reduce carbon output, along with their intention to appoint a new director with “environmental expertise.” Although it remains unclear exactly what Engine No. 1 is planning, rumors suggest the fund has contacted other investors, strongly suggesting they intend to launch a second campaign in the not-too-distant future.
What should Chevron Corporation (NYSE:CVX) expect?
It was recently reported by The Wall Street Journal that Exxon was considering abandoning two massive natural gas projects: the 75 trillion cubic foot (tcf ) Rovuma LNG project (capital cost $30 bn) and the 5 tcf Ca Voi Xanh offshore-Vietnam gas project (capital cost $10 bn). Exxon board members (most likely including the three supported by Engine No. 1) have publically expressed concerns about both projects. According to internal reports, these projects are among the highest CO2 producers in Exxon’s pipeline; it is no surprise these projects have been called into question. However, we find the plight of both fields to be perplexing since production would almost certainly be used to displace coal in electricity generation, cutting CO2 emissions by nearly 50%. This fact seems to be lost on the new Exxon board members.”
5 Most Popular Dividend Stocks on Robinhood
5. Exxon Mobil Corporation (NYSE:XOM)
Dividend Yield: 4.37%
Oil and gas giant Exxon Mobil Corporation (NYSE:XOM) got upgraded to Buy from Hold this February by Argus analyst, Bill Selesky. The analyst gave the stock a price target of $92 in light of the company’s fourth-quarter 2021 performance. The company announced earnings per share of $2.05, beating estimates by $0.11, and generated $84.97 billion in quarterly revenues. The company’s revenue saw year-over-year growth of 82.56% and beat revenue estimates by $6.24 billion.
On January 26, 2022, Exxon Mobil Corporation (NYSE:XOM) declared a quarterly cash dividend of $0.88 per share of common stock. The dividend will be payable on March 10, 2022, to shareholders of record on February 10, 2022.
Goehring & Rozencwajg Associates published its “Natural Resource Market Commentary” third-quarter 2021 investor letter. Here’s what the firm had to say about Exxon Mobil Corporation (NYSE:XOM):
“After successfully replacing 25% of Exxon’s board of directors despite owning just 0.02% of the outstanding equity, Engine No. 1, the climate-focused activist hedge fund, met with Chevron’s management late last summer. In discussions that were later described as “cordial,” Chevron executives shared their plan to reduce carbon emissions. Subsequently, Chevron announced new plans to further reduce carbon output, along with their intention to appoint a new director with “environmental expertise.” Although it remains unclear exactly what Engine No. 1 is planning, rumors suggest the fund has contacted other investors, strongly suggesting they intend to launch a second campaign in the not-too-distant future.
What should Chevron expect?
It was recently reported by The Wall Street Journal that Exxon was considering abandoning two massive natural gas projects: the 75 trillion cubic foot (tcf ) Rovuma LNG project (capital cost $30 bn) and the 5 tcf Ca Voi Xanh offshore-Vietnam gas project (capital cost $10 bn). Exxon board members (most likely including the three supported by Engine No. 1) have publically expressed concerns about both projects.
According to internal reports, these projects are among the highest CO2 producers in Exxon’s pipeline; it is no surprise these projects have been called into question. However, we find the plight of both fields to be perplexing since production would almost certainly be used to displace coal in electricity generation, cutting CO2 emissions by nearly 50%. This fact seems to be lost on the new Exxon board members.”
4. Realty Income Corporation (NYSE:O)
Dividend Yield as of February 7: 4.48%
Realty Income Corporation (NYSE:O) is another stock that pays monthly dividends. The company is among the S&P 500 and operates as a real estate investment trust, REIT. Realty Income Corporation (NYSE:O) has been consistent with its dividend increases for over 25 years now and has a track record of 114 dividend hikes and has paid 618 monthly dividends consecutively since it went public in 1994. The company also boasts a payout ratio of 223.73% and a 5-year CAGR of 3.37%.
On November 30, 2021, Mizuho analyst Haendel St. Juste raised the price target on Realty Income Corporation (NYSE:O) to $82 from $81 and reiterated a Buy rating on the shares.
3. Altria Group, Inc. (NYSE:MO)
Dividend Yield: 6.82%
Altria Group, Inc. (NYSE:MO) manufactures and sells cigarettes, oral tobacco products, and wine in the United States. Perhaps you will recognize the company by one of the names we all know and see everywhere, Marlboro. The company has a track record of 52 years of consecutive dividend hikes, making it stand tall among other dividend kings.
Here is what Broyhill Asset Management has to say about Altria Group, Inc. in its second-quarter 2021 investor letter:
“Altria (MO) shook off the prospects of a ban on menthol and a potential cap on nicotine and gained 20%. We shared our thoughts on these regulations during the quarter, which are available here.
MO Valuation. MO is up ~ 18% YTD (even accounting for the recent sell-off). We expect MO to generate close to $5 in annual FCF per share over the next few years, putting the stock at ~ 10x, which is less than half the market’s multiple today. Over the last decade, shares have traded at an average multiple of 15x and within a range of ~ 10x – 20x (+/-1 standard deviation). The stock yields 7.2% at the current price, close to a 6% premium to treasuries. Historically, shares have traded closer to a 3% premium to the 10Y, which would imply a ~ $75 share price.”
2. Prospect Capital Corporation (NASDAQ:PSEC)
Dividend Yield: 8.78%
Prospect Capital Corporation (NASDAQ:PSEC) operates as a business development company that makes debt and equity investments in middle-market companies. On November 9, 2021, Raymond James analyst Robert Dodd upgraded Prospect Capital Corporation (NASDAQ:PSEC) to Market Perform from Underperform.
Prospect Capital Corporation (NASDAQ:PSEC) was a part of 7 hedge fund portfolios by the end of the third quarter of 2021. The total stakes of these hedge funds in the BDC were in excess of $27.33 million. As of last December, Two Sigma Advisors held the highest stake in Prospect Capital Corporation (NASDAQ:PSEC) worth $15.2 million.
1. Verizon Communications Inc. (NYSE:VZ)
Dividend Yield: 4.73%
By the end of the third quarter of 2021, 57 hedge funds had Verizon Communications Inc. (NYSE:VZ) among their 13F holdings. The total value of these stakes was in excess of $10.35 billion. As of February 4, 2022, Berkshire Hathaway owned the most shares of Verizon Communications Inc. (NYSE:VZ). The fund’s stake in the company was valued at $8.25 billion, which covered 2.49% of the fund’s investment portfolio.
On January 26, 2022, Deutsche Bank analyst Bryan Kraft raised his price target on Verizon Communications Inc. (NYSE:VZ) to $59 from $57 and reiterated a Hold rating on the shares.
Here is what Weitz Investment Management Hickory Fund has to say about Verizon Communications Inc. (NYSE:VZ) in its fourth-quarter 2021 investor letter:
“After several quarters of pandemic-induced outsized growth, new broadband connection growth has slowed for U.S. cable operators. This slower growth has coincided with a renewed push by competitors like Verizon and AT&T to offer high-speed data (either via wireless connects or by building new fiber-optic networks).”
You can also take a look at 10 best high dividend stocks to buy and 10 Best Growth Stocks To Buy Now.
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Disclosure: None. 10 Most Popular Dividend Stocks on Robinhood is originally published on Insider Monkey.
