In this article, we will take a look at the 15 most promising dividend stocks according to analysts.
Financial markets are currently wavering following the SVB collapse and uncertainty about the Federal Reserve’s roadmap to tame inflation. Some analysts believe the central bank could pause interest rate hikes to stop a possible crisis spillover in the banking sector. But others question how the Fed would be able to tame inflation if it pauses its interest rate hikes? Only time would tell could be the right answer since experts have been proven wrong time and again given the unprecedented nature of the crisis we are seeing in the markets where history is no longer a guide.
However, when it comes to dividend stocks, history does provide some guidance. Data shows that when markets are going through turmoil and recession is around the corner, dividend growth stocks provide a solid refuge to investors. An S&P Global report said that companies that have a strong track record of growing their dividends provide investors a chance to have exposure to “high-quality stocks and greater income over time, therefore buffering against market volatility and addressing the risk of rising rates to some extent.”
One of the most important reasons why investing in dividend growth stocks seems worthwhile is the buffer against volatility that comes with having an exposure to these stocks. The S&P Global report said that during Dec. 31, 1999 to March 31, 2022, the S&P High Yield Dividend Aristocrats outperformed the S&P Composite 1500 and S&P 500 High Dividend Index by an average of 140 bps per month and 49 bps per month, respectively, during down market cycles.
A detailed research report by Raymond James also mentions several data points highlighting the performance of dividend stocks during recessionary periods. The report, titled “Investment Strategies for Recessionary Periods,” says that for investors who are increasingly sensitive to market fluctuations” and want to “proactively manage volatility,” high quality fixed-income and dividend-producing equity investments are suitable as they have historically shown resilience during recessionary environments.
Photo by Vitaly Taranov on Unsplash
Our Methodology
For this article, we first used the Finviz stock screener to find stocks with dividend yields over 2% whose average analyst price estimates are at least 30% above their current stock prices. We sorted the resultant dataset of stocks in descending order of market caps and picked top 15 stocks with a strong upside potential in terms of stock prices based on one-year analyst price estimates, taken from Yahoo Finance.
Most Promising Dividend Stocks According to Analysts
15. Equinor ASA (NYSE:EQNR)
Number of Hedge Fund Holders: 16
One-Year Average Price Estimate: $41.50
Energy company Equinor ASA (NYSE:EQNR) is a high-yield dividend stock in our list of the most promising dividend stocks according to analysts. In February, Equinor ASA (NYSE:EQNR) declared a quarterly dividend of $0.30 per share, which was a whopping 50% increase from the prior dividend of $0.20. Forward dividend yield came in at 4.1%. Equinor ASA (NYSE:EQNR)’s board also declared an extraordinary cash dividend of $0.60.
As of the end of the last quarter of 2022, 16 hedge funds out of the 943 funds in Insider Monkey’s proprietary database had stakes in Equinor ASA (NYSE:EQNR). The net value of these stakes was $496 million. The biggest stakeholder of Equinor ASA (NYSE:EQNR) was Zach Schreiber’s Point State Capital which owns a $30 million stake in the company.
14. British American Tobacco p.l.c. (NYSE:BTI)
Number of Hedge Fund Holders: 19
One-Year Average Price Estimate: $53
British American Tobacco p.l.c. (NYSE:BTI) is one of the most notable dividend stocks with a strong dividend growth history. British American Tobacco p.l.c. (NYSE:BTI) also has an upside potential based on average analyst price target of $53. British American Tobacco p.l.c. (NYSE:BTI)’s management recently said during the Q4 earnings call that the company plans to continue growing its dividend at an “average pay-out ratio of 65% over the long term, maintaining leverage within our target corridor of 2 to 3 times adjusted net debt / adjusted EBITDA, potential bolt-on M&A opportunities, and share buybacks.”
At the end of the fourth quarter of 2022, 19 hedge funds tracked by Insider Monkey reported having stakes in British American Tobacco p.l.c. (NYSE:BTI). The biggest stakeholder of British American Tobacco p.l.c. (NYSE:BTI) was Rajiv Jain’s GQG Partners which had a $1.4 billion stake in the company.
13. Sociedad Química y Minera de Chile S.A. (NYSE:SQM)
Number of Hedge Fund Holders: 25
One-Year Average Price Estimate: $112
Sociedad Química y Minera de Chile S.A. (NYSE:SQM) is one of the biggest lithium producers in the world. This high-yield dividend stock has a strong upside potential based on analysts’ average price estimate. Earlier this month, Sociedad Química y Minera de Chile S.A. (NYSE:SQM) posted Q4 results. Q4 GAAP EPADR came in at $4.03, beating estimates by $0.27. Revenue in the quarter jumped about 190% on a YoY basis to reach $3.13 billion, beating estimates by $110 million.
At the end of the fourth quarter of 2022, 25 hedge funds had stakes in Sociedad Química y Minera de Chile S.A. (NYSE:SQM).
12. Boston Properties, Inc. (NYSE:BXP)
Number of Hedge Fund Holders: 26
One-Year Average Price Estimate: $77.29
Boston Properties, Inc. (NYSE:BXP) is a high-yield dividend stock with upside potential in stock price, according to analysts. Boston Properties, Inc. (NYSE:BXP)’s one-year average price target is $77.29, while the stock price as of March 14 stands at $53.
In December, Boston Properties, Inc. (NYSE:BXP) declared a quarterly dividend of $0.98 per share. Forward dividend yield at the time came in at 5.89%.
As of the end of the fourth quarter of 2022, 26 hedge funds tracked by Insider Monkey had stakes in Boston Properties, Inc. (NYSE:BXP). The net worth of these stakes was $506 million. The biggest hedge fund stakeholder of Boston Properties, Inc. (NYSE:BXP) was Jean-Marie Eveillard’s First Eagle Investment Management which had a stake worth over $259 million.
11. The Carlyle Group Inc. (NASDAQ:CG)
Number of Hedge Fund Holders: 28
One-Year Average Price Estimate: $43
Earlier this month, Barclays analyst Benjamin Budish gave bullish comments on The Carlyle Group Inc. (NASDAQ:CG). The analyst thinks The Carlyle Group Inc. (NASDAQ:CG) is undervalued.
In February, The Carlyle Group Inc. (NASDAQ:CG) declared a quarterly dividend of $0.325 per share, in line with the previous dividend. Forward dividend yield at the time came in at 3.58%.
As of the end of the fourth quarter of 2022, 28 hedge funds reported having stakes in The Carlyle Group Inc. (NASDAQ:CG). The total value of these stakes was $887 million. The most notable stakeholder of The Carlyle Group Inc. (NASDAQ:CG) was Panayotis Takis Sparaggis’s Alkeon Capital Management which has a $391 million stake in the company.
Gator Capital Management made the following comment about The Carlyle Group Inc. (NASDAQ:CG) in its Q4 2022 investor letter:
“We started a new position in The Carlyle Group Inc. (NASDAQ:CG) during Q4. Carlyle is a name-brand private equity firm. We like the private equity business because 1) the sector is taking market share with investor portfolios, 2) the business results of private equity firms are asymmetrical in bull markets versus bear markets, and 3) the locked-up client capital is more durable than traditional investment managers.
Carlyle’s stock had a tough 2022. Private equity firms had very strong years in 2020 and 2021 as investors recognized the attractiveness of the business model. They bid up multiples to unattractive levels. Then as the bear market of 2022 unfolded, investors pulled away from the stocks of private equity firms due to the firm’s equity exposure. The high market valuations made it unattractive for private equity firms to make new investments, and, at the same time, the declining stock market made it difficult to monetize existing investments…” (Click here to read the full text)
10. Hasbro, Inc. (NASDAQ:HAS)
Number of Hedge Fund Holders: 32
One-Year Average Price Estimate: $70.30
In February, Hasbro, Inc. (NASDAQ:HAS) declared a quarterly dividend of $0.70 per share, in line with the previous dividend. Forward dividend yield at the time came in at 4.88%. The dividend is payable on May 15 to shareholders of record as of May 1.
A total of 32 hedge funds tracked by Insider Monkey reported owning stakes in Hasbro, Inc. (NASDAQ:HAS) as of the end of the fourth quarter of 2022.
ClearBridge Investments made the following comment about Hasbro, Inc. (NASDAQ:HAS) in its Q3 2022 investor letter:
“Rising inflation pressuring consumer budgets for discretionary purchases, as well as volatile currency markets, weighed on global entertainment company Hasbro, Inc. (NASDAQ:HAS), which owns Monopoly, My Little Pony, Nerf, Play-Doh and other games and brands. The main detractors from absolute returns were positions in Microsoft, Ball, Intel, Hasbro and McCormick (MKC).”
9. Huntington Bancshares Incorporated (NASDAQ:HBAN)
Number of Hedge Fund Holders: 32
One-Year Average Price Estimate: $15.94
Yet another bank stock in our list, Huntington Bancshares Incorporated (NASDAQ:HBAN) are under pressure currently amid the SVB collapse. However, Huntington Bancshares Incorporated (NASDAQ:HBAN)’s one-year price target set by analysts presents a strong upside potential. In January, Huntington Bancshares Incorporated (NASDAQ:HBAN) rose after the company posted strong Q4 results and reported 2023 guidance for net interest income that met the consensus estimate.
Aristotle Capital made the following comment about Huntington Bancshares Incorporated (NASDAQ:HBAN) in its Q3 2022 investor letter:
“Huntington Bancshares Incorporated (NASDAQ:HBAN), an Ohio-based bank holding company, was removed from the portfolio based on our belief that shares were fully valued and there were better opportunities to deploy capital elsewhere within the portfolio.”
8. Ally Financial Inc. (NYSE:ALLY)
Number of Hedge Fund Holders: 43
One-Year Average Price Estimate: $35.47
Ally Financial Inc. (NYSE:ALLY) is under pressure amid the broader banking sector downturn following the SVB collapse. Nonetheless Ally Financial Inc. (NYSE:ALLY) has been exhibiting strengths when it comes to fundamentals and earnings. During the fourth quarter, Ally Financial Inc. (NYSE:ALLY)’s adjusted EPS came in at $1.08, beating estimates by $0.07. Revenue in the quarter came in at $2.2 billion, beating estimates by $140 million. In January, Ally Financial declared a quarterly dividend of $0.30 per share. Forward dividend yield at the time came in at 4.44%.
As of the end of the fourth quarter of 2022, 43 hedge funds reported having stakes in Ally Financial Inc. (NYSE:ALLY), according to Insider Monkey’s database.
7. MetLife, Inc. (NYSE:MET)
Number of Hedge Fund Holders: 43
One-Year Average Price Estimate: $83.64
Life insurance company MetLife, Inc. (NYSE:MET) ranks 7th in our list of the most promising dividend stocks according to analysts. As of March 14, MetLife, Inc. (NYSE:MET) is trading at around $59, while its one-year average price target is $83.
In January, MetLife, Inc. (NYSE:MET) declared a quarterly dividend of $0.50 per share, in line with the previous dividend. Forward dividend yield at the time came in at 2.79%. MetLife, Inc. (NYSE:MET) recently announced that its institutional asset management unit MetLife Investment Management will buy Raven Capital Management.
6. Truist Financial Corporation (NYSE:TFC)
Number of Hedge Fund Holders: 44
One-Year Average Price Estimate: $52
Despite a wider turmoil of bank stocks after the SVB collapse, Truist Financial Corporation (NYSE:TFC) got an upgrade from Baird analyst David George. The analyst thinks that the SVB-related problems won’t spread through the sector.
The analyst, who has an Outperform rating on Truist Financial Corporation (NYSE:TFC), said in a note to investors that Truist Financial Corporation’s Southeastern footprint “offers one of the most attractive core customer bases in the U.S.”
At the end of the fourth quarter of 2022, 44 hedge funds had stakes in Truist Financial Corporation (NYSE:TFC). The total value of these stakes was about $824 million. The biggest hedge fund stakeholder of Truist Financial Corporation (NYSE:TFC) was Ric Dillon’s Diamond Hill Capital which had a $563 million stake in the company.
ClearBridge Select Strategy made the following comment about Truist Financial Corporation (NYSE:TFC) in its Q4 2022 investor letter:
“We remained active in culling the portfolio of stocks we see as no longer well positioned for the more restrictive macro environment, eliminating seven common stock positions. The biggest sale was Truist Financial Corporation (NYSE:TFC), a regional bank formed by the merger of SunTrust and BB&T that we purchased during the height of COVID-19. At the time, this evolving opportunity growth company was not being recognized for its strong footprint in the Southeast. But the bank’s underinvestment in technology and exposure to auto lending could become greater risks in a downturn, leading us to exit the stock.”
5. Devon Energy Corporation (NYSE:DVN)
Number of Hedge Fund Holders: 55
One-Year Average Price Estimate: $70
Oil company Devon Energy Corporation (NYSE:DVN) is one of the most promising dividend stocks according to analysts. In February, Devon Energy Corporation (NYSE:DVN) declared a quarterly dividend of $0.20 per share, which was an 11.1% increase from the previous dividend of $0.18. Forward dividend yield came in at 1.25%. The new dividend was payable on March 31.
During the fourth quarter, Devon Energy Corporation (NYSE:DVN)’s adjusted EPS came in at $1.66, missing estimates by $0.09. Revenue in the quarter increased by 0.7% on a YoY basis to reach $4.3 billion, beating estimates by $10 million.
At the end of the last quarter of 2022, 55 hedge funds tracked by Insider Monkey reported having stakes in Devon Energy Corporation (NYSE:DVN). The net worth of these stakes was about $824 million. The most notable stakeholder of Devon Energy Corporation (NYSE:DVN) was Donald Yacktman’s Yacktman Asset Management with a $173 million stake.
4. Chesapeake Energy Corporation (NYSE:CHK)
Number of Hedge Fund Holders: 58
One-Year Average Price Estimate: $119
Chesapeake Energy Corporation (NYSE:CHK) is one of the most promising dividend stocks according to analysts. Chesapeake Energy Corporation (NYSE:CHK) had announced a $1.29 per common share to be paid in March 2023. During the fourth quarter, Chesapeake Energy Corporation (NYSE:CHK)’s adjusted EPS came in at $4.22, beating estimates by $1.32.
As of the end of the last quarter of 2022, 58 hedge funds had stakes in Chesapeake Energy Corporation (NYSE:CHK), according to Insider Monkey’s proprietary database of 943 hedge funds.
Carillon Tower Advisers made the following comment about Chesapeake Energy Corporation (NASDAQ:CHK) in its Q3 2022 investor letter:
“Chesapeake Energy Corporation (NASDAQ:CHK), a natural gas exploration and production company, emerged from bankruptcy with little fanfare in 2021, despite having rid itself of its debt burden and onerous pipeline contracts. The company was able to make two large acquisitions at very reasonable prices within its core producing areas, allowing for scale and cost savings. Then in 2022, natural gas prices began to rise well above expectations, increasing the value of Chesapeake’s large natural gas resources and production and contributing to its outperformance.”
3. Fidelity National Information Services, Inc. (NYSE:FIS)
Number of Hedge Fund Holders: 64
One-Year Average Price Estimate: $81.71
Financial and technology services company Fidelity National Information Services, Inc. (NYSE:FIS) ranks 3rd in our list of the most promising dividend stocks according to analysts.
In February, Fidelity National Information Services, Inc. (NYSE:FIS) declared a quarterly dividend of $0.52 per share, a whopping 10.6% increase from the prior dividend of $0.47. The dividend was payable on March 24 to shareholders of record as of March 10.
At the end of the fourth quarter of 2022, 64 hedge funds had stakes in Fidelity National Information Services, Inc. (NYSE:FIS).
Diamond Hill Large Cap Strategy made the following comment about Fidelity National Information Services, Inc. (NYSE:FIS) in its Q4 2022 investor letter:
“In addition to SVB Financial and V.F. Corporation, we eliminated our positions in financial services technology company Fidelity National Information Services, Inc. (NYSE:FIS) and media and technology company Comcast Corporation (NASDAQ:CMCSA). Several reasons factored into our decision to sell Fidelity National Information Services, including board and leadership changes, a strategic review, and a cooperation agreement with activist shareholder D.E. Shaw (and discussions with JANA Partners).”
2. CVS Health Corporation (NYSE:CVS)
Number of Hedge Fund Holders: 70
One-Year Average Price Estimate: $113.52
In January, CVS Health Corporation (NYSE:CVS) declared a quarterly dividend of $0.605 per share, which was bump from the previous dividend of $0.55. CVS Health Corporation (NYSE:CVS)’s one-year average price target set by analysts is $113.52, which shows a strong upside potential from current levels. At the end of the fourth quarter of 2022, 70 hedge funds out of the 943 funds had stakes in CVS Health Corporation (NYSE:CVS). The total worth of these stakes was $2.1 billion. The biggest hedge fund stakeholder of CVS Health Corporation (NYSE:CVS) was Cliff Asness’ AQR Capital Management which had a $396 million stake in the company.
Here is what Vltava Fund has to say about CVS Health Corporation (NYSE:CVS) in its Q3 2022 investor letter:
“CVS is a leader in the provision of healthcare services in the USA. It has three main businesses: an enormous network of pharmacies, a health insurance company, and “prescription benefit management”, which is a kind of intermediary between insurance companies and pharmacies. This is the result of large acquisitions over the past 15 years – most notably of Caremark (2007) and Aetna (2018). The markets had deemed its acquisition of health insurer Aetna too expensive (and we agree), so CVS stock then fell into disfavour for a few years.
We took advantage of this in the summer of 2020 and brought the stock into our portfolio at a time when its price was pressed down still further by the coronavirus pandemic. CVS is a giant. It has revenues of USD 300 billion, making it one of the largest companies in the world. It is a relatively stable and highly profitable company with strong free cash flow. Over the past few years, CVS has focused primarily on reducing debt.
This is already much lower than it had been after the Aetna acquisition, and most of the cash is now likely to go to shareholders through share buybacks or be used for smaller acquisitions to grow the company further. CVS trades at about 11 times annual earnings, which is a very appealing valuation given the expected future growth in profitability and overall modest cyclicality in its business.”
1. Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund Holders: 100
One-Year Average Price Estimate: $40.43
Bank of America Corporation (NYSE:BAC) is one of the most promising dividend stocks according to analysts. Bank of America Corporation (NYSE:BAC)’s client base is expected to increase as customer flock to major banks to deposit their money amid the SVB collapse. In February, Bank of America Corporation (NYSE:BAC) declared a quarterly dividend of $0.22 per share, in line with the previous dividend. Forward dividend yield at the time came in at 2.45%. The dividend is payable on March 31 to shareholders of record as of March 3.
At the end of the fourth quarter of 2022, 100 hedge funds out of the 943 funds tracked by Insider Monkey had stakes in Bank of America Corporation (NYSE:BAC).
Ariel Investment made the following comment about Bank of America Corporation (NYSE:BAC) in its Q3 2022 investor letter:
“We initiated three new positions in the quarter. We added leading financial institution Bank of America Corporation (NYSE:BAC) which serves individual consumers, small and middle-market businesses, and large corporations with a full range of banking, investing, asset management, and other financial and risk management products and services. The current company was formed through various mergers including NationsBank, FleetBoston, US Trust, Countrywide Financial, and Merrill Lynch with the legacy commercial bank to form a national banking powerhouse and bulge bracket investment firm. As one of the ‘Big Four’ U.S. banks it enjoys scale driven cost advantages and economies of scale which provide meaningful competitive advantages and potential for strong returns in the largely commoditized banking industry. A survivor of the financial crisis, BAC has emerged with a solid capital base and stands to benefit from a rising interest rate environment.”
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Disclosure: None. 15 Most Promising Dividend Stocks According to Analysts is originally published on Insider Monkey.
